Running a Software as a Service (SaaS) business means handling customer data every single day. SaaS businesses collect data such as addresses, emails, business partners, billing information, usage analytics, and other data. GDPR in the EU, CCPA/ CPRA in California, PIPEDA in Canada, and other privacy laws regulate the way you collect, store, and use customer Personal Information.
The increased use of SaaS tools in everyday life has created a greater need for privacy and security. privacy laws require having a Privacy Policy.
In this blog post, we’ll discuss why it’s important for Saas businesses to have a Privacy Policy, when you should have one, and how to create a comprehensive and compliant Privacy Policy that fits your needs.
What Is a SaaS Privacy Policy?
A SaaS Privacy Policy is a legal document that explains how your software platform collects, processes, shares, and protects user data. It’s not just a formality— it’s a legal requirement in many jurisdictions.
Even if you don’t sell customer data, you still need to have a Privacy Policy. Your SaaS platform almost certainly collects at least some form of Personal Information, such as addresses, emails, business partners, billing information, usage analytics, and other Personally Identifiable Information (PII), which is strictly regulated by data privacy laws.
The purpose of a Privacy Policy is to tell users what you do with their data.
Why Your SaaS Company Needs a Privacy Policy?
For SaaS providers, a Privacy Policy isn’t optional— it’s a legal requirement. When your SaaS platform processes significant user personal data, users should know how their information is handled and if it is sold or shared with third parties.
Here are the key reasons why your SaaS company needs a Privacy Policy:
- Legal compliance
Laws like GDPR, CCPA, and LGPD mandate transparency and require companies collecting or processing personal data to have a Privacy Policy. - Customer trust
A transparent Privacy Policy helps users understand what your SaaS business does with their personal data. Users are more likely to sign up and use your service when they know their data is safe. - Business partnerships
Not only your customers need a Privacy Policy. Investors, clients, and vendors also require having one in place for proof of compliance. - Risk management
A strong privacy policy can help avoid fines and reduce liability in case of disputes.
One of the widely recognized and strictest data privacy laws includes the General Data Protection Regulation (GDPR) in the European Union (EU). Note that the GDPR applies to any business dealing with the personal data of EU residents, independently of where your SaaS business is based.
Under the GDPR, serious violations can lead to fines of up to €20 million or 4% of your company’s global annual revenue — whichever is higher. Even less severe breaches can still cost you up to €10 million or 2% of your worldwide turnover.
Keep in mind that GDPR enforcement is real. Regulators have taken action against SaaS companies for GDPR breaches.
In 2022, Advanced Computer Software Group (UK-based SaaS provider) was hit by a ransomware attack that leaked the personal data of 79,404 individuals. The UK’s Information Commissioner’s Office (ICO) concluded that the company failed to implement appropriate technical and organizational security measures, as required under Article 32 of the UK GDPR. As a result, ICO fined Advanced £3.07 million (around $4 million).
Even SaaS companies without direct consumer-facing products, but serving critical sectors like healthcare or financial services, may face significant regulatory scrutiny under GDPR.
SaaS Privacy Policy and Data Protection Laws
Global regulations set requirements for SaaS businesses on how to manage user personal data. Even though the basic idea of these requirements is similar, there are some differences between them.
GDPR (Europe) requirements for SaaS companies
GDPR is among the strictest privacy laws in the world.
First, it requires explicit user consent to collect and process personal data. It means that your SaaS company should inform users about your data collection and processing practices, and users must explicitly agree to it. Simply scrolling over or continuing using the service without the user consent is not enough.
Second, it requires a legal basis for data processing. The legal basis typically includes:
- User consent: Consent must be obtained in a fair and valid way.
- Contract: Companies can collect or process personal data when processing is necessary for a contract with the user.
- Legitimate interests: Companies can collect or process personal data when processing is based on the company's or a third party's legitimate interest.
Third, it sets requirements for data security. All SaaS companies must implement adequate measures to protect user data, such as encryption and restricted access for authorized personnel.
Fourth, the GDPR gives users rights over their data. Users have the following rights, including:
- The right to access their data.
- The right to rectify or erase personal data.
- The right to withdraw consent and object to processing.
- The right to data portability.
