SaaS payment processing: how it works and which platforms to choose

Key takeaways

• SaaS payment processing powers recurring billing, subscriptions, and usage-based pricing

• The right system helps reduce churn, automate payments, and improve reconciliation

• Airwallex helps SaaS businesses scale with recurring billing APIs, global payments, and real-time FX

Think about your favorite SaaS tools. Maybe it’s a CRM like HubSpot, Slack, or a project management app like Asana. Behind the scenes, all of them rely on recurring payments to keep things running, either as monthly charges, usage-based fees, or annual plans that renew automatically.

For SaaS companies, processing these payments isn’t simple. Plans change, cards become invalid, customers pause or upgrade mid-cycle, and every failed payment risks a churned customer. Add in global customers, multiple currencies, and complex tax rules, and your billing setup can start to buckle.

SaaS payment smooths all of these wrinkles. It powers everything from automated billing and invoicing to retries, foreign exchange (FX), and reconciliation. In this guide, we’ll explain what it is, how it works, and what to look for in a provider. We’ll also demonstrate how Airwallex empowers SaaS teams to manage subscriptions at scale and leverage payments as a growth driver.

What is SaaS payment processing?

SaaS payment processing is the system that helps software companies accept and manage payments for subscription-based products. Unlike eCommerce, which typically handles one-off transactions, SaaS payments are centered on ongoing relationships. Customers sign up once, and your system handles charging them on a regular schedule.

That could mean fixed monthly plans, usage-based billing, or flexible tiers that adapt as customers grow. But there’s more going on than just collecting payments. A proper SaaS payment system also handles subscription management, invoicing, upgrades and downgrades, tax calculation, dunning, FX, and reconciliation.

The goal is to maintain predictable revenue without adding admin. That means retrying failed payments automatically. It means showing local currencies at checkout, even if you’re billing from another country. And it means integrating with your accounting and reporting tools so your finance team isn’t stuck cleaning up the mess later.

Done right, SaaS payment processing keeps your revenue engine running quietly in the background while giving your team the tools to manage it with confidence.

How SaaS payment processing works

Behind every subscription is a series of steps that happen in the background. When set up correctly, these steps ensure your billing is accurate, your revenue is predictable, and your customers are happy. Here’s how it works:

1. The customer subscribes: They pick a plan, enter their payment details, and agree to a billing schedule. This could be monthly, annually, or based on usage.

2. The payment gateway captures the transaction: The gateway encrypts and securely transmits the payment details. It checks the card or bank details and passes the request to the processor.

3. The payment processor handles the transaction: The processor routes the transaction through the relevant card network or banking system. If approved, the funds move into your merchant account.

4. Billing cycles begin: Your system automatically charges the customer based on their plan. If they upgrade, downgrade, or pause, the billing adjusts in real time.

5. Failed payments trigger retries: If a payment fails, your system should retry automatically using smart timing. This reduces churn and keeps subscriptions active.

6. Revenue is reconciled: Every transaction is logged, matched, and sent to your accounting tools. This helps your finance team close the books faster and with fewer errors.

Why SaaS businesses need a purpose-built payment infrastructure

Generic payment systems might work fine for eCommerce. But if you’re running a SaaS company, you’ll quickly hit limits. Most tools aren’t designed to handle complex billing logic, recurring charges, or the operational overhead that comes with managing global subscriptions.

Without a purpose-built setup, you may face:

1. Failed payments and higher churn: A simple card expiry or insufficient funds can lead to failed transactions. Without smart retries, reminders, or backup payment methods, customers churn not because they want to, but because the system gives up too quickly.

2. Messy reconciliation and reporting: Tracking upgrades, downgrades, mid-cycle changes, or refunds across hundreds of customers can create headaches for your finance team. If your system doesn’t sync with accounting tools, you’ll be left stitching together spreadsheets by hand.

3. Limited global support: As you expand, your customers expect to pay in their own currency using familiar payment methods. If your processor can’t support local payment options or settle in local currencies, you risk lower conversion rates and higher FX fees.

