The digital nature of SaaS creates a distinct risk profile that traditional financial institutions struggle to accommodate, leading to significant operational headaches for software companies.

Since SaaS relies on ongoing service after payment, banks view this as a “future delivery risk,” meaning there is a chance the service could stop while customers have already paid. To manage this risk, processors often impose strict terms on SaaS companies.

The lack of physical product delivery is another reason that makes disputes and chargebacks more common in SaaS. While a typical retail business might see chargeback rates around 0.2 percent, SaaS companies often face rates closer to 0.8 to 1.2 percent. That difference adds up quickly. Each chargeback means lost revenue, added fee, and a hit to your standing with payment providers.

Pricing structures can also complicate things. Many SaaS platforms offer freemium plans, usage-based billing or tiered subscriptions. These models are great for growth, but they often lead to more failed payments if the processor isn’t set up to manage them properly.

Common issues SaaS companies face:

• Revenue reserves: 10-20% held for six months or more due to subscription risks.

• Gateway timeouts: Failures during peak signups and promotions.

• Misclassification: Higher fees by 0.5% to 1.5%.

• Retry policies: Cause more payment declines and lost customers.

• Limited analytics: Lack of subscription-specific data for planning.