You’ve been re-evaluating your tech stack. It’s not a simple task; so many different products, so much research into every decision. But now you’ve arrived at an easy one. Your payment gateway. Important, sure, but straightforward. It processes transactions.
How different could one be from another? How much of a difference could you experience by switching gateway vendors?
Answer: quite a bit. While a payment gateway’s primary function doesn’t vary much from one product to the next, your experience with it—and the cost you pay for it—certainly can.
With a gateway solution that integrates deeply with your subscription management service, you’ll not only save money but also optimize your billing and collections process.
The traditional payment gateway experience: fees on fees
Payment gateways are, traditionally, a standalone tool in the recurring billing process. It can be integrated to work seamlessly with your recurring payment platform—at least from the customer’s perspective. But payment processing is an expense that can add up big for you over time, in both tangible and intangible ways.
In 2022, the value of online credit card transactions amounted to $500 billion. There was a fee paid on top of every single one of them. Guess who was on the receiving end of those fees. I’ll give you a hint: it wasn’t Tony Soprano.
Payment gateway companies! And, fine, the mafia analogy isn’t entirely fair. They provide a valuable function. The subscription industry has grown by around 350% in the last decade. For most of the many (many, many) transactions that helped make that growth possible, gateways were there to help the businesses collect their recurring payments.
In other words, if you’re collecting payments, you need one. Unfortunately, that need can become expensive pretty quickly. All of those nice features, like multiple currency options, or preferred payment method acceptance bob up and down on an ocean of fees.
- Interchange/Transaction fees. Now things start to get expensive. That half a trillion dollars we talked about earlier? Payment gateway companies charged fees for nearly all of those transactions. Sometimes in the form of a fixed rate, but usually based on a percentage, known as an interchange fee. Other times, a combination of both. No matter the breakdown, it adds up fast. This is the way most payment gateways make their money.
- Other fees. Then there are the other fees. Line items you get in the mail at the end of the month that are vaguer than a politician’s public apology. Good, honest payment gateway companies will be straightforward about all their fees. Still, there are bad eggs out there that know how to pad a bill. The list can include but is not limited to flat fees, retrieval fees, address verification fees, and not sufficient fund fees. Many of these are standard and straightforward, but when something looks out of sorts, it’s best to follow up.
Those fees can add up pretty quickly. And when fees are charged as a percentage of each transaction, they can vary pretty wildly from month to month.
Not to mention the logistical nightmare that comes as a result of bouncing back and forth between your billing platform at payment processing software to:
- reconcile and compile invoices,
- post payments,
- balance ledgers, and
- handle any tech issues or troubleshooting.
There has to be a better way!
Read more: How to Choose the Best Payment Gateway for Your Recurring Revenue Business
One platform to rule them all
Imagine a subscription-based payment gateway built right into your recurring billing system. No interchange fees. No fluctuating monthly costs. No bouncing back and forth between two platforms.
That’s what Stax Bill offers: one platform to take care of all your billing and collections needs. Here’s how it works.
The feature is billed like most fixed recurring payments. You’ll receive a monthly charge, but no transaction fees, which means you’ll know exactly what you’re paying each month. If you process a high volume of payments, you’ll save enough from paying a subscription fee rather than a percentage of each transaction that the software virtually pays for itself over time.
Because the billing platform and the payment gateway were specifically coded to work together, they cooperate more effectively than most integrations. This makes it easy to set and forget your billing process. Automate more repetitive tasks and free up valuable employee time to be channeled toward more productive means.
This also means you’ll never need to bounce between the customer service departments of two software companies again. Everything is handled under one roof, which means all the answers to your questions are just a phone call away.
Built-in scalability
All of these features aggregate into a billing solution optimized toward scalability. Some experts have recommended that operational costs require no more than thirty percent of total revenue. Despite that, there are many businesses with expenses eating up as much as 80% of their revenue.
As you grow, expenses balloon. With traditional payment gateways, the more transactions you make, the more you lose to interchange fees—and the more work your AR team has to do at month-end close.
Without the right tools, you have two choices for your AR department: Expand it endlessly to keep up with the ever-growing billing and payments demands, or allow the team you’ve always had to drown in a sea of invoices.
With payment gateway-infused subscription management software, even a small AR team can comfortably handle a large influx of invoices and payments no matter how much you grow.
It’s also worth noting that most experts agree we are headed toward a recession. During an economic downturn, solutions that save you money while keeping your business lean and effective are vital to success.
- Eliminate busy work. As Haresh Sippy of Tema India put it, “Automation is cost-cutting by tightening the corners and not cutting them.” As you automate busy work, you allow your AR team to focus on higher-impact, growth-driven goals. Your team works the same number of hours. They get more things done, and they probably prefer it to endless weeks of banal manual billing work.
- Stabilize monthly recurring revenue (MRR). The subscription industry is all about customer retention. Stabilizing and expanding MRR to foster growth. Payment gateway-infused billing solutions can reduce involuntary churn by making it easier for customers to make payments. By marrying your invoicing and collections process, you make it easier for customers to automate payments, reducing the chances that payments will be missed by mistake. The result? Fewer accounts get canceled due to accidentally missed payments.
Periods of high growth are exciting but also precarious. High-quality tools make it easier to cater to more customers while retaining and expanding upon the level of service that put your product in high demand in the first place.
An easy choice
The Stax Bill payment gateway feature is an affordable, transparent tool. Unlike other gateway solutions, it’s designed specifically to be used with our subscription management platform.
The result is straightforward: a competitively priced tool that can help you scale toward a bigger and better future.
