Payments as a Service (PaaS) is a model in which a regulated third-party provider supplies the complete payment infrastructure a business needs, delivered through an API-based platform. The business accesses that infrastructure without needing to build, licence or maintain it independently, whether the goal is issuing cards, disbursing funds, processing payments or all three.

This guide covers the full picture: what PaaS is; who uses it; what a provider takes on; how to make the build versus outsource decision; and how to assess provider stability in a European market that has changed significantly since 2022.

*If your evaluation has already led you to card issuance as a specific requirement, see our guide BIN sponsorship explained: the complete guide for fintechs and PSPs. BIN sponsorship is the card scheme participation arrangement that sits within a PaaS model where cards are involved.

What is Payments as a Service (PaaS)?

PaaS, BaaS (Banking as a Service) and embedded finance are terms used frequently and often interchangeably across the market, including by providers who offer all three.

Payments as a Service

PaaS refers specifically to the outsourcing of payment infrastructure: the technical and regulatory layer that enables a business to make and receive payments, issue cards, settle transactions and manage compliance. A PaaS provider holds the regulatory licences, scheme memberships and processing infrastructure, and makes them available to clients through an API. The client pays for access to that infrastructure rather than building and maintaining it.

Embedded finance

Embedded finance is the broadest category: the integration of any financial product or service into a non-financial platform. A retail app offering buy-now-pay-later, a mobility platform offering insurance, or a marketplace offering instant merchant payouts, are all using embedded finance. PaaS is the infrastructure model that often powers embedded finance. BaaS may also be involved where the product requires banking-grade capability.

Banking as a Service

BaaS is a broader term that typically covers the outsourcing of full banking infrastructure, including deposit accounts, lending and credit facilities, not just payment capability. BaaS providers are usually banks or banking licence holders.

In Europe, the BaaS model has attracted significant regulatory scrutiny since 2022. Providers have faced fines, licence restrictions or insolvency as a result of compliance failures relating to banking-grade infrastructure operated at scale without adequate controls. A business using PaaS to issue cards, disburse funds or process payments has no need for banking infrastructure such as deposit accounts, credit facilities or a banking licence.

PaaS serves an entirely different set of requirements, and a well-regulated PaaS provider operates under a different and more focused regulatory model.

The practical decision rule:

If you need to issue cards, process payments, disburse funds or manage payment flows, that is PaaS territory. If you need deposit accounts or credit products, you are in BaaS or banking territory. If you are embedding financial products into a non-financial platform, you are building embedded finance, and PaaS is likely to be the most suitable underlying infrastructure model.

Who uses Payments as a Service?

DiPocket has operated payment programmes across 15 European markets since 2017, working with organisations across a wide range of sectors and use cases. The common thread is not the type of business but the need: access to compliant, scheme-connected payment capability without the overhead of building or licencing it independently.

Fintechs and digital financial businesses

Fintechs launching card products, digital wallets or payment programmes use PaaS to access the complete payment infrastructure stack: processing, compliance, settlement, reporting and scheme connectivity. Rather than building each layer independently, the full operational weight of running a payment programme sits with the provider, so the fintech can focus on its product and customers.

Where a programme involves issuing cards, that infrastructure includes BIN sponsorship: the arrangement through which the provider’s principal membership of Visa and Mastercard is extended to the client, enabling them to issue cards without holding direct scheme membership themselves. PaaS is the full operational model; BIN sponsorship is the card issuance piece within it. A fintech using a PaaS provider for funds disbursement or open banking may not need BIN sponsorship at all.

Platforms and marketplaces

Platforms that need to pay workers, merchants or partners use PaaS to manage payout flows at scale. For this buyer, the core value is operational: payments leave the platform instantly, settle in the recipient’s local currency, and carry configurable controls on how and where funds can be spent. None of that requires the platform to build or licence payment infrastructure itself.

Non-financial businesses embedding payment products

Non-financial businesses across a wide range of sectors use PaaS to embed payment capability into their core operations without needing in-house payment expertise or regulatory licences.

Travel agencies issuing virtual procurement cards, employee benefit platforms issuing prepaid cards, insurance companies disbursing claims and NGOs distributing relief funds are all examples of this model in practice.

Financial institutions extending their product range

Established banks and financial institutions also use PaaS to extend their product range without building new infrastructure internally.

A bank that wants to offer prepaid corporate cards to SME clients, or a lender that wants to disburse loans directly to a branded card, accesses that capability through a PaaS provider rather than building the issuing and processing layer from scratch.

The PaaS model complements rather than competes with existing banking infrastructure.

What does a Payments as a Service provider cover?

One of the most frequent misconceptions about PaaS is how much of the operational and compliance burden the provider absorbs. In a full-service PaaS model, the answer is most of it. Here is what clients should expect a serious provider to cover, and where the boundary with the client’s own responsibilities lies.

