Payments are fundamental for every transaction taking place in financial services. Each payment rail responsible for transferring funds has benefits and costs from one user to another. The technology available from smartphones, clouds, etc., continues to push the industry towards advancement in response to the growing expectations in the payment experience.
This has resulted in new convenient forms of paying and receiving everyday transfers and the subsequent decline in cash usage.
Payment-as-a-service models based on modern technology, services, and program management with the least overhead and investment, have developed to meet the growing requirements of fintech and non-fintech businesses. Banks and other companies can use these models to enhance the payment experience of their end-users.
What is PaaS (payment-as-a-service)?
Payments are no exception to the current era of “as-a-service” platforms. PaaS providers satisfy most tech and operations responsibilities by creating comprehensive, end-to-end programmes by using cloud-focused platforms for payment processing.
Businesses now possess enhanced resources and capacity to expand their client base by focusing on marketing and user satisfaction. These solutions can be customised as a white-label offering for fintech and non-fintech businesses or directly integrated for banks and financial institutions of every size.
- Fintechs and non-fintech or neobanks – These startups, usually working with flexible tech providers, are some of the initial adopters of PaaS models. Focusing on low total cost solutions because of limited capital is extremely prudent. Plug-and-play, developer-friendly APIs with compliance oversight are crucial requirements to be fulfilled.
- Small/mid-sized credit unions and regional banks – Although smaller organisations like these cannot build their payment systems, the need for using updated payment options still exists. Outsourcing to Paas alleviates restrictions with resources and upfront investment.
- Large national banks – Large banks are likely to set up their in-house payment systems, but aligning them with their legacy banking core is challenging. Leveraging a Paas model to set up something afresh matching the bank’s specifications will necessitate similar work. These builds will possess the capacity of targeting specific functions and payment options with API connectivity for eliminating implementation concerns.
There exists a model suitable for each company having a payment provider. While the volume, size, and infrastructure can vary, every value driver from PaaS platforms has a powerful influence on delivering payments in fast, cost-efficient programmes.
Why Should You Choose PaaS for Growing Your Business?
Payment-as-a-service provides the following benefits to businesses, irrespective of size:
- Speed to market – The infrastructure built by PasS allows businesses to sign up and integrate compliant, full-service programmes fast via a single integration.
- Lower ownership cost – Grouping most of the needs of payment solutions under a single provider can help businesses save costs as they will no longer have to outsource risk management, security requirements, etc. Although setting up an in-house solution by integrating numerous vendors might seem cost-effective, the additional staffing required for managing various relationships is expensive.
- Flexible pricing – PaaS providers often adopt pricing structures based on volume, product, company size, etc. Although PaaS models often focus on a transparent fixed monthly charge and transaction-based cost, pay-as-you-go models can be used for matching low volume requirements.
- Upgraded features/services – Being a modular platform, payment-as-a-service solutions can easily add modern, updated methods for facilitating transfers such as blockchain or real-time payments.