We see 5 key payments trends for 2023 that will drive the priorities of strong vertical SaaS companies:
- Monetization of payments will be key growth strategy for SaaS
- The definition of unified commerce will continue to expand
- Integrated solutions will be essential for increasingly complex commerce
- Businesses will expect value from transaction data
- Security threats will continue to accelerate
Why are these the most important payments trends for 2023 (vs some specific payment technology like BNPL)?
Trends 2-5 are the result of several converging vectors:
- Consumers are more willing to change how they pay in the pursuit of increasing convenience and to match how they shop for and consume goods and services today. How those apply to your sector will vary - do they need online payments? do they need pay-by-link? do they need to add a terminal?
- Businesses are looking for unified solutions customised to the specific needs of their verticals, which help them grow AND reduce costs AND reduce complexity (AND > OR). Vertical SaaS is uniquely suited to deliver on the power of "AND"
- The above is made possible by "APIs everything," which means that there is a lot of data flowing around – good for legitimate businesses and fraudsters, alike.
So why is payments monetization our #1 prediction?
Many of the best SaaS companies are fueling their growth with payments.
With the potential for longer sales cycles, “correcting” valuations, and inflation, SaaS founders across the board are looking for the right ways to extend runway without sacrificing the future. Many will be looking at the payment volume on their platform and recognizing the opportunity they have to monetize it.
Monetizing payments lets SaaS founders:
- Deliver what their customers need
- Increase revenues from the existing base
- Leverage new pricing strategies that maximise adoption and total revenue
- Reduce churn
Bonus Prediction: Vertical SaaS will continue to grow
Vertical SaaS CEOs are genuinely committed to and passionate about the needs of their SMB customers.
Despite (and because of) the market conditions, vertical SaaS with a strong payments strategy can continue to grow in a down cycle. SMBs across the board increasingly are turning to SaaS in order to compete with local and global alternatives. Vertical SaaS providers can bring it all together for them, with embedded payments a critical piece of the value proposition.
Ambitious and customer-centric Vertical SaaS CEOs will increasingly use embedded payments to deliver on the the needs of their SMB customers - and their own.
