The SaaS (Software as a Service) industry is booming as one of the fastest-growing business types in the world. A $150 billion industry in 2020, SaaS is projected to grow to over $300 billion by 2026. Launching a SaaS business is not as easy as a startup, but if you’ve got a unique product or service that fits a niche, you have an opportunity to grow an extremely profitable business.

Although SaaS is wildly popular and growing, it’s still often considered a high-risk business because the cardholder and card are not present during transactions. That said, the opportunity for success is still there, and once a merchant finds payment processing for SaaS, they’ve got the pieces in place to take advantage of the expanding SaaS industry.

There are several reasons why SaaS businesses might be considered high-risk by a payment processor:

• The number of transactions are often higher than with other businesses. Since SaaS can be purchased by anyone on the internet, the demand and ease of signing up can result in a large number of transactions (both purchase and return) over a short period of time.
• On a related note, the number of chargebacks and refunds can be high based on the functionality of the product and whether the business uses a subscription or recurring billing model.
• Fraudulent purchase claims are often higher than normal because charges can be made without the card or cardholder being present.
• Negative opt-outs and deferred billing issues are commonplace in SaaS businesses because most of them require a credit card to get a free trial of their software. After the trial period, the credit card is automatically billed for the subscription fee of the product unless the user ops-out manually before the trial period ends.
• The least frequent, but still relevant reason, is that the Terms and Conditions may have been buried or hard to find in the customer agreement. This is an ethical issue and doesn’t occur often, but it’s still occasionally a factor.

SaaS is a booming business right now and has been growing exponentially for the past decade. WizoPay is one of the few processors that’s been growing with the SaaS industry for nearly it’s entire time as an industry. Whether you’re starting a brand-new SaaS business or you’re looking for a new payment processor for your existing SaaS business, our team of merchant account experts can help you with your journey. As one of the most experienced leaders in the industry, we’re built to help you combat common issues like high chargeback rates and fraud, and our personalized approach to customer service should be a welcome addition to any business. Finally, we’ve got highly competitive rates and we’re based in the United States.