A proper SaaS payment infrastructure solves these problems. It automates recurring billing, handles usage-based models, retries failed payments at smart intervals, and connects to your accounting tools. More importantly, it helps you grow. You can expand globally, offer flexible plans, and keep churn low without adding more admin.

Top features to look for in a SaaS payment processor

Not all payment platforms are built for SaaS. The right one should reduce churn, support global customers, and take pressure off your finance team. If you’re comparing providers, make sure they offer these essential features:

1. Recurring and usage-based billing: SaaS businesses rely on predictable billing cycles to ensure consistent revenue streams. Whether you charge a flat monthly fee or bill customers based on usage, your payment platform should support flexible billing models that fit your pricing strategy. You also want the option to adjust mid-cycle if a customer upgrades or downgrades their plan.

2. Subscription management: Your system should do more than charge cards. It needs to manage the full lifecycle, from sign-up and plan changes to renewals and cancellations. Look for tools that allow you to customize subscription logic without relying on developer time for every change.

3. Multi-currency and global payment methods: In time, you’ll attract customers from new markets. Your processor should support local payment methods, display prices in the local currency, and settle funds in a like-for-like manner. This reduces FX fees and boosts conversion rates at checkout.

4. Dunning and smart retries: Failed payments are a major cause of involuntary churn. Look for a processor that can automatically retry payments at the best time, send reminders to customers, and offer backup payment options when the first method fails.

5. Accounting and ERP integrations: Manual reconciliation drains time and increases the risk of errors. A good processor will sync directly with your accounting, ERP, or RevOps tools, allowing you to automate reporting and close your books faster.

6. PCI compliance, tokenization, and fraud tools: Your provider should be fully PCI DSS compliant and utilize tokenization to store customer data securely. It should also include fraud detection to protect you and your customers from chargebacks and other forms of abuse.

7. Flexible APIs: Whether you’re building a custom checkout or connecting to your tech stack, strong developer tools matter. Look for clear documentation, test environments, and the ability to integrate with your CRM, billing engine, and support tools without workarounds.

Compare the top SaaS payment processors

Here’s how five top providers stack up for SaaS businesses, and a quick overview of their costs.

Comparison of fees and major features

Airwallex

Airwallex is a global payments platform built for businesses with recurring billing and international reach. It offers multi-currency accounts and developer-first tools that help SaaS teams manage billing, reconciliation, and payouts from one platform.

Pros

• Accept payments from 180+ countries and offer 160+ local payment methods

• Collect in 25+ currencies and settle in 10+ without forced conversion

• Recurring billing APIs with strong developer support

• Built-in FX, reconciliation, and payout tools

Cons

• Fewer out-of-the-box features for complex subscription management compared to platforms like Chargebee

Stripe

Stripe is a well-known payments infrastructure provider with strong developer support and flexible billing tools. It’s widely used by SaaS startups and scale-ups looking to get started quickly with subscriptions and usage-based pricing.

Pros

• Extensive global reach with support for dozens of local payment methods

• Flexible APIs and strong developer documentation

• Customizable billing with support for trials, upgrades, and metered usage

Cons

• Some limits on settlement in emerging market currencies

• Add-ons like tax or RevOps can drive up cost

• Support is mostly self-service unless on a premium plan

Chargebee

Chargebee is a subscription management platform ideal for complex billing workflows. It works alongside Stripe, Airwallex, or another payment gateway.

Pros

• Deep support for billing experiments, invoicing, and revenue recognition

• CRM, ERP, and accounting integrations

Cons

• Requires a separate payment processor like Stripe or Airwallex

• Can become expensive at scale, depending on usage and features

• Less suited to businesses needing full-stack payments infrastructure

GoCardless

GoCardless focuses on bank debit payments for subscription and invoice-based businesses. It offers strong payment recovery tools and a lower churn risk compared to card-based methods.

