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Software as a service (SaaS) businesses have grown rapidly over the past few years and continue to accelerate. The increasing demand for software has contributed to the establishment of all kinds of online businesses. If you are planning to join this market, you need to know the key compliance requirements, such as a SaaS privacy policy.

As long as your SaaS company is collecting information for account services or subscription, you will likely need a privacy policy to be compliant with online privacy laws in your country.

In this article, we’ll take a closer look at why exactly you need to get the privacy policy for your SaaS business, the specific laws you need to abide by and what the privacy policy should include.


Why SaaS Businesses Need a Privacy Policy

Online privacy has become a problem because almost every online service requires users to share some information about themselves. Because of this, governments across the world have introduced strict data protection regulations to control the collection, sale and usage of user data. One of the legal requirements for SaaS companies is a privacy policy.

To ensure that consumer personal data is processed transparently, there are specific types of regulation for businesses operating around the world.

General Data Protection Regulation (GDPR)

The European Union enacted General Data Protection Regulation (GDPR) is considered the most stringent and protective privacy regulation globally to date. Since coming into effect in May 2018, it has revolutionized personal data protection and digital privacy.

This regulatory framework enhances the individual rights of European Union citizens and provides clarification on what organizations like the ones in the SaaS industry should do to safeguard these rights. Each company, no matter the location, has to comply with GDPR as long as they process data for EU residents.

California Online Privacy Protection Act (CalOPPA)

The California Online Privacy Protection Act (CalOPPA) was one of the earliest privacy laws passed in the United States. This law requires every individual or group to have a privacy policy on their website if they are processing California residents’ personal data.

Australian Privacy Act

Introduced in 1998, the Australian Privacy Act is meant to protect and promote the privacy of consumers and regulate how organizations handle personal data. Their law requires every business that deals in personal data to have a privacy policy.

United Kingdom Information Commissioner’s Office

Consumers are also protected by the UK Information Commissioner’s Office regulations. This privacy law applies to all businesses that collect user information like SaaS websites.

What Does a Privacy Policy Need to Include?

SaaS businesses need to collect some user information such as email and payment details in order to set up subscription or account plans. In addition, they might get more personal information such as personal preferences and location to improve on the customer experience.

Because of this access to data, the SaaS privacy policy should cover all these elements and more. It needs to be customized to the specific business and include a section for every type of information.

So what does a good SaaS privacy policy include? Let’s examine what information you need to disclose in your policy.

Type of Personal Data Collected

Your SaaS privacy policy should let the users know the specific personal information collected. This includes the data the consumers provide to you directly, data received from third parties and the indirect information collected automatically in the backend.

Most privacy laws like the GDPR require businesses to reveal the categories of personal data collected.

During the sign-up process to a SaaS website, users will provide personal data such as;

  • Name
  • Email Address
  • Physical address
  • Payment or credit card information
  • Billing address

On the other hand, SaaS companies also collect information automatically when you sign in. Some of the information may include:

  • IP address
  • Location
  • Device or browser information
  • User preferences
  • Date and time of user activity

Ensuring that you list all the personal information you collect in your privacy policy will help ensure your website is compliant with privacy laws.

Why Do You Need to Collect This Information

Apart from listing the data you are collecting, your SaaS privacy policy needs to explain why you need this information. You need to disclose this information so your users are fully informed. Here are some of the common reasons why a SaaS business needs this data:

  • For billing and collection of money
  • Promote use of services
  • To measure how users are using the website and improve content
  • For investigation in case there is suspected fraud or illegal activities
  • To send system alerts, email messages and provide customer support
  • To meet legal requirements and enforce compliance to SaaS laws.

You should only collect personal data that your SaaS business needs.

How Information Is Collected and Used

Once you have listed the data being collected, you need to describe how it’s collected. Your users need to know whether you are using automated procedures, mobile apps, email, online forms, or getting communication from third parties.

Who You Are Sharing The Data With

On some occasions, your SaaS business will share the data with some other companies. Therefore, according to the legal requirements, your privacy policy should include details about who you’ll be sharing the users’ personal data with.

For instance, if you’ll be taking payment information from an eCommerce platform, you need to make the users aware of this information. According to laws in the GDPR, you don’t have to name every company that you share data with, but you can list the type of organizations.

Whether You Are Transferring The User Data Overseas

Most SaaS apps have cloud storage, which means that the data might be hosted in a different region. For instance, if you have EU users and their personal data is hosted in another country like the U.S., you need to include this information in your privacy policy. This will let your users know that their personal data is being transferred to another country.

Information About Website Cookies

While most consumers are not comfortable sharing their personal data in exchange for a better website experience, a poll shows that 50% of US adults accept all cookies when browsing. Cookies are commonly used by companies to monitor how users interact with their mobile apps and websites.

While this technology helps in understanding customer behavior in purchasing products and browsing, it comes with privacy issues. This is because some cookies can track the user’s movement even after they are done using the company website. Therefore, if you have cookies, you need to include this in your website privacy policy.

Furthermore, to avoid any legal issues, your SaaS business should have a detailed Cookies Policy on a different landing page on the website. This policy should have a list of all cookies used by your mobile app or website including the ones used by third-party partners such as shopping carts or advertisers.

Keep in mind that most people don’t know how cookies work; therefore, you should explain to the users in clear language. This will boost trust with your customers. You can avoid liability by ensuring that your business is as transparent as possible.

