Future of Payments
October 12, 2022

Banking as a Service vs. Payments Platforms: What's the Difference?

Continuing our series of how to embed payments and a card program into your product, this week we’re taking an in-depth look at the differences between Banking as a Service platforms and payments platforms.

What is Banking as a Service?

Banking as a Service (BaaS) platforms offer technology capabilities in conjunction with a licensed bank, allowing you to integrate banking services into your product. Using BaaS, your company can leverage a platform’s banking capabilities—such as payment processing, lending, debit or credit cards, and more—all within your product’s customer experience. 

Businesses are turning to BaaS in an attempt to drive customer loyalty and engagement, since they know payment capabilities have become such an integral component of driving growth. By working with a BaaS platform, a company can adopt payment capabilities without getting a banking license of their own. 

What is a payments platform?

Going with a BaaS platform is not your only option for integrating payments into your product. There are also payments platforms—turnkey, white-glove solutions that can help you quickly catch up to your competition without the cost in time, money, and resources that a BaaS platform often requires. 

What is payments program management?

When evaluating your payments platform options, note that some of them also offer program management. Program management will take care of all aspects of these integrated financial services—things like the relationships with the card networks and issuing banks, end user experience and support, card inventory, and dispute management. 

All of these separate components are considerations you’ll need to factor into your decision. Do you want to be in charge of all of these moving parts? Or do you want someone who can help you implement a payments program while handling these components for you?

Payments platform + program management in one

Branch is a free payments platform and program management option in one. The reason we’re free to both companies and workers is because we collect revenue from via interchange. Every time a Branch user swipes their Branch card to make a purchase, the merchant—the one receiving payment from the worker—pays what's called an interchange fee, and part of that fee comes back to Branch.

Benefits of going with a payments platform 

With a payments platform and program management option, your team isn’t drained of resources, money, or time. You can create an experience that attracts, delights, and retains workers with financial benefits, discounts, rewards, and other perks—without having to manage it yourself or be burdened with hidden pass-through costs.

You also get the following benefits:

  • An out-of-the-box payments solution. A payments platform that includes program management is essentially a product that’s ready to go without the need to engineer or develop a thing, unlike a BaaS.
  • Fastest speed to market. Payments platforms can get set up as quickly as days vs. quarters that most BaaS providers take.
  • Limited distractions. When working with a payments platform, your company doesn’t need to manage anything but disbursements. Fraud, risk, legal/compliance, KYC, support, additional pass-through costs…all of that is off your plate. 

As we’ll discuss, however, neither a BaaS platform or a payments platform will be right for 100% of all companies. The best way to add a payments and card program to your business will depend on your unique needs. 

Stay tuned for the next part of our series, coming up next week! 

To get the complete guide to Embedding Payments and a Card Program Into Your Product, click below.


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