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Build vs buy: How to squeeze every ounce of revenue with better payment acceptance

SaaS engineers will often debate whether they should build their payments software or buy a complete solution like Paddle. Find out why building your own payments infrastructure won’t always prevent payment failures.

Payment acceptance (or preventing payment failures) is often the forgotten metric for SaaS businesses. If you are tracking it, the likely scenario is that you will be losing more revenue than you need to. (More on this later)

Having worked with 3000 SaaS businesses for 10 years now, our experience at Paddle is that very few SaaS executives are optimizing their payment acceptance. It’s important for SaaS businesses to be tracking and improving. 


  • Online payment attempts are more likely to fail than in-person payments. 
  • SaaS businesses need to be able to accept international payments.  
  • SaaS relies on retention and seamlessly processing recurring payments to avoid customer churn.

With that in mind, improving your payment acceptance rate helps capture as much revenue as possible.

How to prevent payment failures?

One way to do this is to build relationships and integrations with multiple payment service providers (PSPs) yourself and build out the infrastructure. The more payment providers you partner with, the greater chance you have of preventing more payment failures.

It means you are able to route your payments through the best processor for this specific payment, which will depend on a lot of the characteristics of the payment you're attempting. This gives your payments the best chances of being accepted. Each payment provider will have their own relationships with banks, who decide if payments should go through or not.

You will also provide your payments with the contingency of relying on multiple routing options, should there be an issue with one or another. You will also be able to support your customers in the currency they prefer should you sell across territories.

But that opens up a world full of complexities. Another approach is to let a merchant of record like Paddle, who is better positioned to build out that relationship do it for you.

Essentially, it's a build vs buy approach and the SaaS engineers we speak to will often go through the same process of working out which is cheaper and better for their business.

Let's get into the two approaches.

Building out your own payment integrations

If you have one or some engineers in-house, you might be tempted to build your own payments processor integrations. Why pay a merchant of record when you can build it yourself? Pay one smaller fee to one or two payment processors instead.

The reality is that while you probably could build out integrations, it would be a lot more work, time, and money to execute before you start to see the reductions in payment failures. As you will see, the investment upfront and the resulting ROI do not equate to money and time well spent.

First, you would need to facilitate a relationship with the payment processor(s) and build out the contract for working with them. This takes months, sometimes hefty deposits, and navigating the sales processes of each payment provider. There's also a lot of legal and finance work involved in setting this up. If you sell internationally, you’ll need to set up a local branch or entity in the countries you want to process in, the work more than doubles.

Then comes the engineering. Your engineering team will need time to figure out how each payment processor processes transactions, build, test and roll out the integration.

You will also need all the supporting infrastructure already set up - third party credit card vault, a rich data model to track performance and route payments (just to name a few).

When you have multiple PSPs, you would need to create some code that designates which payments should be routed through which gateway, giving it the greater chance for success. Then you would need to constantly test, roll out changes and monitor improvements or deterioration. It is a constant maintenance task of A/B testing the best PSPs against a number of variables such as time, cards, banks, locations, currencies and so much more.

Once the integration is complete, maintenance will be key

You'll need in-house expertise to build out the strategy to manage the integration and payments routing. If you have two or more payment processors in your stack, the work for support teams will double. Your finance team will need to reconcile two different sources of payment streams and details. The support team will have two payment processors to check in with and use to manage payment failures.

The overarching cost on your business is the wasted time from your product and engineering teams spent on building and optimizing a stack of payment processors instead of focussing on their core competency: improving the product. At the very least it’s going to dominate an engineering team of six engineers and a product manager.

And the kicker, payment processors are just one part of your full payments infrastructure. You will need tooling for subscription management, pricing and checkout, sales tax compliance, fraud prevention, and buyer support to add to your engineers plate. But, it’s not just the number of tools; it’s also the people and the processes behind them.

So building out this infrastructure is one approach. Let's break down the buy approach.

Let Paddle do the heavy lifting for you

Paddle is a merchant of record (MoR) which means SaaS companies like yours offload the operational complexities of building their payment infrastructure to us(while still maintaining control of their customer relationships and experience).

The MoR model means that we are uniquely positioned to take on the relationship and integration with payment processors for you at no additional cost to what you would be paying for with Paddle. Having built and integrated with many of the leading payment processors across many territories, our payment’s team’s number one priority is driving up payment acceptance by reading and recovering failed payments for our customers.

By plugging into Paddle, you get an all-in-one payments solution to minimize your revenue leakage. Paddle does what the best companies in the world dedicate hundreds of engineers and millions of dollars to building and maintaining.

In just one integration, our legal and product teams will navigate the sales and legal processes of building out a contract with these payment processors. Our engineers will then navigate the integrations and start routing payments through the most efficient processors.

Once released, our payments teams then have the expertise to monitor and track all the payments made through Paddle. Their primary goal and expertise is to squeeze every ounce of revenue for you by routing payments through the processors that have the best payment acceptance rate.

All that work that your engineering team would have been doing in the build approach when it comes to routing payments? We do that for you. Our internal engines and teams are set up to constantly monitor payment gateways for any changes and quickly and easily make those adjustments for our customers. We have built out a logic that automatically recovers payments and gives you the biggest chances of payment success.

What’s more, we do this for thousands of customers worldwide which means we see hundreds of thousands of payments made everyday. Our payments teams have access to more granular insight and expertise than any SaaS company hoping to build these integrations themselves. They are set up to make data-rich decisions around payments routing, with a much deeper understanding of payment failures across every variable.

The main point here is that the engineering work and complexities sit with a team who’s core competency is to drive up payment acceptance and reduce your churn. Letting Paddle do the heavy lifting for you will ultimately cost you less in engineering resources and time, letting them focus on growing your product.

And the tooling for subscription management, pricing and checkout, sales tax compliance, fraud prevention and buyer support? Paddle takes care of that too.

So is it worth building your payments infrastructure yourself?

In terms of return of investment, probably not. The more likely option for most SaaS businesses who are tracking payment acceptance is that you will accept the lower rates to avoid the pain of integration.

Is it worth the buy? The saved engineering time alone means the answer should be undoubtedly yes.

We built the complete payment stack so you don‘t have to. From subscription management to sales tax compliance. Book a call with our team to find out more.

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