What stays with the client

PaaS does not remove all compliance obligations from the client. The client remains responsible for KYC (Know Your Customer) and customer onboarding, the cardholder relationship and customer support, programme design decisions such as spend controls and card configuration, and compliance with any sector-specific regulations that apply to their own business.

The programme agreement between provider and client sets this division out explicitly – it is one of the most important documents in any PaaS arrangement, and any ambiguity creates risk for both parties.

What the provider covers

A full-service PaaS provider holds the regulatory authorisations that make payment activity legal across the markets where the client operates. In Europe, this means an Electronic Money Institution (EMI) licence issued by a recognised financial regulator: the FCA in the UK, the Bank of Lithuania in the EU, or equivalent. Beyond the licence, the provider holds principal membership of Visa and Mastercard, operates the processing infrastructure that authorises transactions in real time, maintains PCI DSS compliance for the card data environment, oversees AML monitoring and fraud detection across all programmes, implements card scheme rule changes, and manages settlement and reconciliation through its banking relationships.

In practice, this means the client does not need to employ compliance officers to manage scheme rules, technology teams to maintain processing infrastructure, or legal resource to track regulatory change. Those functions are in the provider’s remit, covered by their operational capability and their regulatory obligations.

Function PaaS provider Client
Regulatory licences (EMI) Provider holds these Client may need own licence depending on business model
Scheme membership Provider holds principal membership Client operates as affiliate under provider’s BINs
Card issuance and processing Provider Client specifies product requirements
AML monitoring (infrastructure) Provider Client responsible for KYC on its own customers
Scheme rule compliance Provider Not required of client
PCI DSS Provider’s certified environment Client must not store raw card data independently
Settlement Provider manages scheme settlement Client manages its own accounts and reporting
Cardholder relationship Not the provider’s responsibility Client owns the customer relationship
Programme design Provider configures to client specification Client determines product rules and limits

How to assess the stability of a PaaS provider

Choosing a PaaS provider is a longer-term commitment than most buyers realise at the point of signing. If a provider runs into regulatory difficulty, your programme cannot grow. If they face financial trouble, your settlement chain is at risk. If they lose their licence, your programme stops. These issues have arisen for real clients of real providers in the European market in the past three years.

What has happened in the European market

The European market has seen significant consolidation since 2022. Several providers have faced regulatory sanctions, operational failures or loss of licence, with direct consequences for the clients whose programmes ran on their infrastructure: disrupted onboarding, settlement uncertainty and reputational association with a provider under regulatory sanction. The lesson is that the financial and regulatory standing of a PaaS provider is a core commercial risk factor for the client.

Why DiPocket’s model is built the way it is

DiPocket holds dual regulatory authorisation: FCA-regulated in the UK and Bank of Lithuania-regulated in the EU. That is a deliberate structure that gives clients legal certainty in both major European jurisdictions and removes the single-regulator dependency that has caused problems elsewhere. We have maintained that dual structure since our founding in 2015 and have never been subject to regulatory sanctions or restrictions on our operations.

What to look for when choosing a Payments as a Service provider

These criteria are drawn from DiPocket’s experience of both operating as a PaaS provider and of working with clients who have migrated from previous providers. They reflect what actually matters when a programme is live, not just at the point of signing.

1. Dual regulatory authorisation

A provider authorised in both the UK (FCA) and an EU member state (Bank of Lithuania, for example) can serve programmes across both jurisdictions without additional arrangements. A provider with only one authorisation has a geographic ceiling that may constrain your programme as it grows.

2. Principal membership of both Visa and Mastercard

Scheme membership with a single network limits your options at launch and over time. Principal membership of both gives flexibility to issue on either scheme and to respond to changes in commercial terms or product requirements. For clients where card issuance is the specific requirement, principal scheme membership is where BIN sponsorship becomes directly relevant.

3. Length of regulatory track record

How long has the provider held its licences and operated programmes? A provider with a decade of clean regulatory history is materially lower risk than one that obtained its licences recently. Ask specifically whether the provider has ever been subject to regulatory sanctions, restrictions on new business, or special supervisory measures.

4. Financial standing

A PaaS provider is a regulated entity in your settlement chain. Ask about capital adequacy and financial backing. A provider who cannot answer this question clearly may be worth further investigation.

5. Processor flexibility

Some PaaS providers are tied to a single issuer processor. If that processor cannot support a requirement that emerges as your programme grows, you have no recourse short of migrating the entire programme. A provider who works with multiple processors (and is transparent about which ones) gives you flexibility at both launch and scale. DiPocket works with multiple processors including Thredd, and the processing layer can be structured around the client’s requirements rather than the provider’s preferred infrastructure.

