diff --git a/CHANGELOG.md b/CHANGELOG.md
index 3b0a7f3f9..eec844175 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -19,6 +19,7 @@ and this project adheres to [Semantic Versioning](https://semver.org/spec/v2.0.0
 
 - Standardized log libraries and configuration
 - Moved GraphQL schema generation to the CI. Now it is distributed as a Github artifact
+- Replace `POSTGRES_*` environment variables with `POSTGRES_ENDPOINT`
 
 ### Removed
 
diff --git a/offchain/Cargo.lock b/offchain/Cargo.lock
index c22a72032..16db3eff3 100644
--- a/offchain/Cargo.lock
+++ b/offchain/Cargo.lock
@@ -4174,12 +4174,12 @@ dependencies = [
  "redacted",
  "serial_test",
  "snafu",
+ "tempfile",
  "test-fixtures",
  "test-log",
  "testcontainers",
  "tracing",
  "tracing-subscriber",
- "urlencoding",
 ]
 
 [[package]]
@@ -5666,12 +5666,6 @@ dependencies = [
  "percent-encoding",
 ]
 
-[[package]]
-name = "urlencoding"
-version = "2.1.3"
-source = "registry+https://github.com/rust-lang/crates.io-index"
-checksum = "daf8dba3b7eb870caf1ddeed7bc9d2a049f3cfdfae7cb521b087cc33ae4c49da"
-
 [[package]]
 name = "users"
 version = "0.11.0"
diff --git a/offchain/Cargo.toml b/offchain/Cargo.toml
index c336fb3c5..b774e3333 100644
--- a/offchain/Cargo.toml
+++ b/offchain/Cargo.toml
@@ -88,7 +88,6 @@ tracing-actix-web = "0.7"
 tracing-subscriber = "0.3"
 tracing-test = "0.2"
 url = "2"
-urlencoding = "2.1"
 users = "0.11"
 uuid = "1.4"
 
diff --git a/offchain/data/Cargo.toml b/offchain/data/Cargo.toml
index 9df0b87dd..a8b0d86b6 100644
--- a/offchain/data/Cargo.toml
+++ b/offchain/data/Cargo.toml
@@ -14,13 +14,13 @@ diesel_migrations.workspace = true
 diesel = { workspace = true, features = ["postgres", "r2d2"]}
 snafu.workspace = true
 tracing.workspace = true
-urlencoding.workspace = true
 
 [dev-dependencies]
 test-fixtures = { path = "../test-fixtures" }
 
 serial_test.workspace = true
 env_logger.workspace = true
+tempfile.workspace = true
 testcontainers.workspace = true
 test-log = { workspace = true, features = ["trace"] }
 tracing-subscriber = { workspace = true, features = ["env-filter"] }
diff --git a/offchain/data/src/config.rs b/offchain/data/src/config.rs
index f55e20d9e..3d1208036 100644
--- a/offchain/data/src/config.rs
+++ b/offchain/data/src/config.rs
@@ -3,77 +3,62 @@
 
 use backoff::{ExponentialBackoff, ExponentialBackoffBuilder};
 use clap::Parser;
-pub use redacted::Redacted;
+pub use redacted::{RedactedUrl, Url};
 use std::time::Duration;
 
 #[derive(Debug)]
 pub struct RepositoryConfig {
-    pub user: String,
-    pub password: Redacted<String>,
-    pub hostname: String,
-    pub port: u16,
-    pub db: String,
+    pub redacted_endpoint: Option<RedactedUrl>,
     pub connection_pool_size: u32,
     pub backoff: ExponentialBackoff,
 }
 
 impl RepositoryConfig {
-    pub fn endpoint(&self) -> Redacted<String> {
-        Redacted::new(format!(
-            "postgres://{}:{}@{}:{}/{}",
-            urlencoding::encode(&self.user),
-            urlencoding::encode(self.password.inner()),
-            urlencoding::encode(&self.hostname),
-            self.port,
-            urlencoding::encode(&self.db)
-        ))
+    /// Get the string with the endpoint if it is set, otherwise return an empty string
+    pub fn endpoint(&self) -> String {
+        match &self.redacted_endpoint {
+            None => String::from(""),
+            Some(endpoint) => endpoint.inner().to_string(),
+        }
     }
 }
 
