Payments-as-a-service (PaaS) is a solution that provides increased speed, flexibility, and choice in the world of payments. It allows banks, financial institutions, and business owners to streamline payment-related elements. This can provide benefits for customers and business owners.
As a business owner, you know how complex payments and related functions can become. If you want to provide advanced payment products, you must invest time and money into internal development. PaaS is an answer to this issue. Let’s discuss how it works and whether it’s right for your business.
What Does Payments-as-a-Service (PaaS) Mean?
Payments-as-a-service allows financial institutions and businesses to outsource both core and non-core functions related to payments. This solution uses cloud-based infrastructure to integrate various payment methods and functions.
By adopting a PaaS solution, you can expand and modernize your business’ payment product portfolio without investing much money, time, or effort. It also helps you avoid issues with licensing infrastructure, eliminate barriers to entry for payments, and minimize backend technical issues.
PaaS can serve a variety of functions, including:
- Card issuing
- Ecommerce gateways
- Payment processing
- Payment clearing
- Payment engine hosting
- Cross-border payments
- Transaction management
- Information security management
- Information technology
- Risk management
- Reconciliation and settlement
- Third-party collections
Payments-as-a-Service: How It Works
Traditional payment hubs require you to use legacy technology stacks located on your physical premises. They also have batch-based deployments, meaning that updates come in big downloaded groups. This way of deployment makes it very difficult to keep up with ever-evolving payment methods.
PaaS is cloud-based, so there’s no need for any equipment. Additionally, rather than batch-based deployments, you get continuous updates. This way, your payment system is always up to the highest standards and latest advancements.
Here’s how it works: your developers or the payment service provider can integrate the solution with your payment system by using an API gateway. The payment service provider hosts networks, servers, databases, operating system software, and development tools within its own data center.
Then, the payment service provider can deliver solutions to implement technology or improve operations. It accomplishes this through a Core Banking Platform that can network with both new generation systems and legacy systems, all using an API-driven approach.
The Benefits of the Payments-as-a-Service Model
The cost of PaaS is fairly low, especially when compared to traditional payment hubs. PaaS platforms can also help reduce transaction fees, making them more cost-efficient. Plus, you won’t have to build your own payment architecture, so you’ll avoid those operational costs.
It’s also worth noting that PaaS providers can offer a variety of pricing structures depending on the product you need, your business size, and your transaction volume. Some models offer a pay-per-use option and others provide fixed costs. With this flexible pricing, it can work for just about any business.
PaaS offers a real-time ecosystem that operates 24 hours a day, 7 days a week, and 365 days per year. With continuous service, you never have to consider downtime for batch-based deployments or large-scale transactions. Most payments are extremely quick and sometimes even real-time.
Most business owners and their IT teams don’t have time to implement a new payment solution. While traditional hubs require an extensive amount of time to set up, PaaS offers a super fast roll-out of new features.
In fact, where traditional hubs can sometimes take years, PaaS solutions can take just weeks. PaaS service providers can also easily activate and deactivate functionalities depending on your needs.
PaaS systems follow strict security protocols, like checking IDs and providing limited access to various controls or information. They can also monitor for suspicious transaction activity.
Plus, PaaS service providers are responsible for various compliance standards, like the PCI DSS (Payment Card Industry Data Security Standard). That can make your business more compliant, efficient, and secure.
PaaS solutions can expand to allow higher volumes of transactions with minimal costs. That means that you can easily scale your payment hub as your business grows, without the burden of debt that you would encounter with a traditional payment hub.
Additionally, cloud-based solutions, like PaaS, can run with few issues, even when use increases. PaaS can also offer automatic scaling, literally responding to changes in your business with little effort from you or your developers.
6. Fast Functionality
Financial technology is always growing. In order to offer the latest and most secure payment methods, your business must be able to adjust to these changes. PaaS can allow you to adapt quickly and easily integrate new payment methods and transfer methods.
Can Your Business Benefit from Payments-as-a-Service?
Although PaaS began as a solution geared toward banks and financial institutions, it is now available to all kinds of businesses. There are few businesses that wouldn’t benefit from making the switch to a PaaS payment hub.
Most customers prefer to have a variety of payment methods, especially new and potentially more secure methods. With PaaS, you can quickly adjust and accept new payment methods. All customers want the assurance that you can provide secure transactions. This is another area PaaS excels in.
From a business standpoint, it makes sense to use PaaS to avoid the high costs of a traditional payment hub. If you’ve already invested heavily in a traditional hub, you’ll need to weigh the pros and cons. Sticking with your old system may be worth it if you don’t intend on adding new functionalities any time soon.
With that said, PaaS can save you quite a bit of money in operational costs. Consider how much could your business save by outsourcing all of the tasks required to update, maintain, and secure your payment hub.
The Benefits of Using Pay.com as Your Payment Service Provider
With Pay.com, you can monetize your user base by giving your users access to a payment system. You allow them to accept payments via Pay.com’s white-label Embedded Payments solution and earn a transaction fee from every sale they make.
At the same time, you’ll give your users the option to accept a wide range of payment methods. Users also get insights and analytics via the easy-to-use Pay Dashboard, as well as the option to track all of their transactions.
While the Pay.com system provides all of the technical payment-related work in the backend, you can apply your branding to the frontend. Our professional team will work alongside you to create the perfect custom solution for your business needs.
The Bottom Line
As technology advances, more and more of our everyday business solutions are becoming cloud-based - including financial solutions. Payments-as-a-service can allow your business to streamline its payment hub. It provides improved speed, scalability, reliability, and security. Plus, it can be far more affordable than high-priced traditional payment hubs.
Although it might seem scary to relinquish control and move your payment hub out of house, it can also be quite rewarding. You’ll no longer need to spend money on operational payment costs, allowing you to reallocate that money. Plus, your business will be better able to respond to new payment technology and scale faster.
Another way to scale? Using Pay.com’s Embedded Payments solution. Our white-label system allows you to give your users access to your payment hub via embedded payments. When they make a sale, you earn money. Plus, you’ll also provide them with endless functionality, like reports and analytics and transaction tracking.
It’s no wonder that embedded payments account for $2.6 trillion of all US transactions in 2021 - and that number will grow to $7 trillion by 2026. Connect with our sales team to learn more about how you can make embedded payments work for you.