Merchant migrations can be a significant barrier for SaaS companies changing payment providers — especially if there’s concern about merchant pushback or churn.
Wouldn’t it be great if we could get advice from someone who has led dozens of successful migrations impacting many thousands of merchants?
This person is Becky Kopplin (VP of Payments at Rainforest). In this episode of the Payments Strategy Show, she sits down with host Joshua Silver to share her battle-tested merchant migration playbook.
They covered:
- How Ministry Brands evaluated acquisition targets based on payments, and what drove up (or tanked) valuation
- The hidden cultural gap between “integrated” and “embedded” payments that stalls adoption
- How to reduce migration risk and improve outcomes with merchant segmentation and a test-measure-learn approach
- Why lowering your processing rate won’t win over merchants… but better product value will
- Real-world strategies for reducing support volume, increasing attach rate, and making payments a strategic differentiator
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Joshua Silver: Welcome to another episode of the Payment Strategy Show. I’m Joshua Silver, founder and CEO of Rainforest. Rainforest helps software platforms embed payment processing so they can make money and increase customer retention. I’m here today with VP of payments, Becky Copeland. Before Rainforest, Becky led payments at vertical SaaS companies and advised many different SaaS companies as a payment strategy consultant. Welcome to the show, Becky.
Becky Kopplin: Thank you. Happy to be here.
Joshua Silver: So to get started, tell us a little bit about your background. How did you first get into payments?
Becky Kopplin: So I have this theory and I’m pretty sure it holds up and if anyone’s listening and disagrees, I’m interested to hear, but I don’t think anyone gets into payments on purpose. And I also think once you’re here, you can’t leave. So this is my theory and I talked to lots of folks to see if I can prove this out and so far I’m on track for that. But in the same way, I did not get into payments on purpose. Early 2000s, I started working for a wholesale ISO before I knew what any of those letters meant and learned payments just from the inside out. And at the ISO, what we did was, you know, a lot of the direct merchant sales as a wholesale ISO, that meant we also took risk. But what we did uniquely then was payfac before payfac was a thing. And what that meant was we actually consolidated funds and ran those through an FBO. And so card funds, Amex funds, and ACH funds came in and we provided a consolidated deposit and that was one of our unique offerings to the market, which is now basically a payment facilitator, but that’s what we were doing back in the early 2000s.
Joshua Silver: Very good. Well, let’s do a deep dive on your experience at Ministry Brands, because that, I think, is especially relevant to SaaS leaders who think about getting acquired at some point. So at Ministry Brands, you were on the acquiring side. You were going and buying up other companies. What did you look at when performing due diligence for the acquisition? What factors really drove the valuation or even the decision to acquire them or not?
Becky Kopplin: Sure. And for those not familiar with the ministry brand story, basically what we were looking to do was consolidate a very fractured market, which was church technology. And so this covered the gamut of technology to churches and nonprofits, I think, website development and presentation software and accounting. But more importantly to this conversation is online giving or giving processing. And so there was a lot of different small providers in the market and we were looking to consolidate that to really drive innovation for nonprofits in the space. So did an awful lot of acquiring and brought a lot of folks into the ministry brands fold, hence the name brands, right, referencing all of the different brands that operated under that banner. But from my perspective, overseeing giving and payments, really what we wanted to do was ultimately understood, could we consolidate the backend and really drive economies of scale? And so what we dove into was the payment experience and the payment contract. So what did the merchant, in this case churches and ministries and nonprofits, what was their experience with the payments interaction? And then what was the giver’s experience with the payment interaction? And then what did that vendor stack look like and what the relationship was to all of those parties?
Where this starts to become really important is when you think about the high level merchant or processing models, you’ve got all the way from a referral model. This referral model, which was really common back in the day for software platforms was, I’ll take this merchant. I’m going to throw it over the fence at the payment processor, right? They’re going to sell it and close it and paper it and give me a mid as the software provider. And then I’m going to do the same thing with the transaction, which is throw it over the fence and the processor is going to do statement and support and that’s kind of old school referral model.
Good integrated model, which is that with a little deeper connections, maybe remove some of those exposed stops.
And then all the way today, which is what we see more and more common, which is embedded, which is the payment processor, the provider is entirely behind the scenes. The reason I dive into that is because that matters a ton when I’m going to look at optimizing that payment opportunity, which is really what we were looking at when we were evaluating these software platforms.
So what we ideally wanted to see, perfect scenario, was the merchant did not see the payment processor and had no direct relationship with them. The cardholder experience was direct and fully with the merchant or believed it to be so, so they weren’t aware of any of the vendors. We wanted to see contracts without gotchas. So no exclusivity, no non-solicits, no incredibly high minimums, and we wanted to see scenarios where platforms owned their data. Specifically card data at the time.
