Payment Pulse – Ep. 24

Introduction: Learn how embedded payments drive SaaS retention by creating habits, building trust, and increasing lifetime value- without relying on contracts or forced lock-ins.

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Episode Transcript

Shannon:  Welcome to Payment Pulse, where SaaS strategy meets real world revenue. I’m Shannon.

Michelle: And I’m Michelle. Today, we’re talking about one of the most powerful retention levers in software.

Shannon: Most SaaS companies obsess over things like onboarding flows, feature adoption, and their customer support teams, but they overlook one of the stickiest parts of the product: the way customers get paid.

Michelle: So here’s what we’re explaining today: why payments have quietly become one of the strongest retention strategies in SaaS.

Shannon: Because when payments are embedded into the product, everything gets stickier…

Michelle: Customers build habits inside your workflows instead of hopping between tools…

Shannon: …And once operations depend on those workflows, churn gets a lot harder.

Michelle: Add in reliable statements and transparent fees, and that’s where trust shows up.

Shannon: Then layer on transaction-based revenue that grows as customers grow, and premium payment features that unlock expansion over time.

Michelle: Put it all together: habit, trust, growth – and it adds up to one thing.

Shannon: If customers run their money through your platform every day, the odds of leaving drop fast.

Michelle: Money creates habits…

Shannon: And money creates loyalty.

Michelle: …and panic when something breaks!

Shannon: Oh, absolutely, ’cause no one’s calmly submits a support ticket about missing funds. So traditionally, payments have lived in the back office: separate portal, separate login, different brand.

Michelle: The “Don’t look at it unless accounting questions it” approach!

Shannon: Right, but embedded payments flip that. Now, every transaction reinforces the platform…

Michelle: …your dashboard becomes muscle memory…

Shannon: …and that’s where the costs of switching sneak in. Not in contracts, but in workflows.

Michelle: So let’s talk about those tiny annoyances when payments aren’t embedded.

Shannon: Like logging into another system.

Michelle: Tab hopping through every open window.

Shannon: Reconciling transactions manually.

Michelle: All of those micro-frictions add up.

Shannon: But when payments live inside the platform, payout initiation, invoice matching, dispute tracking, it’s all on the same screen.

Michelle: Now let’s talk about dashboards.

Shannon: So when transaction data analytics and payment controls all live together, your product becomes the single source of truth.

Michelle: No separate spreadsheets…

Shannon: No “Wait, which system is right?”

Michelle: And branding matters too.

Shannon: Right. Branding is huge.

Michelle: If the money flows through your interface, your logo, and your support team, payments stop feeling like a bolted-on feature.

Shannon: That’s true. So they really feel inseparable

Michelle: So here’s where stickiness becomes real retention…

Shannon: Because leaving suddenly means retraining staff…

Michelle: …rebuilding integrations…

Shannon: …Migrating years of transaction data

Michelle: Which is never as clean as the sales deck says it’ll be!

Shannon: Ever.

Michelle: And if you’re in a regulated industry, that migration gets terrifying. Audits, compliance reviews, financial reporting…

Shannon: Yeah. And customers stay because you’ve become the path of lease resistance.

Michelle: And in SaaS, being easier than switching is half the battle. Now, let’s get into churn.

Shannon: Because churn doesn’t start with cancellation emails.

Michelle: It starts with an exasperated sigh

Shannon: Mm-hmm. Right? And things like delayed payouts and confusing fees.

Michelle: And transactions that disappear into the void.

Shannon: So embedded payments give platforms control to engineer that frustration away with features like automated reconciliation and predictable settlements.

Michelle: And real time transaction visibility, plus proactive alerts before customers even know something’s wrong.

Shannon: That’s the move from reactive to protective.

Michelle: Which is exactly where trust gets built.

Shannon: Now let’s talk about where loyalty really gets tested and how platforms handle money.

Michelle: Let’s!

Shannon: Yeah, so users might tolerate clunky reporting.

Michelle: But they will NOT tolerate wondering if payroll clears.

Shannon: Because every successful transaction is like a tiny deposit into an emotional trust bank, if you will. So reliable payouts, clear fees, smooth de dispute handling, those all compound…

Michelle: And once your customers trust you with their revenue…

Shannon: …they do not churn lightly.

Michelle: That’s right. Okay, let’s shift to lifetime value.

Shannon: So traditionally in SaaS, we think retain customers with product and expand with seats.

Michelle: Embedded payments add a third option, which is transaction based growth.

Shannon: So your customers process more volume and you earn more,

Michelle: No price hike emails required.

Shannon: Right? It’s just math.

Michelle: And those basis points also add up. So 20 to 50 basis points of volume flowing back to the platform can eclipse subscription revenue.

Shannon: Especially for high volume users.

Michelle: Yeah, if you think about it, that customer doing $50K a month…

Shannon: Yeah. Three years later they’re doing $200K.

Michelle: Same subscription, quadruple payments revenue…

Shannon: And that’s how modest accounts become VIPs.

Michelle: Then come the premier layers…

Shannon: Things like dispute management, instant payouts and fraud protection…

Michelle: And marketing tools powered by transaction data.

Shannon: And these don’t feel like sales pushes…

Michelle: Rather, they feel like survival tools as customers scale.

Shannon: And that’s really the best kind of upsell.

Michelle: I mean, it’s really awesome to hear when customers say, “Wait, you can already do that for me?”

Shannon: Yeah, it really is. So now what, tell me, what does a retention first payment strategy actually look like?

Michelle: For me, I would say fully embedded.

Shannon: And branded, right.

Michelle: Yeah. Transparent settlements

Shannon: Proactive dispute support is another.

Michelle: And constant visibility into their money.

Shannon: Right, right. So these forces reinforce each other, and stickiness gives time for lifetime value to grow.

Michelle: Yeah. LTV funds better retention programs.

Shannon: And lower churn means more customers reach the stage where premium payment features just make sense.

Michelle: It is definitely the flywheel that every organization wants.

Shannon: That’s a really great analogy. So if you’re a SaaS leader listening to this and thinking payments are just a utility.

Michelle: Clearly they are not

Shannon: Yeah, that’s right. There’s so much more, their product,

Michelle: Their experience.

Shannon: their retention.

Michelle: And probably your most underutilized revenue engine.

Shannon: When payments are embedded, branded, and reliable, customers stop thinking about switching.

Michelle: They run their business on you. And when customers trust you with their revenue, that’s when they stick around.

Shannon: And in a market where switching tools is easy, being the platform customers trust with their revenue might be your biggest competitive advantage.

Michelle: Well, if you like this episode, you can find more resources and deeper dives on our blog at xplorpay.com. That’s X-P-L-O-R pay dot com.

Shannon: Thanks for listening, and we’ll see you next time on Payment Pulse.