How vertical software companies can increase revenue with embedded banking features

Learn how SaaS startups have expanded their core product offering and added to their bottom lines through embedded financial services

Max Cutler
March 16, 2023

As SaaS builders for a specific niche, you know the workflows and processes of your industry like the back of your hand. Think about those spreadsheets that keep the whole business afloat, custom-designed processes that run day-to-day and carry out the dirty work... The very stuff you are hard at work optimizing and automating away.   

However, you don’t need to limit yourself to just workflow and process improvements. Adding banking features to your product mix, perhaps by partnering with an embedded finance provider, can be a great way to supercharge your revenue generating potential while delivering even more delightful customer experiences. 

At its most basic, embedding finance products increases revenue. Banking features help your customers make more money, which helps you do the same.

Read on to discover how embedded finance keeps the vertical SaaS flywheel spinning with financial products like payments and cards!


Transform your product offering with payments and cards  

Embedding payments is often the logical first step for developers of Software-as-a-Service (SaaS) solutions who target a specific market or industry, and who want to increase revenue generating opportunities.

Adding cards is another common way vertical SaaS companies like yours can bring finance features to market. A typical use case we see involves workflow solutions branching out by developing an expense management product with cards at its core. This can be particularly appealing for freelancers & creators who want to better organize and consolidate how they track and ultimately do their spending.  

For you, as a vertical workflow software company, developing a payments product is the sensical first foray into financial services. When we talk about workflow software, we are thinking of solutions that better optimize, organize, and facilitate business processes. 

Toast: a canonical example of the power of embedded payments 

Considered a pioneer amongst providers of industry-specific SaaS, Toast is a restaurant management software that incorporates financial services into its product suite. 

Toast saw an opportunity to significantly improve on existing point-of-sale (POS) solutions catering to the restaurant industry. The company developed an innovative hardware product, which hosted workflow software enabling restaurant workers to more efficiently handle orders, manage stock, and serve diners. The POS integrated with payment processing providers, of course, but Toast did not initially offer hosted payments. 

By becoming the vertically focused card processor for the restaurant industry, Toast had the perfect opportunity to meaningfully expand revenue generation while simultaneously improving customer experience. 

Toast’s payment product offers restaurants more advantages than simply the ability to accept card transactions. By bringing workflow software and payment processing under one roof, the company can generate insights from customer data that can be used to develop marketing campaigns. Furthermore, Toast handles fraud prevention and monitoring, ensuring the restaurant is compliant with regulations and protected from bad actors.

With payment processing, Toast makes additional revenue via shared interchange with card networks like Visa or American Express. 

Those companies reward Toast for facilitating transactions on their networks between restaurants and diners. The beauty of this business model lies with its inherent scalability: the more volume the restaurant does in sales, the more money Toast makes from interchange. Finally, offering payment processing for Toast allows them to further monetize existing customers of their PoS while also appealing to future users who may require a highly integrated solution. 

Toast is a textbook example of how companies developing software for the hospitality industry can add finance products to their product suite. It improves the user experience for existing customers while enhancing the overall attractiveness of the company for those not yet on board. While not all vertical SaaS providers will have such an obvious adjacent use case, developing a payments offering can be an excellent first step towards improving user experience and enhancing revenue generation.

Cards for the creator economy: a superb BaaS use case         

In a previous article, we described how offering cards can be a game changer for companies like Expensya, who are building expense management software. But folks like you who work at vertically-focused SaaS companies can also build exciting new products with cards. 

For companies developing workflow software targeted at freelancers and creators, in particular, we see a great opportunity to improve user experience while also unlocking new revenue streams via card issuing. 

It’s pretty clear that a freelance designer should not use a CRM system like Salesforce or HubSpot to manage their work. 

Companies like Passionfroot and Moojo have realized this and built tooling to help creators organize their businesses by giving greater visibility and control into their relationships and cash flow. 

With great software that simplifies admin for the self-employed, taking the next step and implementing banking features is a sure-fire way to generate more revenue and improve the customer’s experience.   

By offering the end user business expense cards fully integrated with the admin tool, we can help you bring this vision one step closer to reality. And you will increase your own revenue, via shared interchange (once again 😉).   

Cards for dedicated expense management are not just relevant for software companies serving freelancers & creators! We see issuing cards as an excellent source of additional revenue and an enhanced user experience for many companies developing workflow software focused on a specific vertical. 

And you don’t have to stop with cards! There is a whole ecosystem of banking features your customers will love and pay you for.


Embedding banking features is fast and easy with Swan 

For vertical SaaS companies, adding banking features and other financial services can be transformational for the overall business. Opportunities to generate revenue from selling workflow software on its own are limited, even in large verticals. Embedded finance providers like Swan can work with you to add new product lines, such as payments or cards, without having to spend tons of time building it yourself or reducing your margin by partnering with a full-service provider. 

Embedding finance with Swan is fast and easy. With our rock solid regulatory model, best in class APIs, and industry knowledge, we are able to provide the resources and expertise you need to put together a finance product that will delight customers, both new and existing. 

As a focused SaaS provider, don’t let yourself get stuck as only a workflow management solution. Build finance features your users will love and pay you for. Come talk to us!  

Max Cutler
March 16, 2023
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