 #[derive(Debug, Parser)]
 pub struct RepositoryCLIConfig {
-    #[arg(long, env, default_value = "postgres")]
-    postgres_user: String,
-
-    #[arg(long, env)]
-    postgres_password: Option<String>,
-
+    /// Postgres endpoint in the format 'postgres://user:password@hostname:port/database'.
+    ///
+    /// If not set, or set to empty string, will defer the behaviour to the Pg driver.
+    /// See: https://www.postgresql.org/docs/current/libpq-envars.html
+    ///
+    /// It is also possible set the endpoint without the password and load it from Postgres'
+    /// passfile.
+    /// See: https://www.postgresql.org/docs/current/libpq-connect.html#LIBPQ-CONNECT-PASSFILE
     #[arg(long, env)]
-    postgres_password_file: Option<String>,
-
-    #[arg(long, env, default_value = "127.0.0.1")]
-    postgres_hostname: String,
-
-    #[arg(long, env, default_value_t = 5432)]
-    postgres_port: u16,
-
-    #[arg(long, env, default_value = "postgres")]
-    postgres_db: String,
+    postgres_endpoint: Option<String>,
 
+    /// Number of connections to to the database
     #[arg(long, env, default_value_t = 3)]
     postgres_connection_pool_size: u32,
 
+    /// Max elapsed time for timeout
     #[arg(long, env, default_value = "120000")]
     postgres_backoff_max_elapsed_duration: u64,
 }
 
 impl From<RepositoryCLIConfig> for RepositoryConfig {
     fn from(cli_config: RepositoryCLIConfig) -> RepositoryConfig {
-        let password = if let Some(filename) = cli_config.postgres_password_file
-        {
-            if cli_config.postgres_password.is_some() {
-                panic!("Both `postgres_password` and `postgres_password_file` arguments are set");
-            }
-            match std::fs::read_to_string(filename) {
-                Ok(password) => password,
-                Err(e) => {
-                    panic!("Failed to read password from file: {:?}", e);
+        let redacted_endpoint = match cli_config.postgres_endpoint {
+            None => None,
+            Some(endpoint) => {
+                if endpoint == "" {
+                    None
+                } else {
+                    Some(RedactedUrl::new(
+                        Url::parse(endpoint.as_str())
+                            .expect("failed to parse Postgres URL"),
+                    ))
                 }
             }
-        } else {
-            cli_config
-                .postgres_password
-                .expect("Database Postgres password was not provided")
         };
         let connection_pool_size = cli_config.postgres_connection_pool_size;
         let backoff_max_elapsed_duration = Duration::from_millis(
@@ -83,11 +68,7 @@ impl From<RepositoryCLIConfig> for RepositoryConfig {
             .with_max_elapsed_time(Some(backoff_max_elapsed_duration))
             .build();
         RepositoryConfig {
-            user: cli_config.postgres_user,
-            password: Redacted::new(password),
-            hostname: cli_config.postgres_hostname,
-            port: cli_config.postgres_port,
-            db: cli_config.postgres_db,
+            redacted_endpoint,
             connection_pool_size,
             backoff,
         }
diff --git a/offchain/data/src/lib.rs b/offchain/data/src/lib.rs
index 8d22f5d30..548414c1f 100644
--- a/offchain/data/src/lib.rs
+++ b/offchain/data/src/lib.rs
@@ -9,7 +9,7 @@ mod repository;
 mod schema;
 mod types;
 
-pub use config::{Redacted, RepositoryCLIConfig, RepositoryConfig};
+pub use config::{RedactedUrl, RepositoryCLIConfig, RepositoryConfig, Url};
 pub use error::Error;
 pub use migrations::{run_migrations, MigrationError};
 pub use pagination::{Connection, Cursor, Edge, PageInfo};
diff --git a/offchain/data/src/repository.rs b/offchain/data/src/repository.rs
index f51583bbf..f65b67b58 100644
--- a/offchain/data/src/repository.rs
+++ b/offchain/data/src/repository.rs
@@ -34,7 +34,7 @@ impl Repository {
             Pool::builder()
                 .max_size(POOL_CONNECTION_SIZE)
                 .build(ConnectionManager::<PgConnection>::new(
-                    config.endpoint().into_inner(),
+                    config.endpoint(),
                 ))
                 .map_err(backoff::Error::transient)
         })
diff --git a/offchain/data/tests/repository.rs b/offchain/data/tests/repository.rs
index e7b7322fc..24334786f 100644
--- a/offchain/data/tests/repository.rs
+++ b/offchain/data/tests/repository.rs
@@ -6,13 +6,15 @@ use diesel::pg::Pg;
 use diesel::{
     sql_query, Connection, PgConnection, QueryableByName, RunQueryDsl,
 };
-use redacted::Redacted;
 use rollups_data::Connection as PaginationConnection;
 use rollups_data::{
     CompletionStatus, Cursor, Edge, Error, Input, InputQueryFilter, Notice,
-    PageInfo, Proof, Report, Repository, RepositoryConfig, Voucher,
+    PageInfo, Proof, RedactedUrl, Report, Repository, RepositoryConfig, Url,
+    Voucher,
 };
 use serial_test::serial;
+use std::io::Write;
+use std::os::unix::fs::PermissionsExt;
 use std::time::{Duration, UNIX_EPOCH};
 use test_fixtures::DataFixture;
 use testcontainers::clients::Cli;
@@ -36,12 +38,19 @@ impl TestState<'_> {
             )))
             .build();
 