6. European market footprint

If your programme will operate across multiple European markets, the provider needs regulatory authorisation and operational experience in each of those markets, not just a single jurisdiction with a passporting claim. DiPocket operates programmes across 15 European markets and settles in EUR, GBP, PLN, HUF and RON directly, without requiring FX conversion steps that add cost and complexity.

7. Advisory capability and programme support

decisions that determine whether a programme succeeds, such as card design, product rules, compliance framework, and go-to-market sequencing, require expertise that most clients do not have in-house. Ask what programme support looks like in practice and who your day-to-day contact will be.

8. Pathway to direct scheme membership

Even with no immediate plans to pursue principal scheme membership, a provider who actively supports that transition is a better long-term partner than one with no interest in it. DiPocket has supported multiple clients through that journey. The transition is operationally significant and considerably smoother with a provider who has done it before.

How DiPocket delivers Payments as a Service

DiPocket was founded in London in 2015 with a deliberate design: a dual-regulated EMI, principal member of both Visa and Mastercard, operating across the EEA and UK from a single integrated platform. We built the model we would have wanted as clients ourselves: one where the regulatory standing was unambiguous, the infrastructure was genuinely owned rather than resold, and the advisory support was built into the service rather than charged as an add-on.

Since 2017 we have operated card programmes across 15 European markets for clients ranging from early-stage fintechs to established financial institutions and large non-financial businesses. Our infrastructure is supported by tier-one technology partners including Thredd for processing, Entersekt for ACS, and ComplyRadar for transaction monitoring.

What DiPocket’s PaaS service covers

  • Associate or affiliate membership of Visa and/or Mastercard under DiPocket’s principal membership
  • Plastic and virtual card issuance, including tokenisation for Apple Pay, Google Pay and other mobile wallets
  • IBAN issuance for payment receipt via SEPA (Single Euro Payments Area) and UK Faster Payments
  • Push-to-card disbursement via Visa Direct and Mastercard Send
  • Transaction fraud monitoring and AML (Anti-Money Laundering) control through integrated compliance infrastructure
  • Multi-currency settlement in EUR, GBP, PLN, HUF and RON
  • Open banking capability via PIS (Payment Initiation Services) and AIS (Account Information Services)
  • API-based integration with detailed reporting and reconciliation
  • Active programme support and advisory guidance throughout the programme lifecycle

Ready to explore Payments as a Service with DiPocket?

DiPocket is a dual-regulated EMI and principal member of both Visa and Mastercard, authorised by the FCA (Reference No. 900439) and the Bank of Lithuania (Licence No. 75), operating payment programmes across 15 European markets. Speak to our team about your programme requirements.

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FAQs on Payments as a Service

1. Is Payments as a Service only for fintechs?

No. PaaS is used by organisations across a wide range of sectors: non-financial businesses embedding payment capability, platforms managing payout flows, established financial institutions extending their product range, and fintechs building new payment products. The model is defined by the need to access compliant payment infrastructure without building it, not by the type of business that has that need.

2. What is the difference between a PaaS provider and a payment gateway?

A payment gateway enables a merchant to accept card payments at the point of sale. A PaaS provider supplies the infrastructure that enables a business to issue cards, manage payment flows and settle transactions. The two operate at different levels of the payment stack and are not substitutes for each other.

3. Do I need my own EMI licence to use a PaaS provider?

Not necessarily, but it depends on your business model. If you are holding customer funds or operating as an e-money issuer in your own right, you may need your own EMI authorisation regardless of the PaaS arrangement. The FCA’s guidance for EMI applicants sets out the relevant thresholds for UK businesses. This is a question to work through with your provider and your legal advisers before launch.

4. How long does it take to go live with a PaaS provider?

For a straightforward card programme, two to three months from signed agreement to live issuance is realistic with a well-organised provider. Disbursement-only programmes can move faster. Multi-market launches or programmes requiring extensive customisation will take longer. The bottlenecks are usually compliance sign-off and integration rather than scheme registration.

5. What happens to my programme if my PaaS provider runs into regulatory trouble?

This is the most important risk question a buyer can ask, and the one most content in this space avoids. If a provider is restricted by a regulator from onboarding new clients, your programme cannot grow. If the provider faces financial difficulty, your settlement chain is at risk. If the provider loses its licence, your programme ceases until new infrastructure is found and cards are re-issued to every active cardholder. The best protection is choosing a provider with a long, clean regulatory track record, sound finances, and dual authorisation across the markets you need.

6. Can I use the same PaaS provider across multiple European markets?

Yes. A single PaaS provider can cover multiple European markets provided they hold the necessary regulatory authorisation and have operational infrastructure in each. Passporting an EMI licence across the EEA is legally possible but is not the same as having direct settlement capability and active programme experience in a market. Ask the provider specifically which markets they settle in directly, which currencies they support without FX conversion, and where they have live client programmes running.