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Payments-as-a-Service (PaaS) is becoming increasingly popular in some countries, particularly in the United States, Canada, most parts of Europe, and in the Asia region. It's projected that it will become more mainstream in 2030.
Payments-as-a-Service (PaaS) Industry Trends
Based on the GlobalView Research report, the PaaS market size valued at US$ 13.88 billion in 2022. The market is projected to increase at a compound annual growth rate (CAGR) of 15.2% from 2023 to 2030.
Advances in technology and the growing demand for digital payment methods are major driving forces of PaaS in the global market. COVID-19 has also intensified the behaviour of both consumers and businesses in paying for their goods and services.
With PaaS, companies have a number of options to process payments on their transactions. Financial institutions can use this system to make their customers' lives easier when paying bills or making other payments with merchants. But how important is PaaS in financial technology organisations?
The Importance of PaaS in your Fintech Company
Payment-as-a-service solutions are designed to provide a more personalised customer experience by enabling financial institutions to customise and configure their services to meet the needs of their customers.
As more and more people are getting comfortable with digital payments, companies are now building new payment-as-a-service (PaaS) solutions to help them spend their money more smartly. Next, we’ll discuss why PaaS is important for your financial institution:
1. Helps Your Fintech to be Cost-Effective
Building a payment processing infrastructure from the ground up can be costly and time-consuming. PaaS suppliers provide a cost-effective solution for fintech organisations by granting access to payment processing capabilities without requiring huge upfront investments.
2. Supports Your Global Payments Processing
PaaS providers can enable organisations to handle payments in numerous currencies and across borders, which is especially significant for businesses with global customers.
3. Increased Customer Trust and Confidence
PaaS suppliers frequently feature extensive fraud protection and security measures, which can help organisations create confidence with their consumers while protecting against financial loss.
4. Provides valuable customer data and insights
PaaS providers can provide useful data and insights into consumer payment behaviour, allowing businesses to streamline payment processing and boost customer retention.
5. Keeps Your Business Scalable and Flexible
As fintech companies expand, they must be able to handle the rising transaction volumes. A trusted and professional PaaS third-party provider offers scalability and flexibility for increasing demand for PaaS solutions.
In conclusion, Payments-as-a-Service (PaaS) is a vital component for many organizations, particularly fintech firms, because it provides cost-effective, scalable, and fast payment processing capabilities while allowing businesses to focus on their core goods and services. PaaS providers offer many benefits such as better customer data and insights as well as increased consumer trust.
Our expert PaaS team ensures that your payment platforms are designed with your company's needs in mind, meaning that your payment infrastructure will be simple and easy to use. We'll set up everything from the point of sale to the back-end processing so you don't have to worry about anything at all! For more information, get in touch
Traditional card issuing processes can be complex and time-consuming, resulting in various pain points for both issuers and cardholders. It's common for Fintech companies to encounter traditional card processing issues, which can include longer processing times, a lack of flexibility, higher overhead costs, security risks, and a lot of paperwork. Switching to a CaaS (card as a service) system allows you to improve the way you work.
Card as a service (CaaS) has made it easier for cardholders to switch their credit or debit cards without going through the tedious process of applying and waiting for approval from traditional card providers.
Customers often find more flexible and quicker payment methods. They are also looking for more contactless and touch-free payment options.
A CaaS payments solution provides your cardholders with the option to shift between transactions using both physical and virtual cards. Buy Now Pay Later (BNPL) card payments are another option that customers find to be particularly useful. There is also an emerging trend that non-financial companies to create innovative payment cards from a CaaS model to answer these growing demands.
To meet customers’ expectations, your fintech business should make a switch for the following reasons:
1. Faster to Market on Target Segments
CaaS providers offer a streamlined and automated approach to deploying and managing card issuance infrastructure, thus reducing the time and resources required to launch new programs. This enables businesses to launch new payment card products and services quicker than their competitors.
2. Less Time for Card Issuing and Processing
With reduced processing time and issuing of cards, you can also minimise the overhead cost of building your digital payment infrastructure.
3. Effectively Automate Your Processes
You can virtualise and automate your payment services with extensive card technology. Some merchant processing also provides card readers, devices, and payment gateway solutions to retailers without giving much attention to creating your infrastructure and hiring developers.
4. Improved Card Security and Control
CaaS solution improves the security of card issuance processes by providing advanced encryption and tokenization capabilities, enhanced monitoring, as well as fraud prevention tools.
5. Cost and Spending Control
You can manage your capital expenditures (CapEx) and operating expenditures (OpEx) by using a CaaS model. You can even maintain and upgrade your card issuance infrastructure without having to spend too much. An expert CaaS provider usually offers cost-effective and scalable solutions. This means that CaaS can be launched sooner to reduce additional upfront investments in hardware and software.
6. More Flexible Features
Your company can offer flexible CaaS products by customising your card's features, terms, and conditions. This results in more effective targeting of various customer segments and more tailored payment products and services.
7. Improved Customer Experience
Your business can offer versatile, customised, and innovative payment solutions to customers that can help improve customer satisfaction and loyalty, which boosts your revenue growth.
Banking-as-a-Service (BaaS) is a technology that enables fintech companies to access and integrate banking services without building and maintaining their infrastructure. By leveraging BaaS, fintech companies can quickly launch new products and services, reduce costs, and gain access to advanced payment processing capabilities.
According to a survey, 85% of respondents from global financial institutions believe Banking as a Service (BaaS) will make an impact over the next year. More so, 40% of the respondents believe the impact will be significant in the coming months.
Also, 81% of global respondents revealed that they see BaaS as a means to expand their business, improve their distribution channels, and streamline their overall operations.
Without BaaS, non-bank companies that want to offer financial services to their customers would need to build their banking infrastructure, which can be time-consuming, expensive, and challenging. Next, let’s discuss the benefits of BaaS in the next section.
3 Benefits of Banking as a Service for Your Business
With BaaS, fintech companies can focus on developing innovative products and services instead of worrying about building their banking infrastructure. Aside from this, the benefits of using BaaS can provide many opportunities to grow your fintech business, as follows:
1. Provides New Revenue Sources. The direct and immediate benefit of getting a BaaS platform for your company. It’s a new and great revenue stream opportunity by giving access to API-based banking products and services to non-bank companies and other financial institutions.
2. Enhances Flexibility and Marketability. Fintech businesses have the flexibility to operate their companies because you don’t have to get a banking license. Companies don’t have to create infrastructure from scratch. Your organization also can take advantage of broader market reach in collaboration with different financial institutions.
3. Minimizes Costs and Strengthen Security. Banking as a Service allows your companies to save time and money by eliminating the need for costly infrastructure investments. A reduction in developing your system enables your business to offer cutting-edge and personalized products and services to customers. With a vast array of organizations giving financial services, it’s also essential that all parties ensure high standards for security and trust.
How to Choose the Right BaaS for Your Business Needs
Choosing the right banking-as-a-service (BaaS) for your fintech company is a critical decision that can greatly impact your business. With the right BaaS, you can access a range of banking services such as e-wallet payments, loan origination, and risk management. This allows you to focus on developing innovative products and services that meet customer needs without having to worry about building or managing an internal banking infrastructure.
When it comes to selecting a BaaS, there are several factors to consider, including cost, scalability, efficiency, flexibility, marketability, and security. It’s important to do your research to choose the best option for your business needs.
For more of the cutting-edge BaaS infrastructures that suits your company, email us at [email protected] for a free consultation!