+        let redacted_endpoint = Some(RedactedUrl::new(
+            Url::parse(&format!(
+                "postgres://{}:{}@{}:{}/{}",
+                self.data.user,
+                self.data.password,
+                self.data.hostname,
+                self.data.port,
+                self.data.db,
+            ))
+            .expect("failed to generate Postgres endpoint"),
+        ));
         Repository::new(RepositoryConfig {
-            user: self.data.user.clone(),
-            password: Redacted::new(self.data.password.clone()),
-            hostname: self.data.hostname.clone(),
-            port: self.data.port.clone(),
-            db: self.data.db.clone(),
+            redacted_endpoint,
             connection_pool_size: 3,
             backoff,
         })
@@ -89,7 +98,7 @@ pub fn create_input() -> Input {
     }
 }
 
-#[test]
+#[test_log::test]
 #[serial]
 fn test_create_repository() {
     let docker = Cli::default();
@@ -100,7 +109,7 @@ fn test_create_repository() {
     test.get_repository();
 }
 
-#[test]
+#[test_log::test]
 #[serial]
 fn test_fail_to_create_repository() {
     let docker = Cli::default();
@@ -110,12 +119,19 @@ fn test_fail_to_create_repository() {
         .with_max_elapsed_time(Some(Duration::from_millis(2000)))
         .build();
 
+    let redacted_endpoint = Some(RedactedUrl::new(
+        Url::parse(&format!(
+            "postgres://{}:{}@{}:{}/{}",
+            "Err",
+            test.data.password,
+            test.data.hostname,
+            test.data.port,
+            test.data.db,
+        ))
+        .expect("failed to generate Postgres endpoint"),
+    ));
     let err = Repository::new(RepositoryConfig {
-        user: "Err".to_string(),
-        password: Redacted::new(test.data.password.clone()),
-        hostname: test.data.hostname.clone(),
-        port: test.data.port.clone(),
-        db: test.data.db.clone(),
+        redacted_endpoint,
         connection_pool_size: 3,
         backoff,
     })
@@ -124,7 +140,61 @@ fn test_fail_to_create_repository() {
     assert!(matches!(err, Error::DatabaseConnectionError { source: _ }));
 }
 
-#[test]
+#[test_log::test]
+#[serial]
+fn test_postgres_file_configuration() {
+    let docker = Cli::default();
+    let test = TestState::setup(&docker);
+
+    // Create Postgres pgfile
+    let tempdir = tempfile::tempdir().expect("failed to create tempdir");
+    let pgpass_path =
+        tempdir.path().join("pgpass").to_string_lossy().to_string();
+    tracing::info!("Storing pgfile to {}", pgpass_path);
+    {
+        let mut pgpass = std::fs::File::create(&pgpass_path)
+            .expect("failed to create pgpass");
+        // Set permission to 600
+        let metadata =
+            pgpass.metadata().expect("failed to get pgpass metadata");
+        let mut permissions = metadata.permissions();
+        permissions.set_mode(0o600);
+        pgpass
+            .set_permissions(permissions)
+            .expect("failed to set pgpass permissions");
+        // Write pgfile contents
+        write!(
+            &mut pgpass,
+            "{}:{}:{}:{}:{}\n",
+            test.data.hostname,
+            test.data.port,
+            test.data.db,
+            test.data.user,
+            test.data.password
+        )
+        .expect("failed to write pgpass");
+    }
+
+    // Set Postgres environment variables
+    std::env::set_var("PGPASSFILE", pgpass_path);
+    std::env::set_var("PGHOST", test.data.hostname);
+    std::env::set_var("PGPORT", test.data.port.to_string());
+    std::env::set_var("PGDATABASE", test.data.db);
+    std::env::set_var("PGUSER", test.data.user);
+
+    // Connect to postgres using pgpass file
+    let backoff = ExponentialBackoffBuilder::new()
+        .with_max_elapsed_time(Some(Duration::from_millis(100)))
+        .build();
+    Repository::new(RepositoryConfig {
+        redacted_endpoint: None,
+        connection_pool_size: 3,
+        backoff,
+    })
+    .expect("failed to create repository");
+}
+
+#[test_log::test]
 #[serial]
 fn test_insert_input() {
     let docker = Cli::default();
@@ -141,7 +211,7 @@ fn test_insert_input() {
     assert_eq!(result, input);
 }
 
-#[test]
+#[test_log::test]
 #[serial]
 fn test_get_input() {
     let docker = Cli::default();
@@ -158,7 +228,7 @@ fn test_get_input() {
     assert_eq!(input, get_input);
 }
 
-#[test]
+#[test_log::test]
 #[serial]
 fn test_get_input_error() {
     let docker = Cli::default();
@@ -178,7 +248,7 @@ fn test_get_input_error() {
     ));
 }
 
