Payments-as-a-Service | B2B Finance Glossary

What is Payments-as-a-Service?

Paystand is pioneering something that’s never been done in the B2B industry: Payments-as-a-Service, a subscription-based software model for B2B payments – not a transaction-based model that drains revenue every time a payment is made.

Our Payments-as-a-Service model helps give finance teams access to the Paystand Bank Network: a zero-fee payment network designed to eliminate transaction fees for mid-sized and large enterprises everywhere.

However, we know that moving B2B customers to a fully digital payment experience doesn’t happen overnight, so we still make it possible to accept legacy payments like credit cards and ACH transfers through our platform. Payments-as-a-Service offers a flat monthly rate to use Paystand’s software. This offers AR departments continuous software improvements, greater predictability, transparency, and peace of mind that costs will never skyrocket as their businesses grow.

How Does Payments-as-a-Service Work?

Everything Paystand does is about creating capital efficiency for your business and delivering a frictionless payment experience to your customers. That means decreased DSO, faster time-to-cash, and more revenue as your business grows. Paystand lets you control and customize how much you spend so you can predict AR costs with certainty and be sure you are forecasting accurately.

We built our business on how payments should be, not how they’ve always been. In a digital world, there’s no need for gatekeepers and middlemen who charge transaction fees. Inspired by the shift to efficient, software-driven models that have changed the game for other areas of the enterprise, Paystand has developed proprietary technology and a payment framework designed to bring B2B payments into the digital era.

To eliminate transaction fees for good, Paystand offers its customers the Paystand Bank Network: our zero-fee, digital payments network that gives you access to real-time bank-to-bank transfers. It’s the easiest and most secure way to send and receive money. The Paystand Bank Network lets your business use Least Cost Routing (LCR) technology to help customers shift to zero-fee digital payments. It also empowers you to control costs while maintaining flexibility for your customers and offering alternative payments that calculate your customer’s savings in the checkout window.

Why is Payments-as-a-Service Important?

Today, even though almost every other enterprise sector has gone digital, B2B payments are currently stuck in the dark ages. The available methods are either tied to slow and tedious paper-based processes or entail high fees that siphon away your business’s revenue.

Over 40% of B2B payments are processed via paper check – a form of payment that falls victim to fraud 74% of the time. On top of that, checks are subject to long periods of mail float (the time it takes for a check to travel from the payer to the payee in the postal system), which extends DSO and significantly slows down time to cash. For some businesses, speedy access to revenue is essential: the one thing that stands between a business shutting down or remaining open. For other businesses that rely almost entirely on check payments, lockbox services can be expensive and time-consuming, and those funds and hours could be better spent on strategic thinking and company expansion.

At the same time, even though credit card transactions are speedier than check transactions and allow customers to pay easily online, they can cost your business 3.5% on every transaction – draining you of your bottom line.

On top of that, finance teams need a solution that allows them to automate AR processes and completely digitize their cash cycle fully.

Payments-as-a-Service is designed not only to eliminate the need for paper checks and the fees tied to credit card transactions, but it’s also essential for automating critical AR tasks that take up unnecessary time. This provides a frictionless payment experience for your customers and helps put revenue on autopilot.

Our offerings also include payer incentives – tactics that allow you to create significant shifts in payment behavior away from credit cards and save as much as 67% on punitive transaction fees. It’s a simple but elegant tool that gives businesses control over two powerful fee-control features:

• First, it allows businesses to set payment incentives (invoice discounts) for choosing the zero-fee Paystand Bank Network or other non-card methods.
• Second, it lets businesses set convenience fees for credit card payments at their chosen rate.

What are the Benefits of Payments as a Service?

Payments-as-a-Service allows you to take your AR department to the next level. Here’s how:

• Automatic invoicing. Send email invoices to your customers that include embedded “pay now” links that allow payments to be collected effortlessly.
• ERP integration. Seamlessly integrate every element of your payments process with your trusted ERP system so you can access critical data from a single location.
• Autopay and recurring payments. Give your customers the option of easily setting up autopay and recurring payments so you have better insight into your cash flow. You can more accurately plan when your revenue is coming in.
• Automatic reconciliation. Auto-reconcile transactions directly within your system of record.
• Enhanced data. Use smart data to attach key invoice information to every payment.

Payments-as-a-Service also allows you to control and automate every aspect of the payment process:

• B2B payments. Accept B2B payments digitally and provide best-in-class customer experiences.
• Billing and receivables. Remove friction in your collections process with a fully automated communication suite.
• ERP integrations. Provide native payment functionality all from within your existing ERP or SOR.
• Software platforms. Bring payments in-house, keep buyers and sellers engaged, and capture more revenue.
• APIs. Customize your payment flows with our robust developer tools and APIs.
• Enterprise blockchain. Enable blockchain-based workflows and ensure critical payment and transaction data.

How Much Does Payments-as-a-Service Cost?

Paystand allows you only to pay the wholesale rate negotiated for you alongside our banking partners. We never charge markups or transaction fees and keep your merchant costs straightforward, predictable, and transparent. On top of that, Paystand always makes costs clear and predictable so you can forecast better. Our Payments-as-a-Service offering is billed as a recurring subscription that’s customized to each one of our customers.

If you’re ready to move to a subscription-based payments model that allows you to stop paying punitive transaction fees for good and reduce your DSO by as much as 60%, you can schedule a time to speak with one of our payments experts today.