We didn’t even contemplate the idea of owning merchant data back then, which is something we talk a lot about now. But back then that wasn’t even on the table, although I would definitely put it on the list now. But effectively, all of these factors would put together a value of it. The more that was owned, the experience, the contract, the data, the higher value we would place on it, and the less was owned, the opposite would then be true.
Joshua Silver: So basically, I think to summarize, you were looking for scenarios where you could come in, swap out the underlying payments infrastructure without it being too impactful and disruptive to the merchant. And for the cardholder, they probably wouldn’t even know the difference.
Becky Kopplin: Exactly. That’s exactly right.
Joshua Silver: And so that, I think, that’s a huge, huge point. You know, when you can do that swap out without it being a big project, obviously that’s going to increase your ability to migrate, right? It’s going to increase your adoption rate. you know, to that end, Becky, once a SaaS company was acquired by ministry brands, what steps would you take to optimize payments and what did that process actually look like?
Becky Kopplin: Yeah, we would go down one of two paths, referring back to this other relationship. If we could do a migration, we would do as close to a lift and shift as we could. So we would pick up these merchant accounts and move them to our preferred provider where we had these economies of scale type of volume based contract. So we could instantly recognize some cost savings in those scenarios, which again, is part of what drove that higher valuation.
But if they couldn’t be moved, right, we would do a different set of things. And really what we’re looking for is a handful of indicators in those scenarios. We’re looking for ways to optimize interchange. So for folks that may not know what interchange is, interchange is what is assessed, essentially determined by the card brands, assessed to the acquiring sides of the merchant and paid to the issuer, the cost of doing business. A lot of categories there, but a lot of opportunities to optimize. So we’re looking at good MCC assignment, good data as a part of the transaction. We’re looking for timing. Kind of back then, timing was really important. You the gap between authorization and settlement. We’re looking for a lot of that. And then what we were also looking for was approval rates. So in that scenario, recurring transactions were a big part of what we did. So keeping those transactions running and those recurring running was top of mind. So diving into approvals and card account updater and other opportunities to keep those dollars running. So those are some of the things that we would do to think about optimizing payments.
Joshua Silver: And what, as a follow up to that, what did you find was the most painful of all those different steps? Where did you run into the most challenges typically?
Becky Kopplin: Back then, card account updater was actually really difficult. You’d have to have a separate provider and often cases like it was very expensive. It was difficult to implement and as silly as that sounds now because it comes out of the box in so many places, it was really difficult. Oftentimes, the MCC assignment was one of the easier ones we do. We’re optimized or not. But in some cases, we had processors argue with us about what the appropriate MCC would be even and that became an uphill battle. So for each one, it was a little different, but oftentimes Card Account Updater was kind one of the more challenging ones.
Joshua Silver: Got it. I think you’ve probably migrated more MIDs than almost anybody else in the industry. I think you also have the record for the only person who has ever said that migrations are my favorite. Since most people tend to shy away from them, you really lean in. How do you approach a migration to make it less daunting?
Becky Kopplin: Yeah, I think it’s really important to start with the premise that we learned along the way, which is the mantra to say or the key statement is merchants don’t really have brand preference when it comes to processors they work with. And they may not be thrilled that you’re changing a flow.
But nobody is like, absolutely love XYZ processor because they’re my favorite. There is a tolerance for that style of vendors, but very rarely is their brand preference. And so what we found to be true is if you offer somebody a similar product at a similar price with a similar experience, folks don’t really care.
They may not love moving or the act of moving, but I think people get stuck in their heads that merchants care a lot about where they process and the fact is they just don’t. And so when you start with that premise, you realize what this is now is a who moved my cheese exercise versus like convincing people that what you’re offering them is now better. Parity is now the requirement versus I need to upsell people to a very exciting thing that’s happening because they generally just kind of don’t care. And then after that, it’s a lot about, there’s so many places to go. I think one of the more important things that helps make this easier is segmentation. What also feels very daunting about migrations, especially if you have a lot of them, is you think about in your mind,
I’m going to send out an email to thousands and thousands of my merchants, and I’m going to tell them all to fill out this form and move. And you’re imagining this wave of calls or of merchants that are really unhappy about this thing you just did. But the reality is when you, there’s two things that segmentation gives you. One is it gives you the ability to do a test measure learn exercise.
So start with 10 clients and see how they feel about your messaging and your process. Refine, answer new questions that you didn’t think of. Expand that to 50 customers. I’ve learned more now. I’ve gotten better at it. I’ve adopted my messaging. And so what I’ve done is by the time I send out an email to thousands and thousands, I’ve really done a good job learning and listening. I think the second thing it lets you do is it lets you customize your message and your process to people based on where they’re at.
