Payments

as a Service
A New Concept Set To Revolutionize
Payment Processing
 Table of Contents

Executive Summary.................................................................p.3

The Unique Features

of Payments as a Service (PaaS)..................................p.4
Value of One Provider...................................................................................p.4

Flexible Technology.......................................................................................p.4

A Full Service Team........................................................................................p.5

A More Cohesive Payment Ecosystem....................................................p.5

Re-thinking Payments
with the Customer in Mind.................................................p.6
Simple Pricing Models..................................................................................p.6

Updated Security..........................................................................................p.6

Evolving Methods of Payments.................................................................p.7

Onboarding & Reporting.............................................................................p.7

Creating New Avenues of Recurring Revenue.....................................p.8

Global Reach..................................................................................................p.8

How PaaS and Banks Can Work Together............p.9

Future Proofing Banks With PaaS.............................................................p.10

Conclusion: PaaS is Constantly Evolving................p.11

About Bambora..........................................................................p.12
 3

Executive Summary

Software as a Service (SaaS) has taken over

traditional methods of software licensing and
delivery, and now that ideology is being used
to connect payment systems.

In an industry once dominated by banks and PaaS is not just changing the ISV and merchant
large financial institutions, when implementing landscape; banks are recognizing that the rise
and maintaining payment systems was a in PaaS is an opportunity to provide a reliable
slow and arduous process, a new evolution option for their customers that can rival the
is happening. competition. New regulations as a result of the
2008 financial crisis have only strengthened
Payments as a Service (PaaS) uses the SaaS the case for banks to adopt a new solution
model to simplify payments for the end that can be brought in-house rather than
customer, whether it be an Integrated constructing an entirely new model. Integrating
Software Vendor (ISV) or merchant. PaaS ideology into their practice, banks are
realizing the potential to offer a solution that
For a customer, using PaaS means a simplified is scalable, secure, and can process higher
fee structure, with no surprises, and no transaction volumes at lower costs.
transactional costs eating away at profits.
Instead, customers are rewarded for increasing
their transactional volume, as the goal of PaaS
providers is now on how to retain clients so that
they will stay with their service, rather than
figuring out how to profit off of them.
Part 1: 4

The Unique Features of

Payments as a Service (PaaS)
Payments as a Service adds value to Flexible Technology
customers in ways that surpass traditional
payment systems in both functionality The FinTech industry is centered around
and scalability. innovating existing technology to make
complex payment processes comprehensible
Payments is not the centerpiece in the and straightforward for users. The move from
ever-evolving Independent Software Vendor traditional on-premise, physical servers to
landscape anymore. Payments now more cloud-based software solutions reduces
than ever must be seamless and simple—from operating costs and allows for payment
functionality to economics. providers to get their products to market faster.

Four things set PaaS apart from traditional This evolution has allowed new technology like
payment systems; the value of one provider, omnichannel solutions and digital wallets to
flexible technology, full-service support, and a reach customers faster than ever before.
more cohesive payment ecosystem. These four
things enable ISVs, banks, and merchants the
opportunity to deliver services that have never
been available before.
Omnichannel is an approach
Value of One Provider to shopping that enables the
customer to seamlessly shop
Software providers traditionally had to online, in-store, or in-app
integrate and support connections to thereby making the experience
e-commerce, mobile, point-of-sale, reporting, both enjoyable and effortless.
and reconciliation platforms.

Digital wallets can be an

When you partner with a PaaS provider,
there is only one platform, one integration,
online service or on a mobile
and one billing service. There is no longer a device that allows for the
need to integrate to multiple platforms or user to make electronic
multiple providers. PaaS providers offer simple transactions without the
fee structures that align with the software hassle of entering card data.
providers existing pricing model.

PaaS has created an adaptive solution set to

adhere to market changes and niche vertical
needs for any business. The technology offered by
providers needs to be flexible and easy to implement.
 5

A Full Service Team

Customer support has gone from reactive When the ISV or merchant works with a
inbound support to a proactive service, payment provider, they have access to all the
focusing more on the success of the customer features that FI, and Card Networks, have to
journey. The FinTech industry is shifting away offer, without having to integrate separately
from automated messaging and large call into all of them. A more open ecosystem is a
centers with exceedingly long wait times. While win for all involved players.
chatbots and pop-up windows continue to
dominate the SaaS space, a real, personalized, Trust in the ecosystem and players is critical
and reachable, multi-channel service team is as new technologies emerge. It doesn’t
becoming more and more in demand. matter how much you innovate, if no one
trusts your offering.
An ecosystem as complex as payments
deserves a full service team. From With the PaaS model, the payment provider
integration support, account management, builds deep relationships with FI and Card
and a team dedicated to the customer Networks, to service consumers. Payment data is
experience, the service provided is now a even more sensitive and merchants are quick to
substantial differentiator when deciding on review untrustworthy providers. Building trust in the
a payment provider. payment ecosystem and existing relationships is
critical to the success of all players.
A More Cohesive Payment Ecosystem

It might be hard to believe that payments

could be bringing people closer together,
but through technology, PaaS is developing
a community where everyone playing can
benefit. The solutions built by Financial
Institutions (FI), Card Networks, Payment
Processors, and Integrated Software Vendors
all directly benefit the end user: the customer.
Part 2: 6

Re-thinking Payments
with the Customer in Mind
PaaS is cutting out the confusion for The traditional tokenization or vault solutions
customers with easy-to-understand designed to reduce the storage of sensitive
pricing models, updated security, evolving card data can now be used to not only
payment methods, simple onboarding, enhance security, but deliver value to the
and opportunities for global expansion. customer. As PaaS solutions become more
savvy, security should always be top of mind.

