Paypal executive Rohan Mahadevan once said that the core value of Paypal’s service is risk management and Paypal is, at its core, a risk-management company.
This rings true because risk management is both the hidden challenge and the unsung hero of payments.
Payment providers generally take one of two approaches to risk management: mainstream and high-risk. Mainstream payment providers tend to have a rigid underwriting model and only work with merchants who fit that model. High-risk providers accept some of the merchants that mainstream providers reject, but assess significantly higher processing fees and tend to lag significantly behind in technology.
The industry has created a false dichotomy where anything that doesn’t fit into the mainstream profile gets dumped into high-risk. The reality is that many merchants who don’t quite fit the mainstream risk profile don’t actually have a high-risk profile, either… they just have a different risk profile.
This becomes problematic for vertically-focused SaaS platforms when the merchants in that vertical don’t fit the mainstream risk model. Mainstream payment providers don’t know how to underwrite these verticals, so the platforms suffer low merchant approval rates, which impedes payment adoption, limits payment revenue, and ultimately leads to merchant frustration and churn.
Rainforest’s risk model was developed specifically for vertically-focused SaaS platforms, and we work with each platform to make sure the risk model is aligned with the industry/vertical. This allows us to support underserved verticals, like logistics and trucking.
Even after merchants are approved, mainstream providers tend to mitigate risk with blunt tools like holding payment reserves or delaying payouts, which is disruptive to merchants.
In contrast, Rainforest collaborates with the SaaS platform to use more surgical risk-mitigation techniques. As part of our innovative approach, we develop a vertical-specific underwriting model for each platform and leverage custom data from each platform to improve transaction monitoring.
No other payment provider has created the end-to-end vertical-specific risk modeling that starts with merchant onboarding and continues to transaction monitoring.
There are a lot of payment providers offering “payments-as-a-service” for SaaS platforms.
Rainforest is the only one that was built from the ground up exclusively for vertical SaaS platforms. Every aspect of our technology, support, and operations was optimized for this.