Whether You Share Data With Third Parties

A majority of SaaS businesses use third-party software to host features and widgets. Some of the common ones are social media widgets and Google Adsense for analytics. This information needs to be included in the SaaS app privacy policy because the features can collect information from the users such as an IP address.

In addition, some third-party affiliates will need to access your customer database to accomplish their services. This creates privacy issues because they can see your user data.

To avoid any issues, you need to check the terms of use agreements and the terms and conditions of your third-party affiliates. From this, you can get information about what you need to do on your end. You’ll also need a privacy policy to let your customers know about the third-party partner.

If the third-party partner has its own privacy policy, you should also inform your users about it. This boosts trust because you are transparent with the users.

How Long The SaaS App Stores Data

Your SaaS business should have detailed information about how long they need to store personal data on their sites. To make this easier, you can draw a retention schedule. In addition, you can add a data retention clause for account management and subscriptions.

This clause provides detailed information regarding;

  • Your rights in retaining personal data in your database if necessary
  • The right of the user in managing their personal information
  • Where the personal data is stored, who can access it or change details
  • User’s right to delete their personal information or accounts
  • The company’s right to delete accounts if the user does not comply with all the requirements.

How You Are Keeping User Data Safe

If you have a SaaS app that stores data in the cloud, you are responsible for keeping user data safe. Personal information should be protected to avoid any breaches. As part of the SaaS app privacy policy, you need to disclose the steps you have taken to ensure that the data is safe and systems are secure in case of a data breach.

Additionally, you should also inform your users about the technologies and encryptions your website uses to protect the data. You should also disclose the certificates used by your website and your third-party partners.

What Type Of Communication Users Should Expect

As part of your SaaS privacy policy, you’ll need a communication clause. This is important because you’ll need to contact your users for different purposes such as marketing, informational emails or billing.

This clause also informs users when they should expect communication from you and why it’s necessary. You should also include the method of communication; if you’ll use email or texts to send promotional messages. Additionally, you should include the process that users can follow to opt-out of communications in line with anti-spam laws.

A Business Transfer Clause

SaaS businesses change hands quite often; therefore, it’s advisable to have a transfer clause as part of your privacy policy. You should include this clause even if you are not planning to sell your SaaS business anytime soon.

This clause is important because it assures customers that in case of a transfer to new owners, their personal information will be safe. In addition, the data will be transferred to the next owner under the privacy policy.

Changes To The Privacy Policy

Once you create a SaaS privacy policy, you can make changes at any time. However, when you make any changes, you are required by the law to inform your users of these changes. You can insert a clause in the policy to let them know that you will pass on this information.

Furthermore, you should include how the changes will be announced; whether via email, a blog post or other means. Ensure that your customers are informed about these changes on time to avoid any legal issues.

Whether You Comply To Regulations

Every country has different regulations that govern how SaaS businesses should store personal information. Your business should comply with these regulations to avoid problems. You should also inform your users that your SaaS company complies with these laws and disclose whether you have a certificate to prove it.

How To Contact You

A good SaaS privacy policy includes details such as how users can contact you about issues regarding their privacy. To make this easier for your users, you can have a dedicated email or phone number that they can use. In addition, you can also have a separate form that users can fill in details about any privacy concerns.

Where To Add Your Privacy Policy

Once you’ve drafted your SaaS privacy policy, you need to make it accessible to all your users. The placement of the privacy policy can vary if you have a website or a mobile app. Let’s look at where you can add your privacy policy.

SaaS Website

In most cases, SaaS websites add this link in the website footer to make it accessible by every user. This is common practice on most websites; therefore, a lot of users will automatically check this part.

You can also boost visibility for your privacy policy by incorporating it into your contact forms, log-in section and account registration. When you add this link at this stage, users have to actively accept the privacy policy to access all the services.

SaaS Mobile App

If your SaaS business has a mobile app, you can also incorporate the privacy policy option in the application. However, it’s not possible to include a link like in the website. However, you can add the policy during the sign up or installation process or under a specific menu.

It’s a good idea to display the privacy policy as early as possible at the sign up stage. Users get the option to view your privacy policy as soon as they install the app before deciding to create an account.

Additionally, you can add the privacy policy under a menu. Some apps add the privacy policy on the settings menu to make it discoverable by all users. You can also have the policy under the legal section. This form of transparency boosts trust between your business and the customers.


Privacy policies are a critical part of SaaS business compliance. As technology continues to evolve, there is a need for privacy laws to regulate the collection, usage and sale of user data. Typically, SaaS companies should include a privacy policy on their website because it’s likely a legal requirement and an important part of building consumer trust.

For many years, most website privacy policies were too long and difficult for users to understand. In addition, most website owners would copy and paste generic website privacy policies from other SaaS websites, resulting in inaccurate policies.

There’s a lot more to a SaaS business than just launching a product. There are compliance issues to consider, and you may need to create cookie policies, privacy policies, disclaimer policies, and more for your website. As a business owner, you should consider these laws to avoid legal repercussions and whether you must comply with privacy laws in the countries you do business.

At GetTerms, we know compliance is a headache but we aim to make it simple. If you need a quick and affordable way to generate privacy policies for your SaaS business, generate your SaaS Privacy Policy today.

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