The GDPR also sets other requirements for companies, including SaaS companies, such as data sharing and data retention restrictions, transparency, and others.
Download the complete GDPR compliance list:
CCPA (California) requirements for SaaS companies
First, the CCPA and its amendment, the CPRA, grant consumers the right to know, delete, correct, opt out of data sales, limit the use of sensitive data, and the right to non-discrimination.
Second, the CCPA/ CPRA sets data handling obligations for SaaS companies, that must:
- Sign data processing agreements with vendors (service providers, contractors).
- Implement reasonable security measures to protect customer data.
- Keep records of consumer requests and how they were handled (at least 24 months).
- Provide at least two methods for submitting requests.
Third, the CCPA/ CPRA sets Privacy Policy requirements, including:
- SaaS companies must clearly list what categories of personal data you collect, use, and share.
- SaaS companies must explain the purposes for data collection.
- SaaS companies must reveal whether they sell or share user data with third parties and must reveal these third parties.
- SaaS companies must provide instructions for exercising user rights (like a web form or support email).
- SaaS companies must update their Privacy Policies at least once per year.
- SaaS companies must include a “Do Not Sell or Share My Personal Information” link if applicable.
Download the complete CCPA compliance list:
LGPD (Brazil) and SaaS companies
LGPD sets similar requirements to GDPR with strong user rights and strict business obligations.
If you operate globally, your SaaS Privacy Policy should be broad enough to cover all major laws. However, it should also be flexible enough to adapt as regulations change. You must regularly update your SaaS Privacy Policy.
What Should Your SaaS Privacy Policy Include?
Your SaaS Privacy Policy must clearly explain how you collect, use, process, and safeguard Personal Information to comply with data protection laws worldwide.
While requirements may vary slightly by region, most regulations have some common requirements for the Privacy Policy.
Your SaaS Privacy Policy must include these key elements:
- Types of personal data you collect
A compliant SaaS Privacy Policy should include information on the types of information you collect, including names, email addresses, shipping and billing details, contact numbers, IP addresses, user-generated content, and data from third parties such as integrations, payments, etc. - How and when you collect the data
Be transparent about when and how you gather user information.
Many SaaS companies collect the data directly from user submissions, using account registration forms, subscription or billing information forms, support request forms, etc.
Your SaaS company may also use automated data collection tools such as cookies, local storage or session storage, pixels, and Analytics tools (e.g., Google Analytics).
You can also collect user data through third-party integrations, including APIs, embedded services from payment or marketing tools, and social media integrations that provide user profile data. - Why do you collect user data?
Clarify the reasons what you use user data for. Saas Companies may collect user data for account creation, billing, responding to support requests, service improvement, or understanding user interests and needs. - Legal basis for data processing
The GDPR requires a legal basis for data processing.
The legal basis typically includes user consent, contractual necessity, or legitimate interest. Although user consent may be more difficult to obtain, it is the most reliable type of legal basis. - What do you do with user data?
The SaaS company could use the data for communication, personalization, analytics, or other purposes. - Personal data processing
Do you process personal data and why? How do you use the result of the processed data? - Data sharing practices
Mention any third parties you work with — such as Stripe for payments, Amazon Web Services for data storing, etc., and briefly explain what kind of data you share with them and why. - Data retention and deletion policies
Reveal your data retention periods and deletion processes. For example, account and billing data may be retained as long as users maintain active accounts, while usage logs and analytics data could be retained for 12-24 months. Clarify all circumstances requiring longer retention, such as compliance with legal obligations or resolution of disputes.
Provide clear instructions for users on how to request data deletion and make sure to fulfill these requests within specified time frames (usually within 30 days). - Details on cookies and tracking technologies
Inform users about the types of cookies or other website trackers your SaaS service uses, what they do, and how users can manage or opt out of consent if they choose to. - How can users access, update, or delete their data?
Make it easy for users to take control of their data. Let them know how to request access, make corrections, request deletion or portability of data, and provide the necessary contact details or links to execute these rights. - International transfers
Inform users if you send their personal data across borders, for instance, if your SaaS company is based in the EU, but your servers are located outside the EU. Make sure to mention any safeguards you use when transferring data abroad. - Security measures
Disclose what security measures you use to protect customer data, such as SSL encryption, secure payment gateways, and limited staff access. - Contact details
Explain how users can reach you when they have questions or concerns. This could be a support email address or a dedicated privacy contact form. - Actual date of the Privacy Policy
Your SaaS Privacy Policy should include the date it was last updated to show transparency and let users know when your practices were last reviewed.
