Episode 79: The Payments Maturity Cycle with Nick Fredrick and Danny Omiliak of Rebar Technology

This week we have a special episode of Subscriptions Scaled, where we discuss planning for payments maturity as you scale. The episode is hosted by the founder of Content Allies Jake Jorgovan who’s joined by our usual host Nick Fredrick and Danny Omiliak of Rebar Technology. 

In the episode, we discuss the problems that often occur with subscription payments, how you should mature with payments, and how common payment issues can be solved with Rebar Technology’s SBS Express subscription billing system.

Keep reading to learn more about the episode.

Nick Fredrick and Danny Omiliak

Rebar Technology combines the best off-the-shelf and custom solutions to provide effective subscription billing platforms for businesses.

Nick Fredrick is the president and CEO of Rebar Technology and the usual host of Subscriptions Scaled. Nick is involved in many areas in Rebar Technology, from product development to business development to marketing and product delivery. Putting it simply, Nick is pretty involved in the company.

Daniel is a senior growth strategist with Rebar Technology. Daniel helps support marketing, sales, and business development activities. 

He joined Rebar Technology after spending around five years doing payment consulting for Fortune 100 and 500 companies. Daniel helped these companies improve their payment strategy, architecture, and operations.

A payments maturity cycle

Small and medium-sized businesses often start with a high-cost yet easy-to-implement payments vendor known as a PayFac (payment facilitator) to get up and running quickly. 

This is because small businesses often need to obtain revenue as quickly as possible, so they often spend more. However, this is normal for companies starting with payment processing.

As merchants grow and their transaction volume increases, they tend to outgrow the PayFac model. As businesses scale and increase their number of transactions, they can negotiate better payment processing rates if they move to a direct-to-acquire approach.

This is where the payments maturity cycle comes in. Typically we see smaller and medium-sized businesses starting with the PayFac model. Then they may grow in their transaction volume and switch to a direct-to-acquire approach.

The problems with payments

Problems that often occur with PayFac systems include higher costs as payments are sometimes integrated with other services like storefronts. Or, in some cases, web developers may choose a payments vendor on the company’s behalf based on what’s easiest to implement, such as Stripe. 

Popular PayFacs like Stripe and Shopify payments market low-cost payment processing but add costs in other ways. For example, there’s an upcharge for businesses who want access to their data and want to accept additional payment methods.

Businesses with a subscription or recurring business model are also often charged more and may need to pay for an extra plug-in or vendor to bill on a recurring basis. 

Regarding support, many PayFac companies only provide developer resources online and expect businesses to work out implementation alone. This can be challenging and expensive for companies without dedicated developers. If additional support is required, such as hiring a consultant or a new employee, this will come at a steep cost.

How you should mature payments

As businesses scale and grow, the PayFac model doesn’t adjust the cost of the payment processing to the volume presented by a merchant. This results in extremely high fees that the merchant often overlooks. 

Most PayFacs hope businesses don’t consider other payment options, even when they’ve outgrown the model. This typically works in their favor because when companies are scaling, they aren’t usually worrying about the payment fees.

Larger businesses can obtain a merchant account directly from an acquiring bank, known as a direct-to-acquirer approach. This is usually a cheaper way for subscription businesses to accept payments.

Many major merchants with subscription models look to ensure payment capture and revenue recognition with techniques including retries, dunning, and account updater services.

Enterprise merchants may even consider routing to multiple payment vendors to guarantee the availability of payment systems. These businesses should ensure that payment contracts don’t include exclusivity clauses to avoid vendor lock and so they can negotiate better payment processing rates.

Typically, the best thing for merchants to do once they’ve scaled is to reach out to their existing payment vendor to determine if they’ll support them moving to a direct-to-acquire approach. Or businesses can evaluate a new solution like the SBS Express to support that capability, which we’ll discuss next. 

The Rebar SBS Express

Introducing the Rebar SBS Express, which helps businesses navigate the payments world. The billing system is designed for smaller to medium-sized companies requiring subscription pricing support but which also need a payment gateway with a merchant account.

The Rebar SBS Express is straightforward, easy to use, and offers lower payment costs than other PayFacs. There are no add-ons, hidden payment terms, or complicated fine print to keep an eye out for. The pricing of the billing system is clear, straightforward, and cheaper than the competition.

The Rebar SBS Express also offers a graduation strategy with a team of cost-of-acceptance experts. These experts help businesses determine the right time to move on from the PayFac model into Rebar’s enterprise SBS platform for even better cost savings.

Rebar specializes in subscriptions, so businesses will work with a payments vendor that knows their stuff. Companies will receive enhanced support from Rebar, who’ll help them every step of the way in the world of payments, whether they’re a small to medium business or an enterprise account.

The Rebar SBS Express solution is ideal for new small to medium businesses who need a subscription billing solution. It also works well for merchants seeking advice on subscription best practices from industry experts and those who don’t want to deal with compliance related to accepting payments.

Likewise, the Rebar SBS Express system is ideal for businesses that want the opportunity to grow out of the PayFac model without the hassle of switching vendors, and those that don’t want their data shared.

For enterprise accounts, the enterprise-grade platform offers security, scalability, and reliability benefits. 

Learn more about the SBS Express system here.

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