38 Pros & Cons Of Starting A Payment App (2024)

Flexibility

You can put as much time into the business as you'd like. If you like the work and have some initial experience, you can start small and manage all aspects of the business on your own.

Meaningful business connections

You never know who you will meet as a payment app. This could be the start of an incredible business opportunity!

High customer retention rates

Once a customer invests in your product, they've invested their time and energy to utilize your product/service which is highly valuable to them. Typically, your product or service becomes indispensable to your customer.

Gain exposure and experience

This career allows you to gain experience working for multiple different businesses - which will benefit your resume and also keep things interesting for you!

Unlimited income potential

With starting a payment app there is no cap as to how much income you can make. The stronger your business skills and the more energy/time you put into your career, the more you'll make.

Amazing perks and discounts

Working in the payment app comes with its perks! As a seller for these products/services, you typically also get to enjoy industry perks and discounts.

Predictable income stream

Your businesses income stream tends to be predictable based on the number of customers you have signed up. This makes financial planning and outlooks much more seamless!

More convenient user experience using an app

The smartphone market is continually growing, and many consumers prefer to use an app over a website. Bonus points if your app is accessible to users without WiFi!

You can generate revenue through your app!

Although it can be pricey to develop an app, there are various different ways to generate revenue. You can make it so that customers pay a small fee to download your app and you can generate revenue through ads + sponsors.

App store allows you to reach a wide audience

If your app is listed in the app store, you are easily accessible to users that frequently visit the app store. App store listings also show as separate entries on Google’s search rankings, which allows for more users to see your business!

Greater Income Potential

With this business, the sky is the limit in regards to your income potential.

You get to do something you truly love

With starting a payment app, you get to put your energy into something you are truly passionate about! You'll find yourself devoting as much time and energy as possible into the business to make it successful.

Strong Demand & Relatively Recession Proof

The demand for payment app is increasing year over year and the business is known to be relatively recession proof.

You get to inspire others

Your business is one that encourages and inspires others, which in itself, can be very fulfilling.

You establish yourself as an expert

With starting a payment app, you establish yourself as an expert in your niche, which builds your credibility. In return, customers are more likely to trust you and refer you to other friends and family.

Can build solid foundation of clients

It's unlikely you will have one-off customers as a payment app. Typically, you have a solid foundation of clients that use your product and services regularly.

Make money while you sleep

The advantage of starting a payment app is that you have the ability to have passive income and make money while you sleep. This is the dream for many entrepreneurs.

Low maintenance customers

In this industry, customers are known to be very appreciative and low maintenance. This can help with your stress levels and allow you to focus on growing your business.

Results and revenue happen quickly!

Unlike other businesses, it can be relatively quick to start seeing results and revenue. As long as you follow all the steps to validate your idea before launch, you are likely to see quick results and ROI.

Security Issues

With any Saas business, data loss and security issues may arise throughout your process of building your product. It's critical that you understand exactly what you're responsible for and how to avoid potential issues down the road.

Low margins

The gross margins for your payment app are typically around 37%, which can make it more challenging to incur new expenses and maintain profitability.

High employee turnover

In the payment app, employee turnover is often high, which can be quite costly and time consuming for your business. It's important to try and avoid this as much as possible by offering competitive pay, benefits, and a positive work environment.

Taxes

As a payment app, you typically pay self-employment taxes which can be quite high. It's important to understand what you will be paying in taxes each year so you can determine if the work you're taking on is worth it.

High overhead expenses

With starting a payment app, there are overhead expenses that come with selling a physical product. You will want to make sure you strategically budget for these overhead costs. We discuss this more in the startup costs section below.

You may need to charge sales tax

If you are selling your products in various states, you may be required to charge sales tax. Although this may not impact your financials specifically, it can be a headache to create a process and procedure for this. To learn more about sales tax, check out this article

Churn

In this business, customers can cancel their membership or subscription for your services - which can make revenue forecasting challenging and unpredictable. It's important to focus on your churn rates and trends so that you can prevent this as much as possible.

Time commitment

With starting a payment app, all responsibilities and decisions are in your hands. Although this is not necessarily a negative thing, work life can take over at times. This can place a strain on friends and family and add to the pressure of launching a new business.

Difficult to build trust with your customer

With starting a payment app, there can be minimal face-to-face interaction, which means it can be a lot more difficult to establish trust with your customers. You'll need to go the extra mile with your customer to grab their attention and business.

Strict regulations

With any payment app, there are strict rules and regulations as it relates to processing your product. You must follow these regulations specifically, or significant legal issues could occur.

Complex development process.

The development process for a payment app can be quite complex, which may cause delays and challenges when launching and growing your product.

Profit-sharing with the app store

If you are using your app to drive revenue, either through paid downloads or through purchases of your services through the app, then be aware that app stores get a substantial cut (around 30%) of revenue on top of sales tax!

Complex maintenance

Your payment app will require a long-term investment due to the need for updates, bug fixes, and security vulnerabilities. It's important that you (or someone on your team) stays on top of this at all times.

Impatient customers

You may offer an engaging user experience for your customer, but customers expect a lot and may be impatient if they aren't pleased with your product or service.

More of a challenge to run your business from home!

Running your business from the comfort of your own home is a big appeal for many entrepreneurs. With a payment app, you are more likely to run your business out of your office or storefront space.

Difficult to scale

With a payment app, it can be challenging to find ways to scale. Check out this article that discusses scaling your business and the challenges that come with it.

Learning Curve

When you start your own business, you no longer have upper management to provide you with a playbook for your roles and responsibilities. You should know the ins and outs of every aspect of your business, as every decision will come down to you.

Equipment Breakdowns

Over the years, your equipment can get damaged, break down, and may need repairs which can be expensive. It's important you prepare for these expenses and try to avoid damages/wear & tear as much as possible.

Technical issues can be frustrating

Technical issues are common in this business. If you struggle with the technical side of things, you may want to consider outsourcing this responsibility to save yourself the time and frustration.