Simple Pricing Models PCI was set as the first standard to specify the
compliance requirements payment providers
The goal for previous payment models was must go through to process payments. Now,
to profit off of the success of customers; PSD2 and GDPR have emerged as the latest
the higher the transaction volume, the more guidelines to protect and share sensitive credit
a provider could take. PaaS is re-thinking card information.
payments with the customer in mind. Rather
than profiting off of the ISV or merchant As the new guidelines have created a market
success through excessive or hidden fees, for increased security, PaaS providers can now
providers have found a way that the two can offer products that surpass the legacy security
grow together. methods. The added benefits of security and
simplicity integrating with PaaS lets the ISV
The PaaS pricing model is simplified so that it and merchant set their sights on creating a
fits into a typical SaaS model. Rates are flat customer-focused experience.
(percentage based off of volume) or bundled
(combining pricing from multiple vendors) so
ISVs can use secure
••••••••••••••••••

customers get one easy to digest bill. There are

no more hidden fees or confusing acronyms. payment fields that
The emphasis is on a structure that allows for a
customer to easily understand their statement, are embedded into
making fee reconciliation a breeze. the software users
interface, to capture
Updated Security
sensitive card data
As payment volumes increase globally and new without it touching
technology speeds up the payment lifecycle,
security becomes more imperative.
their own servers
or disrupting the
customer experience.
 7

Evolving Methods of Payments

It is the consumer behaviour that drives the The vendor innovates; they listen to the
card brands to create new payment types, and customer and build an experience just for
ISVs and merchants in turn need to respond to them. The card brands break down payment
consumer demands. barriers by offering new payment methods such
as wallets. PaaS acts as the doorway between
The rise in online payment methods such as digital the vendor and the card brands, giving each
wallets in addition to credit cards means vendors of them the availability to innovate and
need to offer these options for their customers, create. The end result is a seamless customer
or risk being left behind. For PaaS providers, the experience.
big question is: How can we make it easier for the
seller to sell? The answer lies in the latest payment Onboarding & Reporting
trends, specifically omnichannel.
The ease of onboarding and integrating into
With an omnichannel presence, vendors can a PaaS platform also makes switching to a
innovate new ways to capture a customer’s payment platform more desirable. Traditional
attention at any point of their shopping merchant applications were a complicated
journey, while offering the payment types that and time-consuming process, not to mention
their customers want. Domino’s pioneered costly to manage. Using PaaS, customers can
the “pay by emoji” method, which allowed for get onboarded in a matter of minutes, with a
customers to order a pizza simply by tweeting step-by-step walkthrough of integrating the
a pizza emoji after they registered their payments platform into their service. The gap
Twitter handle with Domino’s Pizza Profile. With between onboarding and processing their first
Domino’s omnichannel experience, customers transaction is decreasing dramatically with the
can pay online, in-app, in-store, and now just flexible technology that PaaS can offer.
by tweeting an emoji.
There is plenty of competition in the payments
space, so providers need ways to differentiate
themselves. Customers need to be able to
easily reconcile their accounts, but also monitor
them for any suspicious behaviour so they can
detect fraud before it happens. Fraud such as
chargebacks costs the average merchant
1.47% of their annual revenue, a substantial
amount. Allowing customers to easily monitor
and reconcile their account greatly reduces
their risk of chargebacks.
 8

Creating New Avenues

of Recurring Revenue

For any size business, an opportunity to include With 80% of merchants saying they would
a new stream of revenue is always a great way switch suppliers to reduce costs, there is an
to add value to the company. Options such as opportunity for PaaS providers to stand out
revenue sharing or IC+ pricing can be enticing and offer the best service in the payments
perks when making a selection. Not all PaaS space, which directly benefits the end customer.
providers offer services like revenue sharing, so
it is important customers shop around before PaaS providers also have the opportunity
selecting a partner. to allow for their customers to use the same
payment platform when doing business in
Global Reach international markets. The value of one provider
creates a seamless payment experience
All these elements identified by PaaS tie back across borders, and the ease of reporting
to the emerging need to acknowledge the and reconciliation makes settling in different
rise of global payments. With an estimated currencies easier than ever. One platform, one
940 million shoppers spending $1 trillion in integration, one billing service.
cross-border e-commerce by 2020, the need

940 million shoppers

for ISVs and merchants to go global is greater
than ever before. To bring their business to an
international scale, ISVs and merchants need
an option that addresses the costs associated
with cross-border transactions. The network of
spending $1 trillion
gateways, acquirers, and providers that PaaS in cross-border
offers has given their customers the option to
find the optimal mix for their business.
e-commerce by 2020

Revenue sharing shares a portion of the profits among partners for referring business
to a company.

