In a recent blog post we highlighted some of the reasons for the rise of Payment as a Service, specifically the cost-efficiency, flexibility and reliability that are offered by cloud-based payment as a Service infrastructure. A Payment as a Service model allows payment service providers to focus on their core business – serving their customers – while effectively outsourcing their payment transaction processing.
In this blog post, we’ll be taking a closer look at Payment as a Service , and related Software as a Service (SaaS), and how they can add value for payment service providers and independent sales organizations in a highly competitive payments marketplace.
What makes a payment service provider successful within an increasingly competitive market?
The ISO (Independent Sales Organization) model, which has traditionally dominated in North 7 America, and the PSP (payment service provider) model, which has been more prevalent in European markets, are evolving and shifting closer to each other in order to more effectively enable cross-border eCommerce. independent sales organizations are increasingly expanding their focus beyond processes in the payment value chain to offer alternative payment methods, which benefits US merchants looking for global payment processing solutions. The PSP model is also evolving, as businesses take on processes previously considered the domain of banks, therefore behaving more like acquirers.
This evolution, in tandem with the increasingly global shopping habits of consumers, has created a highly competitive market. It has become essential for payment service providers and independent sales organizations to not only provide a comprehensive range of global payment solutions, but to bring merchants to market quickly and efficiently.
Merchants are looking for payment providers who can advise them on the right mix of payment methods as they expand globally, as well as offering risk management services, and consolidated monitoring and reporting. That’s a lot for merchants to ask of their payment providers, however Platform as a Service(PaaS) and Software as a Service (SaaS) can provide the tools needed to serve demanding, next generation customers.
How does payment as a service and SaaS give payment service providers and independent sales organizations a competitive edge?
Cloud-based payment PaaS and SaaS provides a way for payment service providers to increase their bandwidth and the range of services that they offer without committing to cost-intensive development. Payment experts who are looking to establish a payment service provider/independent sales organization business can incur high costs when purchasing and managing the underlying hardware and software needed to process payments, which brings unwanted risks in a market that is both mature and highly competitive. An important feature of PaaS is scalability, meaning payment PaaS solutions are appealing not only to new businesses, but also for established players looking for the additional bandwidth needed for global growth.
PaaS solutions, in addition to scalability, benefit from cloud characteristics such as high availability, and multi-tenancy. A benefit of SaaS is application customization, which allows users the flexibility to configure in a way that best suits their particular business needs. The development, testing and deployment of applications is fast and cost-effective, meaning that payment service providers and independent sales organizations are not only limiting their risk, but also have the ability to respond quickly to the needs of their merchants.
PAY.ON’s modular payment platform offers the benefits of PaaS infrastructure, thanks to our development team who invest thousands of hours each month to ensure our solutions are secure, reliable, and fully PCI compliant at all times. A cloud-based solution allows our developers to continuously make updates and improvements to payment flows and systems without affecting or interrupting payment transaction processing. Our scalable modular system gives payment service providers and independent sales organizations the ability to pick and choose the white-label payment services that best serve their businesses. In our case, PaaS also includes many of the features of Software as a Service (SaaS), as cloud computing services increasingly overlap.
Ultimately, the competitive edge that payment providers can gain from cloud based PaaS and SaaS solutionsis a result of effectively balancing compliance and innovation. Payment service providers and independent sales organizations who implement PaaS can therefore provide their clients state-of-the-art payment processing, safe in the knowledge that they always compliant. This leaves more time to focus on their core business, and in doing so they can establish a niche for themselves and thrive within this competitive market where traditional models are merging.
Although effective deployment of SaaS and PaaS solutions can be powerful differentiators in the current market, there is also a noticeable trend towards Open API or open platform solutions, which further build upon the benefits offered by cloud-computing models. We anticipate that open platform solutions will play an growing role in the payments space in 2015.
What do you believe makes a payment service provider successful in the current market? Let us know in the comments below