What is Payments-as-a-Service?

Feb 15, 2022 by Eduardo Lopez

Most companies aren't in the payments business, even though they need a solution for compliance payment processing. With the evolution of the global economy, global payments add an additional layer of complexity. For B2B organizations seeking to receive online payments without access to a payments ecosystem, the task of maintaining regulatory compliance can intimidate management teams and create a monstrous workload for AR professionals.

The answer? Payments-as-a-Service (PaaS).

Think Venmo or PayPal, but for businesses and with a more attractive fee structure and more robust features.

To give you a brief overview of what a payments ecosystem looks like, our PaaS solution can plug into any major ERP. Essentially, our payments platform moves your cash cycle into the cloud and helps you completely automate the back-office financial process. In addition, instead of charging transaction fees based on volume, subscribers only pay a flat monthly rate.

PaaS solutions are generally easy to implement and manage. A modern PaaS platform is also likely to be cloud-based, which allows AR teams to process payments from any computer with an internet connection. This is especially helpful for fast-growing startups and medium to large companies with multiple subsidiaries and remote teams.

So, why choose a Payments-as-a-Service solution over another basic payment gateway? Here is what you need to know.

Payments-as-a-Service vs the average payment gateway

Let's be clear, payment gateways are not the same as a PaaS platform. Like PayPal or Stripe, a payment gateway will only accept incoming credit card payments. However, a B2B payments ecosystem accepts various digital payments, such as ACH or eCheck options. They also collect data and push it to your ERP, so there's no need for manual entry. When your client pays with a bank transfer, that information is automatically logged into NetSuite or Sage, or whatever software you use.

PaaS solutions evolved out of the growing recognition that today's financial system is plagued by costly fees, disparate data sources, and paper-driven processes. The problems AR teams are facing put considerable strain on a company's cash flow. Just consider these numbers:

  • 15% of B2B receivables are overdue.
  • US organizations wait 33 days on average to receive a cross-border payment.
  • It takes 15 days on average to process an invoice manually.
  • The cost of processing a single invoice is between $12 to $30 with manual processing.
  • 64% of all businesses are making more than half of their payments electronically.

Ouch. Those long-wait times for payment and pricey invoice processing expenses add up to lost revenue and opportunity.

A PaaS provider removes much of the cost and complexity from the traditional payment process, speeds up collections (and, in turn, time-to-revenue), and frees up accounting teams to focus less on paperwork and more on high-value activities.

At the same time, executives gain the ability to analyze data and cash flow in real-time revealing actionable decisions that improve and support your company's revenue growth.

Payees also benefit, as the seamless customer experience decreases the likelihood of missed invoices and allows them to leverage potential incentives, such as early payment discounts.

Some of the overall advantages of the Paystand payment system are:

  • Improved Regulatory Compliance: E-Notarized and digitally auditable records stored on the blockchain to guarantee secure payment transactions that align with national, regional, and global compliance demands.
  • Lower Costs: Switching to a flat monthly rate for payment processing is just the initial savings. AR teams can also save by incentivizing ACH or eCheck billing over credit cards and shifting credit card processing fees to the customer through convenience fees. (Paystand customers have saved up to 50% on the cost of receivables.)
  • Little-to-no maintenance: Since our PaaS payments platform runs in the cloud, it also removes the hassle of having your employees perform software maintenance, updates, and manage their individual PC's security.
  • Shorter Monthly Close: Through Payments-as-a-Service, you can quickly reconcile payments, update records in real-time, and set up alerts that trigger specific AR tasks. (Paystand customers close the books 30-50% faster.)

Join the future of B2B Payments

Developing an in-house payments infrastructure is cost-prohibitive for most companies, and is incredibly difficult to maintain over time. But the average payment gateway hardly solves the problems of AR professionals.

Payments-as-a-Service solutions, however, provide the flexibility and insight that every professional payment system needs going into the next decade and beyond.

Want to see if Paystand is the right PaaS platform for your organization? Schedule a consultation or free demo with us and we'll answer all of your questions.