How to design a scalable payment system for your SaaS

Alvaro Morales

Building and managing a scalable SaaS payment system is a must if you intend to expand into new markets and regions. 

Imagine having a SaaS solution that dazzles customers—only for them to hit a brick wall when they try to pay for it. It’s like running a 20k marathon and tripping just before the finish line. 

In this in-depth guide, we’ll show you how to improve your payment system design strategy so you can focus on building the core product.

We’ll go over:

  • Unlocking scalable payment solutions for your SaaS
  • Core requirements of a solid payment system
  • Choosing the correct payment infrastructure
  • Offering diverse payment methods
  • Security and compliance considerations 
  • Tool recommendations for managing your payment system
  • The importance of analytics to enhance your strategy
  • Anticipating market and tech changes through future-proofing

Let’s get started.

How to unlock scalable payment solutions for SaaS

Scalability is an absolute must when designing a payment system for your SaaS product. But what does scalability truly mean in this context?

When we say your payment system is scalable, it means your business can adapt to surges in transaction volume as your customer base grows, preventing slowdowns or errors when your SaaS product experiences rapid success. 

A scalable system is also essential for global expansion, as it can easily integrate new payment methods, currencies, and regional regulations to accommodate diverse customer needs in different markets.

What are the core requirements of a solid payment system?

Building a payment system design that inspires confidence in your customers and drives business growth requires more than just accepting payments. Here are the essential pillars of a strong and dependable system:

  • Reliability and fault tolerance: Downtime translates directly to lost revenue. Your payment system must be able to handle unexpected errors and minimize the impact of failures. Techniques like retries, queues, and idempotency (preventing duplicate transactions) are your allies in achieving reliability.
  • Security: Protecting sensitive financial data is critical. You'll need to consider encryption of data at rest and in transit, secure storage of payment information (or avoiding storing it entirely), and compliance with regulations like PCI DSS.
  • Adapting to change: Your payment system should accommodate new payment methods and currencies as your business grows and your customer base expands. A well-architected system handles these updates without significant overhauls of your code.
  • Consistency: Even in distributed environments where data may live in multiple locations, your payment system design needs to provide a single, accurate view of all transactions. Consistency ensures the data your customers and finance team see is always up-to-date and reliable.
  • Monitoring and observability: Visibility into how your payment system is performing is crucial. You need clear metrics and the ability to spot potential problems quickly. Effective monitoring and alerting help you stay ahead of issues before they cause widespread customer impact.

How to choose the ideal payment infrastructure

When building your payment system, you have a fundamental choice: Leverage established payment gateways or craft your own custom solution. Each path comes with trade-offs, so let's explore how to make the best decision for your business.

Using established gateways: The pros and cons

Payment gateways like Stripe, PayPal, or Braintree offer a significant head start. They handle the intricate details of card processing, security, and fraud detection and often provide pre-built user interfaces for collecting payment information. This can drastically reduce your time to market.

However, established gateways can also mean less control over the customer experience or the flexibility to integrate with specialized payment providers in certain regions. It's essential to weigh the benefits of a quick launch against the potential for limitations further down the road.

Building your own solution: Control vs. investment 

Building a custom payment integration directly with card networks and payment providers offers maximum control over the user experience and adaptability to new methods. 

But be warned: It also means taking full responsibility for security, compliance, and handling the complexities of payment processing yourself. This demands significant development resources and expertise.

The importance of APIs and compatibility

Even if you opt for an established gateway, their APIs are your key to customization and future growth. A well-designed gateway API should offer the following:

  • Support for desired payment methods: The API should seamlessly integrate with the credit card types, wallets, and regional providers you need to serve your customers.
  • Data access: The API should allow you to extract the transaction data you need for reporting, analytics, or reconciliation processes. This guarantees you have the information required to manage your business effectively.
  • Flexibility for customization: The API should allow you to customize checkout flows or integrate specific features tailored to your unique business model. This ensures you can create a payment experience that aligns with your brand and customer needs.

What’s the best choice then?

At the end of the day, the right choice depends heavily on your business needs and resources. Established gateways often make sense for rapid development and smaller-scale operations.

A custom solution might be justified if you have the engineering capacity and foresee highly specialized payment needs. The key is careful evaluation to avoid a decision that will hinder your business in the long run.

Why your system should include diverse payment methods

The preferences for how people pay vary greatly depending on where they are in the world. What someone in North America might consider the most convenient payment method, like a credit card, might be less common elsewhere. 

To avoid limiting your potential customer base and ensure a smooth checkout experience for everyone, it's vital to include a broader range of payment options than just major credit cards. Let’s take a closer look at why embracing various payment methods is so important.

It helps you cater to different markets

Credit card ownership and usage might be lower in many parts of the world. By offering local bank transfer options or popular e-wallets in the region, you can unlock entirely new customer segments for your business. 

Imagine a potential customer in a South American country where e-wallets are a dominant payment method. If your system only accepts credit cards, they might be unable to complete their purchase, leading to lost business.

It aids in improving your customer relationships 

Forcing customers to use an unfamiliar payment method can be confusing and frustrating. It can lead to abandoned carts and lost sales. Providing a payment option that aligns with their habits and preferences builds trust and reduces friction at checkout. 

Imagine someone in Europe who is accustomed to using a specific bank’s card for online purchases. If your system doesn't support it, the customer might abandon their cart and seek out a competitor who does.

It ultimately boosts your conversion rates

Offering a more comprehensive selection of payment methods can directly impact your sales. Increased payment options are associated with higher conversion rates. By removing a potential barrier at checkout, you're making it easier for customers to complete their purchases.

