Digital payments are the lifeblood of the digital economy. The total transaction value of digital payments worldwide is estimated to reach $6,685,102m in 2021. The strong growth of online payments has resulted in more companies than ever leveraging financial services within their software to deliver unique and sticky product offerings.
In this blog series, we’ve explored how bold businesses are capitalising on the opportunity of an increasing range of financial services. But how are businesses that don’t have established financial service infrastructure managing to deliver exciting embedded financial products for their customers and employees?
The answer: Payments as a Service APIs.
In our final blog of this series, we’ll explore what Payments as a Service means, why it’s proving critical to the growth of digital platforms and cover the benefits of this innovative new solution.
What Is Payments as a Service (PaaS)?
Payments as a service is a method by which a company uses a cloud-based platform to process payments for their customers. Generally, companies that use Payments as a Service (or PaaS) providers don’t have sufficient internal resources to develop payment processing functionality.
Companies partner with a platform provider, like Modulr, which can rapidly advance their customer offerings without the need to develop upgrades from scratch.
But why don’t more companies develop their own payments infrastructure?
Why Do We Need Payments as a Service?
In the past, large brands attempted to create their own technology stacks to solve problems. But the technology is expensive, slow - by modern standards - and difficult to maintain. With the arrival of cloud computing and innovative new FinTechs, it’s comparatively cheaper, faster and more reliable to partner with a Payments as a Service provider than building it alone.
So how does this affect modern companies that are adept at building technology products or the launch of embedded financial services?
The Rapid Launch of Financial Services
Financial services are unlike most other industries. For one, it's an industry renowned for being tightly regulated, with standards shifting rapidly, especially in recent years with the launch of open banking and PSD2.
It’s more efficient, effective and cheaper to partner with a platform provider that specialises in payments. Companies can then be confident they are compliant and instead focus on innovating in their sector of expertise, rather than worrying about banking legislation.
But how does it work? What would a company need to do to leverage the power of payments as a service for their business?
Embedding Financial Services: Leveraging the Power of a Payments API
Innovative organisations are increasingly incorporating payments APIs into their systems. By embedding financial services into their product offerings, dynamic companies are able to serve customers in extraordinary new ways.
For the first time, non-payments focused companies can embed access to UK, EU and card payment schemes directly into their websites, adding new dimensions to their customer value propositions.
Partnering with payments platforms helps companies sidestep the mistake of building expensive, legacy architecture to stay competitive. The digital economy can continue to grow, retaining its focus on great customer experiences and ushering in a new era of transformational services.
A Brand Legacy is All the Legacy You Need
Old, legacy systems can hold brands back from making essential strides in the competitive digital economy. Outdated tech is unable to adapt to the dynamic needs of modern business, and can barely cope with current demand, let alone the upcoming pressures of an ever more digitised world.
By contrast, Payments as a Service APIs help businesses to keep up with rapidly evolving demand. Companies can pivot and react to the needs of a shifting marketplace, issuing revolutionary financial services through embedded payments infrastructure and setting themselves apart from similar competitors.
Sourcing an effective partner will be the difference between success and failure for businesses in the next five years. Modulr provides the underlying infrastructure and regulatory compliance that you need to launch your embedded payments at speed and scale.