Many platforms approach payments the same way in the beginning. They view it as a feature, ship the integration, and never think about it again. Unfortunately, that usually ends up costing them a lot.
For platforms wishing to fully capture the revenue they get from processing payments for their customers, two things have to work. First, they need a good deal with their processor.
Second, enough of their customers have to actually process through them in order to create significant volume that can be monetized.
That second piece is called attach rate.
What is attach rate, and what does low attach cost you?
Attach rate is the percentage of your software customers who actually process payments through you. If you have 1,000 customers and only 250 process through your payments offering, your attach rate is 25%.
Most platforms average even lower, around 20%, meaning that 4 out of 5 customers use a third party to process their payments. However, best in class attach rate is considered anything over 70%.
The gap between average and best-in-class often represents significant amounts of money and opportunity.
Raising attach rate from 20% to 70% multiplies payments revenues by 3.5x.
Moreover, the more customers processing payments through your platform, the sticker your solution is and the lower your churn rate as well.
What does a high attach rate unlock?
When more of your customers process through your platform, payments stops sitting as a feature and starts showing up as revenue you can forecast and defend.
It isn’t uncommon to double company revenue once payments is fully monetized with a good processor deal and high attach rate.
For most platforms, that revenue increase is game-changing. It allows them to reinvest in their product, hire more freely, and accelerate their roadmap without needing software-only growth to do all the work.
This adds an entirely new layer of freedom to a platform’s business and allows them to explore new opportunities and fully take advantage of existing ones, all thanks to monetizing an aspect of their business they’d already built.
How Forward helps
You already own a payments business. Get paid for it.
Forward runs a white-labeled service that calls your customers and helps them switch onto your payments offering, so attach goes up without effort from your team. You keep more of the economics from the volume they already process through the product.
To understand exactly how much a higher attach rate might be worth to your business, try our payments calculator. Three numbers: how many customers you have, how many process through you, and what percent you keep.
