What is Payments-as-a-Service?

Posted by Kristen Jason on 12 Mar 2021

*Originally published on

You are probably already familiar with the term SaaS (Software-as-a-Service). However, you may not be as well acquainted with PaaS (Payments-as-a-Service). PaaS can also refer to Platform-as-a-Service, but here we will be exploring Payments-as-a-Service. 

PaaS (Payments-as-a-Service) - as defined by the McKinsey Global Payments Report:

While outsourcing of the full payments stack is a possibility, a new generation of technology providers has emerged allowing banks to expand quickly and modernize their payments product portfolio without incurring high upfront investment. Payments-as-a-Service (PaaS) players operate cutting-edge cloud-based platforms to provide specialized services, such as card issuing, payments clearing, cross-border payments, disbursements, and e-commerce gateways.

According to a report from Grand View Research, the global Payments-as-a-Service market size is projected to reach $25.7 billion by 2027. This rapid growth can be attributed to the digital acceleration that has already been in progress, combined with the pandemic which has increased the demand for quick money transfer methods. Due to the rising number of digital financial transactions, the need for cloud-based money transfer platforms, which make it possible to manage higher volumes of transactions faster and at low cost, has increased. 

PaaS offerings are the modern alternative to traditional payments hubs, which are built on legacy technology stacks for on-premise, batch-based deployments. These batch-based ecosystems are a huge roadblock to payment modernization, particularly for the rapidly growing real-time payments market. PaaS is cost-efficient and is designed for cloud-based, real-time 24x7x365 based ecosystems that require fast deployments. 

As we mentioned earlier, PaaS allows for growth to higher volumes of transactions at relatively low cost as you scale, freeing you from the burden of tech debt associated with traditional monolithic payments hubs. While hubs can cost anywhere from  $1m-$25m, with PaaS, you pay for what is needed over time, leading to a much lower total cost of ownership. This is the type of scalability that you should be looking for as the market for emerging payments grows. Additionally, the speed to market of PaaS solutions is a key differentiator. Traditional hubs take years to get to market, while PaaS takes weeks to get you to market.

When an organization uses PaaS, they are also outsourcing integration and compliance concerns,  freeing up resources and increasing efficiencies. Here are some key functions and features to look for in PaaS solutions:

  • ISO20022-native services provide richer, better structured, and more granular data for payments messaging
  • Real-time payments help your organization deliver real-time payment services to customers quickly and easily 
  • Embedded Fraud and risk management helps you manage risk and maintain regulatory compliance
  • Cloud-native built for speed, responsiveness, and reliability and provides you with a strong foundation for innovation
  • Intelligent payment routing options be tailored to your needs and payments scenarios
  • Reporting and analytics provides deep and actionable insights into your payment operations
  • Microservices-based architecture allows innovation and change without disruption 
  • Open APIs provide simple/fast integration with existing systems such as core banking, digital banking, fraud, and risk management
  • Advanced security features to ensure data and privacy protection

Looking to learn more about commonly used payments terms? Check out our blog explaining microservices and API architecture. 

Alacriti offers PaaS on our cloud-based Orbipay platform, which delivers solutions across the payments ecosystem, including The Clearing House’s RTP® network, Electronic Bill Presentment and Payments (EBPP), and Digital Disbursements. To speak with an Alacriti payments expert, please contact us at (908) 791-2916 or

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Kristen Jason Associate Director, Product Marketing Kristen is responsible for marketing strategy and content for Alacriti while staying abreast of industry trends. She offers over 17 years of marketing experience, including 8 years of experience in financial technology and payments. Kristen holds a Bachelor of Science in both Psychology and Business Administration from Florida A&M University and a M.B.A from the University of Central Florida.

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