This guide provides a high-level summary of the software industry’s transition from standard monthly subscription pricing to transaction-based income models. By integrating embedded financial tools, technology leaders can monetise the actual volume of capital flowing through their systems rather than just charging a flat fee for software access. We will examine the economic structure of these programmes, how to calculate expected returns, and the strategic steps required to launch a profitable card offering.
Payment monetisation within a SaaS context is the strategy of generating direct income from user financial transactions. The core of this strategy is interchange revenue. Interchange revenue is the fee collected by the card issuer from the merchant acquiring bank during a transaction. When a software platform issues its own physical or virtual payment cards to its users, it acts as the card issuer. This structure allows the platform to claim a percentage of this fee for every completed purchase.
What is interchange revenue and how does it work?
Interchange revenue functions as the primary economic engine behind all modern card payment systems.
When a consumer or business makes a purchase using a card the merchant accepting that card must pay a processing fee to their acquiring bank. This fee covers the cost of moving the money securely through the global payment networks. The acquiring bank keeps a small portion of this fee. The rest of the money travels back through the network and is paid directly to the bank that originally issued the card to the buyer. This returning flow of money is the interchange revenue. The merchant pays the fee but the issuing bank collects the majority of the profit.
Q&A: Who pays the processing fees in a card transaction?
A merchant acquiring bank is the financial institution that processes credit and debit card payments on behalf of a business.
How issuing banks and software platforms split the revenue
Software platforms generally do not have banking licences so they partner with an issuing bank to create their card programmes. When the platform users spend money on these newly issued cards the issuing bank collects the interchange fee from the merchant. The bank then shares a portion of that collected fee with the software platform.
The exact division of this money depends on the revenue-sharing agreement negotiated between the two parties. A typical revenue split follows three distinct steps.
- The merchant pays a standard processing fee of around 2.5% on the total transaction amount.
- The issuing bank collects this interchange fee from the card network minus tiny network assessment costs.
- The issuing bank then passes a negotiated percentage, often between 60% and 80% of the total collected interchange, directly back to the SaaS platform.
Further Reading: The Complete Guide to Embedding Card Issuance in Your SaaS Platform
Why are software companies moving toward payment monetisation?
Payment monetisation is the process of building financial products into an existing software application to capture a fraction of every payment routed through the system.
Software companies are adopting payment monetisation to tie their revenue directly to the financial success and spending volume of their active users.
Charging a standard monthly subscription puts a strict ceiling on how much income a software provider can generate from a single user. If a customer pays fifty pounds a month they will only ever generate fifty pounds a month regardless of how heavily they use the platform. Transaction-based income removes this ceiling entirely. When a platform issues corporate cards to its users the revenue scales automatically with the user. If the user doubles their business spending next month the platform doubles its interchange revenue without needing to upsell a higher subscription tier. This model aligns the financial incentives of the software provider perfectly with the growth of the customer.
How embedded cards increase customer lifetime value
Customer lifetime value measures the total net profit a company expects to generate from a customer throughout their entire relationship. Issuing embedded cards increases this metric in three specific ways.
- The platform generates daily passive income from every card swipe creating a continuous stream of revenue on top of the base subscription.
- Users who rely on the platform to manage their actual corporate spending are highly unlikely to cancel their accounts keeping churn rates extremely low.
- The software becomes deeply integrated into the daily financial operations of the business making the platform a core operational requirement rather than an optional tool.
How to calculate potential revenue from an embedded card programme
The card networks set different processing rates depending on the type of card used for the transaction. Consumer debit and credit cards usually carry lower interchange rates. These rates are heavily regulated in many regions keeping the profit margins relatively thin. Commercial cards designed for business spending command much higher interchange rates. When a SaaS platform issues a commercial virtual card to a business user the fee charged to the merchant is higher. This means the resulting interchange revenue pool shared between the issuing bank and the software platform is substantially larger. Focusing a card programme exclusively on business spending yields the highest possible financial return.
Estimating monthly income based on user transaction volume
To forecast potential income accurately product managers must analyse the total payment volume their users currently process. This involves looking at existing data to see how much money users spend on supplier payments, employee expenses, or digital advertising.
Example calculation for SaaS payment monetisation
To calculate estimated annual interchange revenue use the following straightforward formula:
Total Annual Transaction Volume x Average Interchange Rate x Platform Revenue Share Percentage = Annual Net Revenue
Example scenario:
- Annual card volume: $10,000,000
- Commercial card interchange rate: 2.5%
- Platform revenue share: 70%
- Calculation: 10,000,000 x 0.025 x 0.70 = 175,000
Result: A platform routing $10,000,000 in user spending through its own cards generates $175,000 in pure net revenue per year.
Further Reading: How to Build an Embedded Card Program
What are the best practices for launching a monetised card programme?
Launching a monetised card programme successfully requires securing a strong banking partnership and creating compelling financial incentives for your users.
Choosing a provider with favourable revenue-sharing agreements
The technology provider you select acts as the bridge between your software and the global card networks. Finding the right partner dictates the long-term profitability of your embedded finance initiative. You must evaluate potential providers based on the percentage of interchange they are willing to share with your platform. Some providers offer a low initial setup cost but take a high percentage of the ongoing transaction fees. Others require more technical configuration upfront but allow you to keep the vast majority of the interchange revenue. Selecting a partner that scales gracefully with your volume is essential for maximising your profit margins.
Designing an attractive cash rebate structure for end users
Generating high transaction volume relies entirely on convincing your users to spend on your newly issued cards instead of their traditional bank cards. The most effective method for driving adoption is offering a direct cash rebate to the end user. Since the platform earns a percentage of every transaction you can pass a fraction of that profit back to the user as a reward. For example if the platform earns a 2% interchange fee it might offer a 1% cash rebate to the customer. This arrangement provides the user with a tangible financial benefit for using the software while still leaving a healthy profit margin for the platform.
| Business model metric | Standard SaaS subscription model | SaaS payment monetisation model |
| Primary income source | Flat monthly software access fees | Percentage fees on financial transactions |
| Scaling potential | Capped by the number of active users | Scales infinitely with user spending volume |
| Customer churn risk | High risk if users find cheaper tools | Low risk due to deep financial integration |
Wallester infrastructure for SaaS payment monetisation
Wallester is an Estonian-licensed financial institution and Visa Principal Member that provides card issuing infrastructure for companies operating in the European Economic Area and the United Kingdom. The platform allows software providers to launch branded Visa card programmes through a white-label model, including both physical and virtual cards. Integration takes place through a REST API that lets developers create cards, set spending rules, and manage payment activity directly inside a software product.
The platform includes BIN sponsorship, card production, and payment processing in one environment, so a software company does not need to negotiate separate agreements with banks and processors. Compliance procedures such as KYC and AML verification are handled inside the infrastructure, which lowers operational complexity for SaaS teams introducing financial functionality. White-label tools also make it possible to issue Visa cards under a platform’s own brand identity with full control over card design and user experience.
Developers issue cards, set limits, and monitor transactions through API endpoints and management tools, while the payment network connections and regulatory framework remain handled within the infrastructure. This structure allows SaaS companies to introduce card-based payment products and collect interchange revenue without building a financial institution internally.
