01/06/2021

What is Payments-as-a-Service?

By Mariana Almeida Marques

Digitalisation requires speed, innovation and personalisation all in one. As customers turn to digital, companies are left with no choice but to dive into new technologies. Unfortunately, traditional financial companies face significant barriers that are slowing them down, and Payments-as-a-Service comes to fix that.

What does Payments-as-a-Service mean?

Firstly, it may be useful to understand Software-as-a-Service, a term that is already familiar to many and widely used within the FinTech industry. SaaS is software offered by a third-party company that other companies can purchase and access via the internet, rather than installing it in their own IT system. It gained outstanding popularity in the last few decades, when digitalisation became the main focus of financial companies.

Similarly, Payments-as-a-Service is a cloud-based platform that can offer all sorts of payment services and technologies. This allows companies to widen their services to customers using one single channel, and enables them to keep up with payment modernisation and customer demand without actually have to invest their own resources.

Why is it beneficial for financial companies?

Payments is a crucial sector for any business built around collecting or paying out money. Yet, the digital disruption brought about many loopholes that prevent traditional companies from keeping up with innovation in the market. An old IT system, besides having exorbitantly high maintenance costs, restrains companies from deploying payment technologies quickly and inexpensively- resulting in losing customers, competitiveness and market share.

Payments-as-a-Service companies help financial institutions to enhance their payment systems.

Whilst payments is fundamental for these businesses, it is also not their core responsibility. This means that most companies don’t have sufficient resources to invest in the payments side, and they also don’t have the modern IT system required to deploy payment technologies fast. Outsourcing their payment system is, therefore, the most efficient way for companies to succeed in the current market and be adaptable to future changes.

PaaS also allows companies to manage higher volumes of transactions much faster and inexpensively than their traditional IT system ever could. Besides, it gives them the freedom and flexibility to expand to new markets, reach different customer bases and continue to be able to meet their customers’ needs on time.

The future of PaaS

The Payment-as-a-Service market size is expected to grow at a Compound Annual Growth Rate of 16.9%, reaching $25.7 billion in 2027 (Grand View Research report). There are various factors contributing for this growth. Firstly, digitalisation will continue to power the payments sector as customers look out for fast, efficient and modern payment platforms. The adoption of AI and other advanced technologies pushes companies in the industry to go a step further in improving their services to customers.

Secondly, the ecommerce sector is expected to grow steeply, fuelling the usage of online payments and, most importantly, the need for high speed and low cost payment services. Customers are increasingly more demanding when it comes to their payment experience, especially because they know that there are a lot of financial companies striving to provide them with the best service.

Increased competitiveness requires companies to put customers first and adopting a PaaS product is an effective way to achieve that. PaaS is expected to be the next big hit not only in the payments industry but in the financial services industry overall.

Finding the right company

Freedom and flexibility are now core factors so succeed in the financial services industry. From a customer perspective, because customers want seamless and secure transactions, and from a business perspective, because flexibility allows companies to easily adapt and expand their services.

The Imburse platform offers connectivity to the entire payment ecosystem, so your company can deploy any payment technologies and connect with any payment providers in the market. What’s best, it can do so whilst saving money, time and resources. If you want to know more about our platform, please reach out to our team here.

Author

Oliver Werneyer

Oliver Werneyer is the founder and CEO of Imburse. Before founding Imburse, Oliver held various roles in the insurance industry, with the likes of Liberty Life, Swiss Re and Genworth.

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