Smallest clients with the least complex integration might get a certain message. My largest clients using my most complex products might get a different experience and maybe the largest ones are getting a handheld, somebody on site with a phone call, executive presence. But now what you’ve done is you’ve been very thoughtful about these segments of merchants where they’re at. Those two things by themselves remove a lot of the fear around this migration process which feels very scary to a lot of people.
Joshua Silver: Yeah, that’s, that’s interesting. You know, you talk about this test measure to learn, you know, outside of the messaging, what are some of the things you’ve seen over the years that are some of the surprising learnings?
Becky Kopplin: Yeah, so the way you contact them is funny. So a lot of people think email is the only way to go when in fact oftentimes a web call campaign ends up being wildly successful. And most people think that that’s out of range, but you try it and you realize it’s just faster in some cases and easier. That one was really surprising.
We almost always end up with one what we call hand-to-hand combat, the segment of customers. And that’s where you kind of, you’ve got a CS, you’ve got an executive, you’ve got, you know, a lot of folks on there hand holding each one. The fact that you have to do that, I think was surprising to a lot of folks. But oftentimes it really comes more down to process in that the process of when do you ask them for their data? When do they provide it? When do you switch over their tokens, right? Like kind of this thing. That’s oftentimes what you’re learning the most about is these little moving parts along the way.
I guess one more thing that I wouldn’t call test measure learn, but we learned a long time ago and other folks still learn the hard way, which is most people approach these as an upsell or opt-in, right? Hey, pretty please take this really cool payment process if you want to, right? And you put this position of power onto the merchant to go, it’s not good enough for me to want to uproot my life.
And the reality is if you start with a posture of we’re upgrading our payment process and it’s going to be a really smooth process for you and complete it by X to avoid disruption of processing or something along those lines, and you treat it like an upgrade, a you’re welcome messaging, you end up in a much different place at the end of these migrations.
Joshua Silver: Yeah. Yeah, so what does that look like?
Becky Kopplin: I think when you think about that from a you’re welcome posture, what you’re doing is you’re letting them know that you’ve upgraded their experience and you’re presenting them with an opportunity to participate, right, in this upgrade that you’ve now offered. And so that looks like an invitation to participate now instead of a choice on whether they believe this is better than what they have today.
And so that looks a lot like talking about the benefits, but not attempting to sell them on the benefits.
This is a better experience for you and we’re upgrading this product. We’ve heard you. We’ve heard that you’d like a better experience here and we’ve listened to you and we’ve delivered on that.
And it really is a much more of a posture of we’ve done exactly what you asked for and you’re welcome.
Again, it’s the language. Obviously that doesn’t necessarily make it in, this invitation to participate in an upgrade versus a often if you feel like it which is oftentimes the way a lot of these read.
Joshua Silver: Yeah, those are some really good tips. If we look at times when things didn’t go as well, what are some of the most common obstacles or challenges that come up during the migrations? For times when they were really successful, what do those SaaS companies do to work through them?
Becky Kopplin: I think one of the things that is the most impactful obstacle or challenge is when the company is not fully committed to the migration, when internal people are kind of, everyone’s probably gonna turn and so I’m gonna go through the motions until I’m proved right and then I’m gonna not participate anymore. Because what you don’t have is full commitment to this as being successful.
And I think I referenced, you know, back that in the daunting idea in that when the whole company’s bought into the idea that, right, merchants don’t really have a preference and this is an operational challenge versus I’m going to sell them on a new product. I think that solves a lot of this, but almost all of the challenges that I’ve run into can oftentimes we come back to your people aren’t really fully bought in to the migration internally, like the employees.
Joshua Silver: So it sounds like it’s almost a cultural, something cultural to overcome and how you’re working with your team on it, versus some external factor.
Becky Kopplin: I think that’s right. And I think the cultural difference between integrated and embedded is one of the more difficult things for folks to overcome because they’re so similar, but there’s such key differences, right? And where you start to feel this is when I’m integrated, I say, hey merchant, go sign up with XYZ processor. And I reference my external processor and I treat it as a separate decision in a separate module.
Right? And what folks like about that is they can point at the processor when they don’t like things or whatever that is. So it makes them feel a little more comfortable.
It actually doesn’t make the merchant happy because what the merchant wants is their problem solved. They don’t want it to just not be your problem to solve. And so what you actually find is just happier merchants on an embedded solution. But until you see that and until you’re bought into that, that’s difficult. But really spending the time to make sure that your internal folks recognize what a better experience this is for merchants holistically. Like there’s no finger pointing, there’s one phone call to make, payments are always in context. This is such a better experience. Support calls go down, right? When your folks internally recognize what a win-win-win this is across the board, then they’re in and they find solutions. When they still want to point merchants over to other processors, what they find is problems and challenges and you see that reflected culturally.
