Incorporating SaaS to offer Payments-as-a-Service

Aug 31, 2018 by Anindya Chanda

Software is changing our world and the way companies operate in it. Shifts in technology and the rise of modern, cloud services have reshaped entire industries. These shifts have created zero-sum situations with a new set of winners, leaving many businesses who did not -- or were unable to -- reinvent themselves on the outside looking in. For every Uber, AirBnb, and Netflix, there are many more local taxi, hotel, and video rental companies who did not embrace new software and services. To remain relevant in today’s rapidly changing business world, it is important to continually review and reimagine your business by taking advantage of the latest developments in technology. In this article we'll discuss Software-as-a-Service (SaaS) and how to incorporate SaaS to offer Payment-as-a-Service.

What is Software-as-a-Service?

Software-as-a-Service is a model that offers a new way of accessing software. Traditionally, software was bought and installed on a device locally. This meant that companies had to update and maintain software - a sometimes tricky and tedious task that can be error-prone and cause delays in service. SaaS, however, delivers services and applications via the Internet, without needing to install and maintain software. Software is hosted and maintained in the cloud (in large data centers) by the service provider, and is usually accessed through a subscription-based model. Benefits to this model include improved performance, security and availability. The key features of a SaaS model are:

  • Support for multiple architectures: Software vendors previously had to maintain and update outdated codebases for various platforms. However, with SaaS, all users now share a common infrastructure and code. This means less time spent updating code and more time for innovation and new features.
  • Accessibility: SaaS applications can be accessed via any internet-enabled device such as a desktop, tablet or smartphone. Users also aren’t restricted to any single location and can access the application anywhere using just an internet connection.
  • Scalability: Additional storage and services are accessible on demand without the need for new hardware or software. This means businesses pay for what they use and scale as they need, saving valuable resources that can be used elsewhere.

Rethinking Finance with SaaS

The finance industry is ripe for disruption -- innovations in technology, recent changes in regulations, and tech-savvy consumers all provide the backdrop for a shift to a more modern financial system. Many traditional banking functions, especially those on the consumer side, have already been replaced by digital services that provide greater utility. But business payments and commercial transactions are still largely manual and inefficient. This is where the shift to a modern, flexible payments infrastructure that uses SaaS principles provides the greatest opportunity for industry-wide transformation. SaaS adoption in commercial finance and banking allows businesses to move costly, manual processes to the cloud, improving operational efficiency and providing a better user experience.

Application Programming Interface (API) based SaaS platforms let companies create an ecosystem which enables various players across the industry to collaborate and bring in unique processes and services at a lower cost. Sharing data in such an ecosystem also helps in reducing fraud and improves the understanding of industry-wide trends.

SaaS platforms also help businesses scale better. For example, businesses can add new services to existing systems quickly through rapid prototyping and deployment to meet customer demand. SaaS platforms are also inherently more capable of maintaining data security standards. And due to the platform-centric nature of SaaS technology, it provides greater ability to control and reduce costs.

In all, the evolution of SaaS-based platforms into a revenue and client-driven model is a positive development for commercial banking and B2B companies, alike.

Turning Payments into a Service

The main objective of any payment handling framework is to offer a method to exchange financial value safely. And while there has been a rise in modern, digital C2C and B2C payment platforms like Venmo and Stripe, most B2B payments are still stuck in antiquated paper, plastic, and manual processes. Consequently, B2B payment systems are slow and inefficient. After examining the principles of SaaS and applying them to B2B payments, we see a clear opportunity to dramatically improve the entire enterprise cash cycle by developing a Payments-as-a-Service (PaaS) platform.

Payments-as-a-Service is a cloud-based, platform approach to billing and invoicing that allows business and customers to transact more quickly and for less cost. PaaS allows merchants and businesses to use local, regional and global payment networks under a single interface. The complexity of moving funds across the network is handled by the platform and merchants need only maintain a single account to collect payment. The key benefits of Payments-as-a-Service are:

  • Eliminate slow, inefficient paper checks: PaaS helps companies convert payments into cash faster with help of digital payment flow for invoices, billing systems, ERP & apps. This results in dramatically reduced Days Sales Outstanding (DSO).
  • Automate complicated billing processes: PaaS lets companies automate billing processes which reduces manual labor, errors, and reconciliation problems. Companies also benefit from real-time invoicing, inventory and finance management.
  • Dramatically reduce transaction costs: PaaS inherits the cost-effective, subscription model of SaaS services, leading to an efficient flat fee model that doesn’t penalize revenue growth like credit card networks do.

Final Thoughts

Technologies like SaaS and Cloud Computing aren’t new by any stretch of imagination. However, the finance industry has been slow to adopt many of these technologies. Businesses both small and large still rely on antiqued paper processes that are a hindrance to both the business and consumer, not to mention expensive and time-consuming. Shifting payments infrastructure to SaaS -- and more specifically, PaaS -- can help businesses save time and cost, while providing a better experience to the customer.

PayStand provides an enterprise level payment technology that is flexible enough for all business needs to accept and process payments. We are designed to scale and provide a single of point integration for payment solutions. Our revolutionary "Payments-as-a-Service" model creates a smart billing and payment network that can digitize receivables, automate processing, reduce time-to-cash, lower transaction costs, and enable new revenue. Contact us today to find out how PayStand can help your business.