The importance of secure and compliant payment processing

A solid payment system design is one that inspires trust both from your customers and regulators. It requires a meticulous approach to how you manage sensitive data. Here's why this area deserves particular focus:

  • Protecting customer data is your responsibility: Payment card details, bank information, and other personally identifiable data are prime targets for cybercriminals. 

    A security breach can severely damage your reputation
    and result in lost business. So remember that implementing robust security measures is a responsibility, not an optional add-on.
  • Security measures directly impact customer trust: Customers naturally want to ensure the protection of their payment information when they choose your SaaS product. 

    By prioritizing security and clearly showing it,
    you build trust and make customers confident that their financial information is in safe hands.
  • Compliance is not optional: Regulations like PCI DSS (Payment Card Industry Data Security Standard) outline strict requirements for any business that handles payment cards. 

Other standards, such as GDPR (General Data Protection Regulation) or regional data privacy laws, may also apply depending on where you and your customers reside. Failure to comply can result in costly fines and penalties.

Having the right tools for a scalable payment architecture

Scaling your SaaS business means handling more transactions and managing an increasing complexity in how you bill your customers. Let's look at some key considerations when it comes to the tools you use:

Automate billing and invoicing

As your customer base grows, generating invoices and tracking payments just with in-house systems becomes unsustainable. Automating your billing processes is a must-have for any scalable system.  

A good strategy is to use a billing platform that can automatically charge customers with subscriptions on a recurring schedule, a core requirement for many SaaS business models.  

Furthermore, it should seamlessly generate and send detailed invoices in formats your customers expect, saving time and reducing potential errors. 

Integrating payment reconciliation features is also essential. Automated payment reconciliation matches payments to invoices, identifies unpaid amounts, and flags failed transactions, saving your accounting team valuable time.

Think beyond your local currency

If you aim for a global customer base, handling payments in various currencies becomes a must. Your payment architecture needs to consider how you'll manage currency conversions and display prices in your customers' local currencies. 

Many payment gateways and processors (like Stripe) offer features to support this, so factor those capabilities into your planning. Additionally, consider if and how pricing models might need to be customized for different regions based on factors such as local taxes, purchasing power, and market competition.

Keeping an eye on analytics and monitoring 

To successfully manage a scalable payment system, it’s important to spot early warning signs of potential problems and have the insights to make informed decisions as your business grows.

Implementing robust monitoring and analytics is critical because it allows you to spot and address issues before they escalate. Let’s look at how to go about this:

Three key features your monitoring tools should have

Here are some essential features to include in your monitoring toolkit:

  • Metrics dashboards: Visualize key performance indicators (KPIs) of your payment system, such as transaction volume, success/failure rates, average processing times, and geographic distribution of payments.

    Having these metrics at your fingertips helps catch anomalies that indicate emerging issues so you can work on smoothing them out quickly. 
  • Logging: Detailed logs of transactions, API calls, and error messages are invaluable when investigating problems. Ensure your solution allows for efficient searching and filtering.
  • Alerting: Configure alerts to be notified when key metrics cross predefined thresholds or system errors occur. Catching issues proactively gives your team time to react before they snowball into major customer-impacting incidents.

What’s great about having monitoring features in your system is that you can use the information you gather to inform your decision-making process while managing your payments system. 

The best part is that our specialized billing solution at Orb already has some of these key features as part of our base offering. We give users 360-degree visibility into their payment journey without making them sift through different tools to keep track of their expenses. 

The importance of future-proofing your payment system design

To keep your payment system aligned with changes and support business growth, it's crucial to design it with adaptability and future-proofing in mind. This approach prevents it from becoming a bottleneck and ensures seamless scalability.

There’s power in anticipating change

It's impossible to predict every specific change that might occur years from now. Having a payment system design that values flexibility lets you adjust without significant overhauls. Here’s how:

  • Prioritize API integrations: When choosing a payment gateway or building your own payment integrations, focus on solutions with well-documented APIs. This makes it easier to swap out providers, add support for new payment methods, or integrate additional systems as your needs evolve.
  • Consider a modular design: Where it makes sense, breaking down your payment system design into smaller, modular components increases adaptability. It allows you to isolate and adjust specific sections in response to changes without having to rebuild everything.
  • Design with global expansion in mind: Understanding regional regulations related to payments, data privacy, and tax is essential for avoiding compliance issues that can hinder future growth.

Next steps

You should now know how to improve the design of your SaaS payments system so that it is scalable and smooth for your customers. 

But there’s one more piece to the puzzle: Having the right billing system to support your current and future payment needs.

That’s what Orb is for.

Orb is a done-for-you billing platform that takes care of all the details of invoicing and charging your customers.

Here's how Orb solves billing for you:

  • Charge confidently with accurate tracking: Make sure you capture every billable event for accurate invoicing. Track API calls, storage utilization, and other relevant usage metrics precisely.
  • Transparency = trust: Provide clear, detailed invoices with line-item breakdowns to foster transparency. Showing customers exactly what they're paying for builds trust and lowers the chances of billing disputes.
  • Integration becomes a non-issue: Connect your billing system with your CRM, analytics platforms, and payment gateways for a seamless workflow. Reduce manual work and ensure data flows smoothly within your tech stack.
  • Usage alerts for proactive engagements: Improve customer communications by setting up custom notifications for usage thresholds. Staying proactive helps prevent unexpected charges and builds positive relationships.
  • Get real-time reporting: Get up-to-the-minute dashboards and reports on usage patterns, revenue projections, and customer insights. Leverage these data-driven insights to improve pricing, refine your SaaS product, and identify opportunities for upsells.

Learn how Orb can take care of billing for you.

May 29, 2024

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