IC+ pricing is a custom pricing scheme for those who process over a certain amount
of transactions.
Part 3: 9

How PaaS and Banks

Can Work Together
The rise of PaaS is an option that banks Banks that are willing to invest and adopt PaaS
cannot ignore, and those that are quicker solutions can realize measurable benefits in
to adopt this service are the ones that two distinct ways:
will succeed.
Reduced costs
The conventional thinking of banks was to keep From a bank perspective, PaaS can reduce
all their services controlled internally; migrating costs because the payment provider is the
operations to a cloud-based software offered owner of the hardware and software; the
by a third party did not fit the mold. For banks, bank does not have to employ its own
the change in attitudes towards SaaS did technology specialist teams. Processing
not happen until a few years ago, when new higher volumes of transactions would not
regulations drastically changed the payment affect the overall profits of the bank; in fact,
space as a result of the 2008 financial crisis. it would be quite the opposite, the higher
Banks now need to provide an option that volume would mean more savings in
promotes performance through scalability and interchange rates. By using the PaaS method,
security, while also reducing transaction costs one European bank estimated they would
for higher processing volumes. be able to save 60% in transaction costs.

The case for adopting the PaaS solutions for Improved performance and scalability
banks has never been stronger, yet most of Arguably the biggest way PaaS adds value
the technology budget for banks is saved to is its ability to scale its customers. The PaaS
maintain the current in-house infrastructure. business model is meant to grow with the
There is little room for constructing a new customer, meaning that as their profits grow,
model that is scalable, compliant, and can they don’t suffer from increased transaction
process higher transaction volume at a lower costs. In addition, using the cloud-based
cost. The top three reasons banks give for payment software allows updates to be
wanting to adopt PaaS are the ability to offer made immediately and seamlessly, responding
flexible capacity (68%), faster provisioning to the fluctuation of daily payments in a
(63%), and reducing ownership costs (57%). more effective manner.

3
The top three
reasons banks ••• 68% ••• 63% ••• 57%
give for wanting
to adopt PaaS ability to offer
flexible capacity
faster
provisioning
reducing
ownership costs
 10

Future Proofing Banks With PaaS

Banks that are early adopters of PaaS stand The speed and ability which banks can
a better chance of solidifying their place enter new markets or compete with ISVs and
as a leader in the industry. By using PaaS, merchants in existing markets are elevated
banks will be able to direct all their payment with PaaS. One of the main concerns for
flows through one platform, a platform that is banks is to stay relevant in a rapidly changing
adaptable for new and emerging technologies environment. Although faced with increasing
such as real-time payments and blockchain. competition, it is safe to say banks aren’t
Although these technologies are already in going anywhere. Integrating PaaS will only
practice, they are still in the early stages, and strengthen the presence banks have in the
the impact they will have on payments is not market, allowing them to develop without any
fully realized yet. constraints based on their legacy systems.
Once implemented banks will be able to
The cloud-based approach used by PaaS uphold their place as viable contenders in
relieves the constraints on the banks internal the marketplace.
IT teams, providing banks with the latest
innovations without the laborious effort and
development delays.
 11

Conclusion:
PaaS is Constantly Evolving

PaaS is changing the way the world Banks that partner with Bambora will realize
processes payments. their potential to adapt and seamlessly
integrate new technology, paving the way for
The advantages and opportunities of PaaS the rest of the banking industry.
are becoming known on a global scale; the
need for a new payments service has never At the forefront of PaaS, Bambora has
been stronger as faith in the legacy payment carved out a niche as a leader in payment
system is dwindling. In 2015, Bambora emerged processing, and this service will only strengthen
to regain the consumers’ trust in the financial as Bambora continues to build the most
system with the value of having one provider. customer-focused payment experience in the
world.
For Bambora, convenience and a user-friendly
environment are paramount when it comes to
processing e-commerce transactions. Bambora
flipped the script on traditional payments,
becoming more customer-focused and
ensuring everyone benefits from the success
of one another. Bambora is continuously
innovating to make payments more accessible
to the end customer. Currently, Bambora and
Ingenico are constructing groundbreaking
solutions to deliver a unified payments
experience for ISVs and the customers.

With Bambora, banks that are willing to invest

in switching their infrastructure over to cloud
technology will be able to direct all their
payment flows through one platform.
 12

About the Author

Justin Passalaqua is Head of Sales for Bambora within North America where he leads all sales
initiatives and is the number one champion of the customer. With over ten years of payment
experience, he makes payments as easy as possible to understand so the customer can focus
on their product and passion.

About Bambora
Founded in 2015, Bambora is a collection of companies with decades of experience in the
payments industry. Now a global presence, with over 600 employees in 64 markets, Bambora
processes over $47 billion USD per year.

Bambora North America is responsible for processing 30% of all e-commerce in Canada and has
equally ambitious goals for the US market. Bambora helps all businesses grow, with simple and
secure payment tools.

@ For any questions, please contact: 1-888-472-0811

[email protected]