Joshua Silver: Absolutely. Let’s fast forward to your experience as a consultant. You worked with a lot of different SaaS companies. What are the biggest mistakes that you typically see SaaS companies make with payments? And what are some of the best practices that they should be following instead?
Becky Kopplin: Yeah, one of the ones that you kind of, know, almost physical reaction to is getting my hands on their contracts and realize they’ve signed a very terrible contract. And those are a gut punch of I, you’ve done yourself a disservice here, right? And that looks a lot of different ways. I’m sure you’ve seen a lot of these, too, right? Like, fully exclusive, know, massive minimums. They don’t own their data. They don’t own their merchants. There’s non-solicits. They don’t have their revenue stream. They are powerless to control their destiny. And anytime any of that’s there, that’s the thing that I point out the most is the worst thing that you can do in signing a payments contract is give your future away to your processor, which is what you do.
In all of those scenarios. There’s so many others, but that’s the one where it’s like, it’s hard to fix this one. It can be done, absolutely can be done, and there’s a lot of ways to undo that. But control your destiny. Own your data. These are your merchants. This is your revenue. If I could billboard that somewhere, I would. But all SaaS leaders shouldn’t own their payments data.
Joshua Silver: Right. Could not agree more. I myself have had to help clean up a lot of really sticky situations where oftentimes it may even be a CEO or leadership team now that wasn’t there when the original payments contract was signed and it was years ago and they’re just living with the repercussions and ramifications later. So that can certainly be a pretty tough situation.
Well, as we start to get towards the end of the interview here, you’ve been in payments a long time. If you could give SaaS leaders just one piece of advice for making their payments offering massive, profitable, successful, what would it be?
Becky Kopplin: Yeah, think, yeah, that’s difficult because I think I could probably talk on that for an hour. If I could sum it up, I would say payments needs to be core to your product value and not an add on. And I would unpack that a little bit more. think as long as you’re seeing payments as an optional module that people opt into, you’ve missed an opportunity.
And not just on adoption, well, oftentimes it’s what we’re focused on is how do we drive revenue and how do we drive adoption? And I think that’s important, but oftentimes the answer is fundamental to that in that what you really want is a better holistic product and payments does that. It’s not just this silo of revenue over here that we can optimize, although obviously you can, but the tighter that integration, like, if your product doesn’t feel complete until payments are running through it, I think you’ve hit that.
And I think you feel that in a couple of ways. Your salespeople don’t have to sell payments separately because the product again feels incomplete, right? I can’t get a full end-to-end picture of my customers, my business as a merchant on your system until I can see that end-to-end. So you see that in sales, you see that in marketing.
You see that in adoption, right? You see a touch rate go from 30, 40%, whatever it is today to 80, 90%, which is where it should be. I think you remove friction points. So it’s not a decision to add payments. It’s a requirement again, to hit on that again. So what that looks like is changing the signup process. I think that product integration and that embedded payment value is what that is.
And I’ve seen people try to figure this out in so many other ways and get it wrong. And so one of the things that people always go to is the way we make payments successful is we drop price. Because I’m going to move them away from their current processor with price. And I cannot tell you how poorly I’ve seen this work.
So the example I’ve used in all the times I work with a platform is convinced this was the case and they rolled out a 1% processing fee, which if you’re not familiar with payments is significantly under cost. And they were willing to basically write a check because they thought what that would do is everybody would raise their hand and come rushing over for this 1% processing fee and nobody bit because it’s not motivating to people to do that. And it’s not sustainable, so it was obviously a teaser rate on top of that. But you get into sustainable savings, right? You’re talking what? I can save you 10, 20 basis points.
Like at a portfolio level, that’s a huge number, but at a merchant level, that’s not interesting, right? What is interesting? Save them time, help them grow their revenue, right? You know, better reconciliation reporting, save them time with support. Like that’s interesting, like the 20 basis points, but so often people are like, price is the answer. And I just have never seen that work. It’s product value. So you asked for one piece of advice. I talked for way too long, but to summarize, product value, payments needs to be a core part of your product offering.
Joshua Silver: Yes, super, super good wisdom. They’re making payments part of the core. I mean, today we even see a lot of startups that start a SaaS company specifically for the payments revenue. So they’ve really taken that to the extreme. They’re saying the SaaS is really just a means to an end, if you will, to get that payment volume. So I think that message is starting to get out there.
Becky Kopplin: I love it.
Joshua Silver: Well, that does it for us today, but thank you so much for joining us, Becky. It’s been great having you on the show.
Becky Kopplin: Yeah, it’s been great being here. Thank you.