Pros

• Low-cost direct debit payments with reduced failure rates

• Smart retry logic and predictive dunning tools

• Supports recurring payments in 30+ countries

Cons

• No support for card payments or digital wallets

• Limited global currency coverage compared to full-stack platforms

• Less suited for instant sign-up or trial-based flow

PayPal

PayPal provides a familiar and widely trusted payment method for both consumers and businesses. It provides recurring billing and subscription tools, but with more limitations than specialist SaaS providers.

Pros

• Easy setup and broad customer recognition

• Supports recurring billing and subscriptions

• No need for a merchant account to start

Cons

• High transaction fees, especially for international payments

• Limited control over branding and checkout experience

• Not built for complex SaaS pricing models or global scaling

How to choose the right payment processor for your SaaS business

The ideal payment partner should align with your pricing model, simplify complexity, and support your growth plans. Yes, features are important, but you also need to consider scale, global reach, and how well the platform aligns with your team’s workflow. Here are five areas to consider when comparing providers.

1. Business model

Think about how you charge customers. If you offer flat-rate subscriptions, usage-based billing, or a combination of both, your payment processor must support this flexibility. It should handle upgrades, downgrades, free trials, and mid-cycle changes without requiring additional administrative effort.

Best fit: Airwallex and Stripe both support usage-based billing and flexible recurring plans.

2. Pricing complexity and scale

Your billing logic will likely evolve as demand increases. You may want to run A/B tests on pricing, tailor quotes for enterprise customers, or support account-based discounts. The right processor will let you do all this without extra engineering effort.

Best fit: Chargebee is built for complex pricing models but relies on a separate payment processor.

3. Global reach

If you sell to customers in multiple countries, look for a processor that can accept local payment methods, display prices in local currencies, and settle funds without unnecessary conversions. This enhances the checkout experience and reduces foreign exchange costs.

Best fit: Airwallex offers over 160 local payment methods and allows you to settle like-for-like in 14 currencies.

4. Technical capacity

Your internal resources matter. Some platforms require deep developer involvement, while others offer plug-and-play options. Choose based on the skills and bandwidth of your team.

Best fit: Stripe gives full control to engineering teams. Airwallex offers strong APIs alongside easy integrations for finance and operations.

5. Churn prevention and reconciliation

Involuntary churn is a hidden leak in many SaaS businesses. Your processor should offer smart dunning tools, automatic retries, and integrations with your finance stack to simplify reconciliation.

Best fit: GoCardless helps reduce churn through direct debit. Airwallex combines retry logic with accounting integrations to support a fast month-end close.

Payments: from back-office function to growth lever

SaaS businesses thrive or fail based on their revenue engines. Every failed payment, delayed reconciliation, or poor checkout experience is a potential leak. Choosing the right payment processor gives you more than just stability. It gives you control, visibility, and a foundation for global growth.

With Airwallex, you can go further. You get the tools to automate billing, reduce churn, and support customers across currencies and countries. You also unlock a path to embedded finance, letting you issue cards, create accounts, collect payments, and build financial products directly into your platform.

That means faster launches. More ways to monetize. And a better experience for every customer you serve.

If you’re ready to turn payments into a growth lever, Airwallex is ready to help.

FAQs

What is SaaS payment processing?

SaaS payment processing is how software businesses collect and manage recurring payments. It covers everything from billing and invoicing to tax, FX, and reconciliation.

Why is recurring billing important?

Recurring billing keeps revenue predictable and customers engaged. It also reduces admin by automating charges, renewals, and reminders.

How does SaaS revenue recognition work?

Revenue recognition spreads income over the subscription period, rather than booking it all upfront. This helps ensure accurate reporting and compliance with accounting standards.

How do I reduce churn in SaaS billing?

Use smart dunning tools, automatic payment retries, and clear customer communication. Supporting local currencies and payment methods also improves retention.

Sources

1.  https://stripe.com/pricing

2.  http://stripe.com/payments/payment-methods

3. https://www.chargebee.com/subscription-management/

4.  https://gocardless.com/en-us/pricing/

5.  https://www.paypal.com/us/business/paypal-business-fees

6.  https://www.paypal.com/us/business/accept-payments/payment-methods