Understanding Payments-as-a-Service

Oct 25, 2022 by Sage Thee

What is Payments-as-a-Service?

Payments-as-a-Service, or PaaS, evolved out of the growing recognition that today’s financial system is plagued with costly fees, disparate data sources, and inefficient, paper-driven processes. The problems AR teams are facing put considerable strain on a company’s cash flow.

Let’s take a look at some figures:

  • 15% of all 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.
  • With manual processing, the cost of processing a single invoice is between $12 and $30.

These roadblocks and bottlenecks result in lost revenue and opportunity, but there’s still hope.

Managing rising B2B transaction costs can be a daunting task, but subscription-based payment methods that combine cloud technology and superior software economics to improve margins, cash flow, and customer experience are here to help.

Introducing PaaS

We built our business on how payments should be, not how they’ve always been. In a 21st-century digital world, there’s no need for gatekeepers and middlemen who charge transaction fees. Inspired by the shift to efficient, software-driven models in other areas of the enterprise, we developed proprietary technology and a payment framework for the digital era.

That’s why we’re pioneering something that’s never been done in our industry: Payments-as-a-Service.

PaaS upends the traditional fee-based payment model, utilizing a subscription-based software model instead. That means you pay a flat monthly rate to use PaaS software instead of losing a cut of every transaction to processing and transaction fees. Think Netflix: You get access to hundreds of shows and movies for a flat monthly rate instead of paying for them individually. Now apply that same concept to payments, and you get PaaS.

Here’s how it works:

The Paystand Bank Network provides digital payment options such as real-time fund-verified transfers, e-checks, and credit cards, all for a low monthly fee — instead of forcing businesses to rely on punitive transaction costs to collect their revenue.

With a low-cost subscription model, companies know their costs upfront, and when transaction volume climbs, the low monthly cost remains the same, and AR costs decline. This means that as sales increase, companies can reap the rewards of higher revenues — rather than recalculate the costs of their higher fees.

Simply put, businesses that adopt PaaS technology benefit from continuous updates to the software platform that deliver enhanced features instead of being locked into an outdated, transaction-based network with no incentive to improve features or costs. The digital payment infrastructure that’s delivered via the PaaS platform allows companies to realize several key benefits.

The Benefits of PaaS

A PaaS provider eliminates the cost and complexity of traditional payment processes, speeds up time to cash, and frees up your accounting team to focus less on time-consuming paperwork and more on high-value activities.

Benefit #1: Faster access to cash

By combining the flexibility of multiple digital payment options with user interface features designed to elicit action from clients, you can slash late receivables in half. Our PaaS platform offers three key features that trigger faster payments:

  1. Automatically generate invoices, ensuring timely invoice delivery.
  2. “Single-click” payment features that allow clients to pay directly from the invoice.
  3. “Open-invoice” functionality that lets clients see all open invoices and pay per line item.

Benefit #2: Zero-touch payment processing

Digital payments coupled with user-friendly payment features also result in less cumbersome processing tasks for AR teams. How? For example, when an invoice is generated in your ERP of choice, a workflow can automatically send an email invoice to the customer. Customers can pay the invoice directly through an embedded payment link, and the payment will be automatically reconciled in both your ERP and PaaS platform.

Here’s what zero-touch looks like:
  • Fifty-two fewer hours spent processing payments.
  • 25% fewer payment-related phone calls.
  • The time required to close books cut in half.

Benefit #3: 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.

Benefit #4: 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 and updates and manage their individual computer’s security.

Boost margins and ROI with Payments-as-a-Service

PaaS means more than just faster, cheaper, more efficient payments — it’s a new way of doing business. PaaS is for companies that want to grow faster than they can hire, onboard, and train new employees. It’s a solution for companies that want immediate visibility into not just their current finances but their forward-looking pipeline and cash flow forecast. It’s for companies that are looking to predict and control expenses in a faster, more streamlined digital environment without paying exorbitant fees.

Snag your free copy of our ebook to learn how Payments-as-a-Service can revolutionize your AR workflow.