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How To Create Your SaaS Privacy Policy?
There are several options for creating your privacy policy, you can choose the one that suits you best.
Write the SaaS Privacy Policy yourself
You can write the SaaS Privacy Policy yourself. If you do it yourself, draft it in plain language, avoiding jargon so users can actually understand it.
You may consider searching for some examples on the internet or using an AI to create one. Read the article on whether AI can create a Privacy Policy?
However, keep in mind that a ChatGPT or other AI tool-written Privacy Policy is not a legally binding document and is not compliant with privacy laws. Such a Privacy Policy could lead to fines or lawsuits in the case of a data breach.
Second, regulations like GDPR, CCPA, or PIPEDA are complex and constantly evolving. So you must regularly check for changes in data privacy laws and update your SaaS Privacy Policy in a timely manner. This could be impractical and time-consuming.
Hire a lawyer
You can hire a lawyer to help you draft your privacy policy. Make sure the lawyer has experience in international data protection laws and is up-to-date with constantly changing requirements. Of course, this level of expertise comes at a price that might be too expensive.
Use A Privacy Policy Generator
Another option is to use an online Privacy Policy Generator. Make sure to choose a reliable one to avoid problems in the future.
A practical solution is using a Consent Management Platform (CMP) like CookieScript. With CookieScript, you can create a clear and comprehensive Privacy Policy using an online Privacy Policy Generator. Simply register, provide information about your website or app, and answer a few questions about your business. We’ll then generate your privacy policy in both text and HTML formats.
CookieScript-generated Privacy Policy will be automatically updated, so you don’t need to follow the changes in data privacy laws yourself.
CookieScript is trusted by more than 150 000 websites and many global brands, including Hyundai, LG, Suzuki, ISS, DTU, and others, so you can also trust in CookieScript.
In Spring 2025, CookieScript earned its fourth consecutive Leader badge on G2, the popular peer-reviewed platform, strenghtening its position as the top CMP on the market for an entire year.
Best Practices for SaaS Privacy Policy
Use these best practices when writing your SaaS Privacy Policy:
- Use clear, simple language.
- Be transparent about data collection.
- Keep it concise but thorough.
- Disclose third-party integrations.
- Highlight user rights.
- Make security an important factor.
- Use headings, bullets, and links for readability.
- Update regularly and show the “last updated” date.
- Make it easy to find.
- Consider regional requirements.
Common Mistakes to Avoid in SaaS Privacy Policies
Here are the most common mistakes for SaaS Privacy Policies. Make sure to avoid them.
- Using vague language
“We may share data” without details erodes trust. Clearly state if you share data with third parties, for what reasons, and reveal all these third parties. Transparency fosters trust. - Making it too short
A Privacy Policy isn’t optional— it’s a legal requirement. Privacy laws clearly state what information should be present on a Privacy Policy. If something is missing, your SaaS Privacy Policy may not comply with privacy laws. - Using copy-pasted templates
Copy-pasted generic templates rarely fit your unique SaaS setup and business practices. When using such templates, you can lose customer trust or even breach the privacy laws. - Not updating Privacy Policies
Laws and practices evolve, setting new requirements for data holders. Regularly review your SaaS Privacy Policy and update it accordingly. - Hiding it away
Users should find it easily before they sign up. It is not much value of a Privacy Policy if users can’t find it.
How to Keep Your SaaS Privacy Policy Up to Date?
Regulations, business practices, and technology change fast. To stay compliant, you must constantly update your SaaS Privacy Policy.
Follow these best practices on how to keep your SaaS privacy policy up to date:
- Review it quarterly or biannually.
- Follow regulatory changes in your main markets.
- Update users proactively when changes are made, highlighting the changes.
- Assign responsibility – usually to a Data Protection Officer (DPO) or compliance lead.
SaaS Privacy Policy vs. Terms of Service: What’s the Difference?
