IaaS vs. SaaS: A merchant’s guide to payment orchestration platforms

Payment orchestration platforms have been developed to assist merchants with improving the checkout experience at both the front- and backend, and relieve the burden for merchants to deploy and manage multiple payment methods and providers. But with so many on the market, what is the difference between an IaaS vs. SaaS payment orchestration provider, and why should merchants care? 

What is payment orchestration?

With payment orchestration, merchants can cater to ever-evolving customer payment preferences and stay compliant to a range of data and regulatory requirements in local markets without eating into engineering and technology resources. 

For merchants without a POP, relying on a single payment provider or juggling multiple providers that are not integrated with each other can be an easily avoided headache. An orchestration layer – whether it is outsourced or built in-house – optimizes payment processing at each stage of the payment flow for online transactions, minimizing the number of failed transactions due to technical issues and allowing merchants to save costs.

Should payment orchestration be built in-house or outsourced?

For merchants that don’t want to invest the money, time, and technical resources into building an orchestration layer in-house, there is an option to outsource to one of a number of payment orchestration platforms (POPs) on the market. However, merchants must consider their needs and whether that fits a platform built as Software-as-a-Service (SaaS) or Infrastructure-as-a-Service (IaaS). 

What are the pros and cons of a SaaS payment orchestration platform?

SaaS platforms are widely available, and have a number of benefits depending on the size of the merchant. For start-ups and small businesses, SaaS platforms take the burden of managing and upgrading software completely off their hands – a major advantage for small teams with limited resources. Due to its delivery model, SaaS platforms manage all potential technical issues, such as data, middleware, servers, and storage, resulting in streamlined support and maintenance for the business. 

However, with SaaS platforms, merchants have no control over the cloud-based infrastructure it runs on, and if the provider experiences an outage, all merchants using it will experience an outage. If a merchant is processing a high volume of transactions using the shared bandwidth on that platform, all merchants will experience a slow-down. In addition, SaaS tools may be incompatible with other tools and hardware already in use, and integrations are normally up to the provider, so it limits an internal team’s ability to make adjustments to integrations on their end.

Perhaps more importantly, merchants are at the mercy of the SaaS organization’s security measures and data leaks can lead to a huge distrust in a brand. By 2025, cybercrime is estimated to cost $10.5 trillion globally, increasing by 15% year-on-year, and reports suggest that the average company with data in the cloud using SaaS platforms represents $28 million in data breach risk. 

Last year, major global SaaS-based companies such as MailChimp, Okta, Microsoft, and Hubspot have experienced data breaches that have hugely impacted their business customers and end-consumers who have been caught up in the mess. 

• The average total cost of a ransomware breach is $4.62 million, slightly higher than the average data breach of $4.24 million
• The average time to contain a breach was 80 days
• By 2025, cybercrime is estimated to cost $10.5 trillion globally, increasing by 15% year-on-year

What is the alternative to a SaaS payment orchestration platform?

For large merchants who are scaling quickly and globally, and want control over their data and systems, IaaS platforms could be a better option. An infrastructure-first solution built natively in the cloud gives merchants the tools and features they need built into their own individualized cloud instances that they can quickly spin out as an ‘Edge’ to new locations, adding new and localized payment services through a single Universal API. 

Edge computing provides flexibility for organizations to achieve greater data sovereignty, greater autonomy, better security, and solve latency issues. A cloud-native POP enables merchants to enter new markets by creating Edge Instances within a chosen country or region, keeping transactions and data secure within a local, unique Edge that is compliant with local sales and privacy regulations. 

Unlike the shared tenancy SaaS platforms offer, an IaaS provider offers a single-tenant cloud infrastructure which reduces points of failure to ensure a merchant never loses a transaction. Merchants will not share infrastructure or server loads with other merchants meaning there is no risk of slowdown or interference from other merchants, as well as the ability to create bespoke deployments to improve regional storage. IaaS is not a ‘one deployment fits all’ solution – merchants have their own private payment infrastructure customized to meet their individual needs. 

Additionally, IaaS platforms do not have a single point of failure. While SaaS payment orchestration platforms (POP) may claim that having multiple payment service providers (PSPs), such as Stripe or PayPal, on the platform removes the risk of being a single point of failure, if the SaaS POP itself goes down, every single merchant loses access to payments, potentially resulting in a significant loss of revenue depending on recovery time. IaaS platforms, on the other hand, have a hugely reduced risk of downtime because it’s unlikely any of the large cloud service providers, such as AWS and Google Cloud, will go down in multiple geographies at the same time. 

Looking forward, regulations and standards such as PCI 4.0 will have a heavier focus on security in the cloud, and large merchants that are relying on a SaaS platform may fall foul of the breaches mentioned above because they aren’t retaining ownership of their data, and are bound to the platform provider’s standards. 

Interested in learning more about payment orchestration? Download our eGuide, ‘IaaS vs. SaaS: An e-commerce merchant’s guide to payment orchestration’, to discover which platform is best for your needs. 

If you’re ready to explore how an IaaS payment orchestration can support your payment strategy and future-proof your checkout, get in touch with our team for a full consultation with one of our experts.