On-premise and SaaS are the main distribution models of software delivery. Cloud SaaS solutions have become a trend in the development of payment services. Their popularity is growing at all levels of business (from startups to market giants), especially in B2B SaaS. However, the on-premise distribution model is still there as well. SaaS implies vendor dependency and several other features that may not suit all companies. When it comes to user’s finances, having full control over your software and data is especially important. software and help you decide which model is best for you.
On-premise vs SaaS payment software: the definitions
What is on-premise payment software?
On-premise software assumes that the client buys a license for the software and uses it. In this case, the software is deployed out of the box on the company’s servers with access to the source code. The company pays only once for the license. Servers can be physically located either in the company itself or rented. In this category, you can either buy ready-made software or turn to a white-label PSP, where you can buy unbranded software and finalize it for your business.
What is SaaS payment software?
SaaS (Software as a Service) is a cloud-based model for creating and delivering software, where applications are developed and hosted on the vendor’s side, and users get access to the platform’s functionality online. A company purchases a subscription without having to install the software on its devices and without maintaining its own staff of specialists. The stability of the SaaS solution, necessary updates, and access to the server are the responsibility of the software vendor.
Key differences between cloud-based vs on-premise payment software
So, let’s look at the main differences between on-premise vs SaaS payment software.
Cost
This is the main difference between SaaS vs on-premise payments, When buying on-premise software, the client pays once. In the case of SaaS, the client simply rents the application. This means that instead of a one-time payment for the software, the user pays a monthly or annual subscription fee for access to a certain set of services.
According to experts’ estimates, at the start, the annual subscription cost of a SaaS communication solution can be 10-12 times lower than on-premise due to high infrastructure costs. However, after 3-5 years the total cost of ownership (TCO) is almost the same.
Customizations
In SaaS vs on-premise payment software comparison the latter has more options for customization and integration with other enterprise systems, which creates interconnection of work processes, processes information from different sources.
SaaS software as a rule does not imply customization for each client. Nevertheless, some vendors do offer a certain degree of product customization for clients’ business needs.
Security
On-premise software provides maximum control over data and systems, which can be critical for a variety of organizations, especially in industries where compliance with strict regulations and personal data security rules is a must, such as finance.
On the other hand, SaaS providers do all the security work for their clients. They offer the necessary cloud-based data protection, backup/restore, and other security services.
Scalability
The scalability of an on-premise solution is the company’s own responsibility. However, with full control and access to data and resources, the company has a deeper understanding of optimization and efficiency gains.
On the other hand, cloud software is more flexible and requires fewer resources for scalability, can be configured with additional modules, allows faster adaptation to the changing market, and provides access to the system from anywhere in the world.
Pros and cons of SaaS vs on-premise digital payment software
Let’s summarize the main advantages and disadvantages of on-premise vs SaaS payment solution.
On-premise
Pros
- Complete control over your data. All data is stored on your servers and only you have full control over it.
- Access to data without the internet. In case of network failure, internal data will still be accessible.
- Customizability. Usually basic software is used as a footing, which is then extended and adapted to the needs of the company by individual settings.
- Own IT infrastructure. The company is independent of third-party equipment and IT-teams.
- No recurring software fees. Software is purchased once, while cloud platforms have a subscription or license.
Cons
- Specialized hardware. Depending on the software, servers with different power and performance classes are required.
- Skilled IT team. You need an entire team of professionals to ensure proper data protection and maintain the stable operation of software and hardware.
- Self-service troubleshooting. If something goes wrong, you’ll have to fix it on your own.
- High initial investment. Generally, buying software will cost you much more than paying for a monthly license.
SaaS payment software
Pros
- Scalability. SaaS software is much easier to scale since you do not need to build the infrastructure from scratch. You can simply buy additional capacity when there is a large influx of clients.
- Low costs. You can use the cloud immediately after purchase, and you only need to make a minimal upfront investment which is one of the distinguishing features of on-premise vs SaaS payment processing software.
- No maintenance costs. In the case of SaaS products, software uptime, upgrades, and server maintenance are the responsibility of the provider.
- Updates and continuous development. SaaS is constantly being updated and refined, and the fees generally remain the same.
Cons
- Ongoing costs. SaaS software cannot be purchased outright. Companies buy subscriptions or licenses that must be renewed on an ongoing basis.
- Fewer customization options. Usually, SaaS software has a standard set of features and limited modifications.
- Vendor dependency. Cloud service providers can stop support of their solutions, fail to comply with legislation, etc.
- Compliance with legislation. Even if the software and infrastructure are on the vendor’s side, you still have to worry about getting all the necessary licenses on your own.
Conclusion
So, what to choose between on-premise vs SaaS payment software? It depends on your needs. These days, SaaS has enough security and functionality to cover all your needs. For example, if you are choosing between on-premise vs SaaS payment gateway, most likely SaaS solution will not differ in functionality from the boxed one. The main factor in this case is price and deployment time.
SaaS will allow you to enter the market much faster and cheaper, and the vendor company can also help with all the necessary documentation. However, some vendors offer mixed models. For example, the Boxopay platform offers on-premises software, and you can pay for it using the SaaS model for each successful transaction. This way, you get customization for your needs and full control over your data, but at the same time you don’t have to pay too much.