SaaS Privacy Policy and Terms of Service are essential documents for SaaS companies, but they serve different purposes.
The Privacy Policy focuses on users’ Personal Information and data privacy. It contains details on how personal data is collected, stored, used, and shared, outlines the security measures in place and users' rights regarding their data.
Privacy Policy is required by data privacy laws.
The purpose of the Privacy Policy is to inform users about data handling practices and comply with data privacy laws like GDPR and CCPA.
Terms of Service (ToS) define the rules of using your platform. It includes information on acceptable use, intellectual property rights, limitations of liability, pricing, payment terms, and dispute resolution.
Data privacy laws typically mandate Terms of Service, but it is highly recommended for protecting business interests.
The purpose of the ToS is to set clear expectations for users about your product or services and to protect the business from legal issues.
In conclusion, SaaS Privacy Policy and Terms of Service are two distinct documents that serve different purposes, but both should be put in place to ensure compliance with data privacy laws and protect your business from legal issues.
Final Thoughts On SaaS Privacy Policy
Drafting a Privacy Policy for your SaaS business may not be the most exciting task. However, it’s a legal requirement. Not having a compliant Privacy Policy in place could get you into trouble. In addition, a well-written SaaS privacy policy is more than a legal checkbox — it’s a competitive advantage. By being transparent about data use, you show your clients that you take their data privacy issues seriously. So, users can trust your company and your products, remaining loyal to your SaaS company.
Thus, privacy is no longer optional — it should be part of your product or service.
Remember that your policy should reflect your business practices — not a generic template copied from elsewhere.
To create your SaaS Privacy Policy, consider using a CMP like CookieScript. Data privacy laws evolve, and new ones emerge constantly. From a business perspective, plugins change, and new tools are added by your partners or vendors. CookieScript-generated Privacy Policy will be automatically updated, so you don’t need to follow the changes in data privacy laws or business tools yourself.
Frequently Asked Questions
What Is a SaaS Privacy Policy?
A SaaS privacy policy is a legal document that explains how your software platform collects, processes, shares, and protects user data. It’s not just a formality— it’s a legal requirement in many jurisdictions. CookieScript CMP can help you create a compliant Privacy Policy.
Do I need a privacy policy for my SaaS company?
Yes, you need. If your company collects any personal data, such as names, email addresses, or billing information, you’re legally required to have a privacy policy. It’s a legal requirement by regulations like GDPR, CCPA, and others. If you don’t have one, your company could be at risk of legal penalties or fines.
What’s the difference between the SaaS Privacy Policy and Terms of Service?
The Privacy Policy focuses on users’ personal information and data privacy. It contains details on how personal data is handled, outlines the security measures and users' rights regarding their data. Terms of Service define the rules of using your platform. It includes information on acceptable use, intellectual property rights, limitations of liability, pricing, payment terms, and dispute resolution.
What should be included in a SaaS Privacy Policy?
Your SaaS Privacy Policy should explain to your users how your app or website handles personal data. How do you collect personal data and why? What types of personal data do you collect and what do you do with it? It must have a legal basis for data processing, data retention and deletion policies, and details on cookies. CookieScript CMP can help you create a compliant Privacy Policy.
What are the GDPR requirements for the SaaS Privacy Policy?
GDPR requires explicit user consent to handle user personal data. The law requires a legal basis for data processing. All SaaS companies must implement adequate measures to protect user data. GDPR also gives users rights over their data. SaaS Privacy Policy itself is a legal requirement.
How to write Privacy Policy for a SaaS business?
You can write the SaaS Privacy Policy yourself, using templates from the internet, or hire a lawyer. However, the most reliable and cheapest way to create the Privacy Policy is to use a Consent Management Platform (CMP) like CookieScript that offers a Privacy Policy Generator. CookieScript-generated Privacy Policy will be automatically updated, so you don’t need to follow the changes in data privacy laws yourself.
Where should I display the Privacy Policy on my SaaS business?
Your Privacy Policy should be easy to find. You could place a link in the website footer, show it during the checkout process, and on account registration pages. If you're using a Consent Management Platform like CookieScript, you can also integrate the policy directly into your consent banner or link it alongside your cookie management tools.