4 Benefits of Payments-as-a-Service

Jul 26, 2023 by Zazil Martinez

Payments-as-a-Service is a game-changing approach for B2B transactions. PaaS is the perfect solution for businesses seeking faster and more efficient payment systems. Now you can break free from the limitations of traditional applications and paper-based methods.

Over the past years, the payments landscape has changed for B2B and B2C transactions. Payments-as-a-Service (PaaS) stems from the shift toward faster, digital payment processing systems.

The 2022 Association for Financial Professionals (AFP) Digital Payments Report found that:

  • 54% of businesses cite speed as the main reason for adopting digital payment services.
  • 75% said faster payment processing has positively changed their organization.

But in-house payment applications are not viable for businesses. Their development and regulatory compliance requirements' high costs make them unaffordable, so companies must partner or stick to paper payments.

Using checks and wire transfers was understandable at first. Early payment service providers had limited systems, which caused difficulties. Business owners needed accounts in each online solution to accept different payment methods, and during the early days of eCommerce, self-serve payments were more common than B2B transactions.

Modern PaaS platforms provide access to multiple payment rails from a single source and integrate with business ERPs. This combination helps businesses reduce costs, improve workloads, prevent fraud, and get a clear insight into their payment process.

Working with a PaaS company has several advantages. But first, let's understand what a payment service provider is and how it works.


What is Payments-as-a-Service?

Modern Payments-as-a-Service solutions developed as people realized the current financial system has many expensive fees, different data sources, and slow, paper-based processes. These problems make it hard for AR teams and can negatively affect 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, but there's room for improvement. Subscription-based payment methods that use cloud technology and efficient software can boost profits, cash flow, and customer satisfaction.


Advantages of Payments-as-a-Service in the Digital Era

Let's reimagine how payments work in the modern world. In the 21st century, there's no need for intermediaries and extra fees when making transactions. That's why we need cutting-edge technology and a payment system designed for the digital age.

Payments-as-a-Service is a groundbreaking approach to payments. Unlike traditional fee-based models, PaaS operates on a simple subscription basis. It's like paying a fixed monthly fee for services like Netflix to access a library of shows and movies. With PaaS, you pay a flat monthly rate to use the software without extra transaction fees.

Imagine having all your payment needs covered under one flat fee without worrying about hidden charges or losing a part of every transaction. PaaS revolutionizes how businesses handle payments, making it easier and more cost-effective than ever.


How Do Payment Service Providers Work?

With a low-cost subscription model, companies can predict their expenses in advance. The monthly cost remains unchanged as their transaction volume grows and extra costs decrease. This way, companies can enjoy higher revenues when sales increase without worrying about higher fees.

Besides, businesses using PaaS technology get continuous software updates and improved features. This is much better than an old-fashioned transaction-based system that doesn't encourage feature and cost improvements.

For example, the Paystand Bank Network provides digital payment options such as:

  • Real-time fund-verified transfers
  • e-checks
  • Credit cards

All for a low monthly fee instead of forcing businesses to rely on punitive transaction costs to collect revenue.


What Are the Benefits of Payments-as-a-Service?

One of the main advantages of PaaS is that it liberates your accounting team from the extensive paperwork related to payments. Instead of spending countless hours on administrative work, they can now concentrate on more valuable and strategic activities.

By streamlining payments and easing the workload on your accounting team, PaaS empowers your business to operate more efficiently and make the most of its resources. It's wise to embrace this technology to simplify your financial processes and stay ahead in the competitive market. Say goodbye to payment complexities and welcome a smoother, more focused approach to managing your finances.


1. Faster Access to Cash

One of the key benefits of utilizing PaaS is how it improves faster cash access. Since it combines the convenience and flexibility of various digital payment options, clients can make payments promptly. You can reduce late receivables by up to 50% by leveraging user-friendly interfaces that encourage quick action.

By offering customers multiple payment methods, they can choose the best option, leading to quicker and more efficient transactions.

Moreover, PaaS's user interface is designed to simplify the payment process for your clients. It streamlines the journey, making it effortless for them to complete their transactions. This user-centric approach prompts clients to take immediate action, decreasing late or pending payments.


2. Zero-touch Payment Processing

Digital payments and user-friendly payment features also result in less cumbersome processing tasks for AR teams. For example, when an invoice is generated in your ERP, a workflow can automatically send the invoice to the customer. They can pay directly through an embedded link and automatically reconcile the payment in your ERP and PaaS platforms.

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.

3. Lower Costs

PaaS can lower costs, leading to cost savings for your business. Here’s how this works:

  • Flat monthly rate. You'll have a predictable and consistent expense by switching to a flat monthly payment rate. This allows you to budget more effectively.
  • Encouraging ACH and eCheck billing. You can incentivize customers to choose ACH or eCheck instead of credit cards. These payment methods incur lower transaction fees so that you can reduce your processing expenses.
  • Convenience fees. Another way to lower costs is by shifting credit card processing fees to customers through convenience fees. When customers pay with credit cards, a small fee can be added to their total bill. This fee covers credit card processing expenses, reducing your business's financial burden.

By combining these cost-saving strategies, your team can optimize expenses and keep costs under control.


4. Low Maintenance

PaaS platforms offer the advantage of low maintenance and ensure a hassle-free compliance experience. Let's break down how:

  • Cloud-based convenience. PaaS systems operate in the cloud, so you no longer need to worry about maintaining or updating software on employees' computers—no more time-consuming updates or dealing with compatibility issues. Everything is managed centrally, so your team can focus on more critical tasks.
  • Enhanced security. With PaaS, individual computer security is lifted off your employees' shoulders. All sensitive payment data is securely stored and managed within our platform. This ensures robust protection against potential security threats and minimizes the risk of data breaches.
  • Effortless compliance. Keeping up with the ever-changing landscape of payment regulations can be complex and demanding. But fear not, payment services providers care for compliance matters for you. They're up-to-date with the latest standards and requirements, so your business always adheres to industry regulations. This way, you can maintain your focus on serving your customers without compliance-related worries.


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

Payments-as-a-Service offers more than quicker and cost-effective payment processing. It introduces a transformative approach to conducting business. This is great for companies aiming to expand without the complexities of hiring, onboarding, and training new staff.

By adopting Payments-as-a-Service, your company can:

  • Accelerate growth. PaaS enables you to focus on business expansion without the hassles of traditional payment processes.
  • Gain financial clarity. You can have real-time insights into your company's finances, empowering you to make informed decisions at every step.
  • Control expenses. Predictability is critical to financial success. PaaS equips you with the tools to forecast and manage costs effectively, ensuring you control your budget.
  • Simplify operations. Embrace the digital era and streamline your processes. PaaS eliminates the need for manual and time-consuming payment tasks, allowing you to focus on core business objectives.
  • Avoid exorbitant fees. Traditional payment methods can come with hidden costs and hefty fees. PaaS offers a cost-efficient alternative, allowing you to save money and strategically allocate resources.

Payments-as-a-Service is not just a payment processing tool. It is a catalyst for your company's growth and financial stability. Embrace the future of business operations and unleash your organization's full potential without labor-intensive processes or excessive expenses. Seize the opportunity to optimize and thrive in the digital landscape.

Learn more about Payments-as-a-Service with Paystand. Download our free ebook and revolutionize your AR workflow!