The Future for Integrated Payments Solutions for Software Platforms and ISVs: Payments as a Service
Key Takeaways:
Payments as a Service (PaaS) Streamline Operations: PaaS is revolutionizing traditional payment processes by offering a seamless integration that simplifies transactions, reduces complexity, and significantly accelerates the merchant onboarding process.
SaaS Companies Benefit from Integrated Payments: Integrating PaaS solutions like Zift into SaaS platforms enables companies to swiftly launch payment capabilities, leverage compliance standards, and share in processing revenue without heavy investments or extensive technical resources.
Simplicity and Consolidation in Payment Solutions: Integrated Payments as a Service offer a unified system for various payment types (credit cards, ACH, EMV, etc.) managed through a single Account ID. This consolidation simplifies merchant operations, enhances reporting, and reduces complexity for businesses.
Future Trends: The surge in cashless transactions, especially in eCommerce and retail sectors, emphasizes the growing importance of integrated payments. The collaboration between payments and software companies is shaping the future, promising improved systems, processes, and enhanced merchant experiences. Payments as a Service, combined with familiar software functionality, represents the future of payment processing.
The Emergence of Payments as a Service
Payments as a Service (PaaS) is quickly emerging as a viable alternative to the seemingly archaic and antiquated onboarding, underwriting, risk management, and sales processes of yesterday.
More than ever, electronic payment transactions, whether B2B or B2C, are being cultivated, managed, and sold via SaaS companies who offer their own business management software to the merchant as a bundled or integrated offering. The explosion of integrated payments has created the much needed disruption the industry as been screaming for.
The Nightmare of Prior Payment Processing Explained
Based on personal experience with the payments infrastructure, I have counted at least five different eComm players (systems) required to manage a single transaction. Those systems included the bank/processor, the payment gateway, the ISO, the billing software, and website/shopping cart. The interaction and communication between these different systems was laughable; it created a clunky, time draining, and overly exasperating experience for the merchant.
The merchant was caught in the middle of the cluster, and when support was needed, and with so many different login credentials to choose from, the merchant’s frustration was apparent. They had login credentials for at least three of the necessary systems involved for a transaction to occur; the processor, the gateway, and the shopping cart; all of this to process and accept a simple credit card payment. Not cool!
Kickin’ Payments as a Service and Taking Names
Payments as a Service (PaaS) has been that glimmer of hope for the retail or ecommerce merchant who’s had to live in the dark ages of traditional payment processing. By empowering SaaS companies, Software Platforms, and POS providers with the ability to integrate, streamline, consume and then render a seamless payment option to their customers, it’s been a major breath of fresh air for the merchant community.
What once took weeks to approve, provision and activate a client, can literally be done within minutes. Instead of having multiple systems to track and manage from a client perspective, all of the statements, reports, and business functions can reside in one centralized system. PaaS is like the Bruce Lee of payments, and the old way just took a roundhouse to the face!
How do SaaS Companies Become Enabled for Integrated Payment Solutions?
At Zift, our experience in working with SaaS platforms and other ISVs has proven that it doesn’t have to be a major investment, whether of time or financial resources, for these companies to become an integral part of the payments ecosystem. In many instances creating Payments as a Service for SaaS companies can be as simple as partnering and integrating with a company that has the right technical specifications, processing connections, and financial sponsorships. We consider that the heavy lifting, and Zift has done all of that already! The SaaS platform simply integrates and starts boarding merchants.
We have found that many SaaS companies “think” they want to become their own payments company, commonly referred to as a ‘PayFac’, only to find that it’s a major investment of time, technical and financial resources to make that a reality, not to mention the compliance and risk that is involved. Many of our existing integrated partners have shared with us after the fact, that having Zift manage the onboarding, underwriting, payment processing, reporting, and compliance was the right move for their business for the following reasons:
PAYMENTS AS A SOLUTION TIME TO MARKET:
Software Platforms and Business Management Systems can launch their offering in a fraction of the time it would normally take to build it themselves.
PAYMENT PROCESSING COMPLIANCE:
PCI Compliance, underwriting, KYC, AML, and other Regulatory requirements are already in place.
WHITE LABEL PAYMENT SOLUTIONS:
Enables Software Platforms to co-brand or white label the technology and embed it as part of their core offering.
RISK MITIGATION IN PAYMENT SERVICES:
Much less financial risk as the PaaS partner than contracting with the banks and processors themselves.
MONETIZATION OF PAYMENTS:
The ability for SaaS providers to monetize payments by sharing in the processing revenue from their merchants’ activity.
SUPPORT:
Partnering with an existing payment platform company, who handles the incoming support needs, makes all the difference by removing the potential financial and personnel burden.
Payments as a Service and Integrated Payemnts Solutions for All Business Types
The beauty of an integrated Payments as a Service solution offered by SaaS providers is the simplicity, breadth and reach of its capabilities. Ecommerce, EMV retail, mobile and ACH processing are now easy to manage through one centralized system – offered natively through the SaaS company’s software. The merchant is already familiar with the software they are using to manage their business, and to have payments as another module or feature inside the existing software’s core platform is so sweet indeed!
One Merchant ID to Rule Them All
When a SaaS company wants to work with Zift, we get rave reviews explaining the ease and simplicity of having one Account ID to manage all the types of payments being processed. It used to be a MID for a gateway, a merchant account, ACH account, Hosting account, etc. Now, with Zift, there’s one Account ID, and in it we can process all major credit cards, third party transactions (Apple Pay), debit cards, EMV and ACH payments. The merchant has one set of credentials which allows them to manage all of this natively with their SaaS company’s reporting system, or through Zift’s merchant console. In addition, the reporting provided through Zift is second to none. All payment processing activity is consolidated and reported clearly in a daily or monthly settlement statement. Again, the keys are simplicity, seamlessness, and consolidation!
The Future of Payment Processing
The increase in cashless payment transactions is staggering! It’s anticipated that eCommerce transactions will tread north of $500 million as we enter 2023. For retail based payments, it’s expected that the numbers will be above $2.336 trillion; both of these are record highs. The continued push for SaaS companies to assist with better systems, processes and an overall better merchant experience is not going away. Payments as a Service coupled with familiar software functionality is truly the future of payment processing. And with the continued partnering of payments companies and software companies the future looks very bright indeed!