Understanding PaaS

It’s no secret that cross-border payments and eCommerce have grown immensely in the past decade. What has been unexpected is the surprising boost they were given by COVID-19, as increasingly more businesses are now forced to take their commerce, and payments, online.
As online operations grow, the need for a payment solution also surfaces, and many businesses  ⁠— who may not have considered getting an online payment solution in the past ⁠—  now deem it necessary.

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What is Payment-as-a-Service (PaaS)? 

Payment-as-a-Service is a term that describes a cloud-based solution where a third-party service provides software and hardware tools, covers servers, storage, and networking ⁠—  i.e., the infrastructure ⁠— and developers can then develop their own customized applications on top of it.

PaaS, when initially introduced, was a breath of fresh air in an industry once dominated by banks and large financial institutions. PaaS now enables businesses to incorporate an online payment solution easily, with minimal integration efforts on their side. With an estimated growth of $47.8 Billion in revenue by 2026, PaaS is definitely a force to be reckoned with. PaaS’s colossal growth is by no means accidental. It reflects the real need businesses have to cater to their growing payment operation and to adjust their payment stack to the evolving needs of the market.

Today, cloud-based solutions for payments, which are derived from ⁠— and also share the same acronym as ⁠— Platform-as-a-Service, use the SaaS model to simplify payments and businesses’ ability to scale up their stack when they need to.

Core Features of PaaS 

A quick search online will return multiple definitions and types of PaaS. Similar to many new concepts, it’s hard to give PaaS a clear-cut definition of what it offers or lacks in terms of features — which makes it all the more difficult for businesses to decide which will be the right solution for them. Still, the following core features are necessary to have in a PaaS solution, in order to get the most out of such a solution:‍


This feature may sound obvious, but payments didn’t use to be cloud-based. This key feature of a PaaS allows businesses to easily access their payment solution from anywhere, without being confined to  a single, specific location. For global businesses, this becomes a major necessity.

Open Source Code

One of the main advantages of PaaS is its open-source code and the ease of building upon  its infrastructure. With PaaS, developers have the freedom to customize the solution according to their company’s requirements, without needing  to build a solution from scratch. Onboarding additional providers, adding third-party integrations, and tweaking business preferences becomes as easy as pie with a PaaS. While APIs may vary between solutions, here is an example of the APIs we have at ZOOZ (where all solution aspects are API-based):

Payments API Reference

Management API Reference

Reporting API Reference

Analytics API Reference

Audit API Reference

Scaleable and flexible 

When companies decide to build solutions in-house, they are required to make a strategic decision to decide on the size of the platform they’ll need. This is always a ballpark estimation, as it is very hard to accurately predict the size of a solution that a business may or may not need in the future. By using a PaaS, businesses no longer need to be troubled with this dilemma, as these solutions are completely scalable and can be adjusted to support periods of high volume as well as lower volume periods.

PCI Compliant

A big challenge for companies is the necessity to become PCI-compliant ⁠— a prerequisite to handling payments. Generally, when businesses decide to handle payment all on their own and build their payment solution in-house, they need to become PCI level 1-certified, which is the highest level of PCI certification. The big advantage of a PaaS is that it should already be PCI compliant, and thus liberate you from procuring such a certification.

Analytics & Optimization

An added benefit of most PaaS solutions is their added analytics abilities, which become very important for payment optimization purposes. By collecting all of your business’s payment performance data, a PaaS can help pinpoint where the strengths and weaknesses of your business lie and what needs to be changed to increase your approval rates and improve your bottom line.

Some advanced PaaS solutions also function as an optimization layer, with added tools to allow you to smartly route your payments, A/B test providers, and set failover rules to eliminate failure in case of downtime. These components becomes extremely important as businesses grow, and it becomes necessary to grow the scale of their operation (and payments) as well.

What Type of businesses should opt for PaaS?

A PaaS can be beneficial for various types of businesses. The initial standpoint should be whether you wish to build a solution in-house and do everything from scratch or whether you wish to have an initial infrastructure. If you prefer to build an in-house solution, a PaaS is not needed. However, to build your payments on top of existing infrastructure, opt for a PaaS.

If you go for the PaaS option, its flexibility can appeal to both large and small businesses, as each can find their needs met. Larger companies are more likely to have the time and resources to build their own payments infrastructure, but they often prefer to focus on their core business, rather than get involved in the technical aspects of integrating payment servers, databases and networks. Small companies often do not have these resources, and so they think ahead and opt for the safety, reliability and convenience of a ready-made, PCI-compliant solution. Regardless of company size, going with a PaaS can be the right move.

Should You Opt for a PaaS?

Now facing the million-dollar question ⁠— should you opt for a PaaS? Or can you get away without one and still build a prospering business?

As long as your business operation is small and limited to only a handful of regions, without the desire or need for expansion, then you might be able to get away without a payment solution to help you streamline and optimize your payment stack.

The complexities really arise once you decide to branch out your business, expand it, or cater to a larger, global customer base. Cross-border purchases tend to complicate the payment scheme. All too often,  after the move to global payments, low approval rates occur,  and it’s hard to understand the reasons for failure and what can be done to combat it. To battle these difficulties you may need to add more providers to serve local audiences in different locations, and then to find a way to route certain payments to a specific provider and according to a specific set of rules. Eventually, this collection of factors will drive most businesses to find a way to organize and streamline their payments, and a PaaS is often the all-around favorable solution to get the control, customizability, and analytics tools to help your business overcome its payment growing pains.

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