Payments as a service

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Payments as a service (PaaS) is a phrase used to describe a SaaS-based methodology used to connect a disparate group of international payment systems. The architecture is represented by a layer – or overlay – that resides on top of these disparate systems and provides for two-way communications between the payment system and the PaaS. Communication is governed by standard APIs created by the PaaS provider.


Payment as a platform diagram

Since the 1980s, credit cards and international wire transfer systems like SWIFT[1]have been the primary methods for making and receiving electronic cross-border payments. Within individual countries, payers and payees have used various electronic systems to make such payments. In the United States, for instance, the Federal Reserve Bank operates the automated clearing house (ACH) system.[2] In most EU countries direct debit is the preferred method of facilitating electronic payments.

With the advent of the World Wide Web, it became necessary to provide alternative payment systems. At first, consumers were hesitant to use their credit cards on the Web due to security concerns. Entrepreneurs capitalized on this problem with the creation of the electronic wallet. As early as 1994, solutions like CyberCash allowed consumers to make secure purchases over the Internet.[3]

While CyberCash eventually failed, more elegant solutions began to take hold. In March of 2000, PayPal was formed and is now the predominant electronic wallet in the U.S. Similar regional electronic wallet solutions are operating in different countries including WebMoney and Yandex.Money in Russia and Alipay in China. While popular in their own countries, these solutions do not have significant global reach. PayPal and Moneybookers (Skrill)[4] have evolved into regional electronic wallets, providing greater liquidity, but still do not provide for the free flow of funds between all popular electronic wallet solutions.

PaaS layer[edit]

PaaS is designed to allow merchants and other market participants to utilize local, regional and global payments options through a single interface. The complexity of moving funds between providers is handled by the PaaS layer and is hidden from the user. Generally speaking, there is only one interface between a merchant and PaaS. Because only one interface is required, merchants or users are only required to maintain one financial repository.

See also[edit]


  1. ^ ISO 9362, Also known as SWIFT-BIC, BIC code, SWIFT ID or SWIFT code)
  2. ^ ACH overview on the Fed website
  3. ^ Cybercash: the coming era of electronic money – Robert Guttmann – 2003 – Business & Economics
  4. ^ EOctopus in Hong Kong – A Feasibility Study — Ben Beiske, Leslie Lee, Iris Yim, David Yu