-#[test]
+#[test_log::test]
 #[serial]
 fn test_update_input_status() {
     let docker = Cli::default();
@@ -198,7 +268,7 @@ fn test_update_input_status() {
     assert_eq!(get_input.status, CompletionStatus::Accepted);
 }
 
-#[test]
+#[test_log::test]
 #[serial]
 fn test_insert_notice() {
     let docker = Cli::default();
@@ -221,7 +291,7 @@ fn test_insert_notice() {
     assert_eq!(result, notice);
 }
 
-#[test]
+#[test_log::test]
 #[serial]
 fn test_get_notice() {
     let docker = Cli::default();
@@ -246,7 +316,7 @@ fn test_get_notice() {
     assert_eq!(notice, get_notice);
 }
 
-#[test]
+#[test_log::test]
 #[serial]
 fn test_insert_notice_error() {
     let docker = Cli::default();
@@ -267,7 +337,7 @@ fn test_insert_notice_error() {
     assert!(matches!(notice_error, Error::DatabaseError { source: _ }));
 }
 
-#[test]
+#[test_log::test]
 #[serial]
 fn test_get_notice_error() {
     let docker = Cli::default();
@@ -293,7 +363,7 @@ fn test_get_notice_error() {
     ));
 }
 
-#[test]
+#[test_log::test]
 #[serial]
 fn test_insert_voucher() {
     let docker = Cli::default();
@@ -317,7 +387,7 @@ fn test_insert_voucher() {
     assert_eq!(result, voucher);
 }
 
-#[test]
+#[test_log::test]
 #[serial]
 fn test_get_voucher() {
     let docker = Cli::default();
@@ -341,7 +411,7 @@ fn test_get_voucher() {
     assert_eq!(voucher, get_voucher);
 }
 
-#[test]
+#[test_log::test]
 #[serial]
 fn test_insert_voucher_error() {
     let docker = Cli::default();
@@ -363,7 +433,7 @@ fn test_insert_voucher_error() {
     assert!(matches!(voucher_error, Error::DatabaseError { source: _ }));
 }
 
-#[test]
+#[test_log::test]
 #[serial]
 fn test_get_voucher_error() {
     let docker = Cli::default();
@@ -390,7 +460,7 @@ fn test_get_voucher_error() {
     ));
 }
 
-#[test]
+#[test_log::test]
 #[serial]
 fn test_insert_report() {
     let docker = Cli::default();
@@ -413,7 +483,7 @@ fn test_insert_report() {
     assert_eq!(result, report);
 }
 
-#[test]
+#[test_log::test]
 #[serial]
 fn test_get_report() {
     let docker = Cli::default();
@@ -435,7 +505,7 @@ fn test_get_report() {
     assert_eq!(report, get_report);
 }
 
-#[test]
+#[test_log::test]
 #[serial]
 fn test_insert_report_error() {
     let docker = Cli::default();
@@ -456,7 +526,7 @@ fn test_insert_report_error() {
     assert!(matches!(report_error, Error::DatabaseError { source: _ }));
 }
 
-#[test]
+#[test_log::test]
 #[serial]
 fn test_get_report_error() {
     let docker = Cli::default();
@@ -482,7 +552,7 @@ fn test_get_report_error() {
     ));
 }
 
-#[test]
+#[test_log::test]
 #[serial]
 fn test_insert_proof() {
     let docker = Cli::default();
@@ -516,7 +586,7 @@ fn test_insert_proof() {
     assert_eq!(result, proof);
 }
 
-#[test]
+#[test_log::test]
 #[serial]
 fn test_get_proof() {
     let docker = Cli::default();
@@ -552,7 +622,7 @@ fn test_get_proof() {
     assert_eq!(proof, get_proof);
 }
 
-#[test]
+#[test_log::test]
 #[serial]
 fn test_get_proof_error() {
     let docker = Cli::default();
@@ -589,7 +659,7 @@ fn test_get_proof_error() {
     }
 }
 
-#[test]
+#[test_log::test]
 #[serial]
 fn test_pagination_macro() {
     let docker = Cli::default();
diff --git a/offchain/indexer/src/indexer.rs b/offchain/indexer/src/indexer.rs
index fb8a8b7aa..47dc38ed7 100644
--- a/offchain/indexer/src/indexer.rs
+++ b/offchain/indexer/src/indexer.rs
@@ -25,8 +25,7 @@ impl Indexer {
     pub async fn start(config: IndexerConfig) -> Result<(), IndexerError> {
         tracing::info!("running database migrations");
         let endpoint = config.repository_config.endpoint();
-        rollups_data::run_migrations(&endpoint.into_inner())
-            .context(MigrationsSnafu)?;
+        rollups_data::run_migrations(&endpoint).context(MigrationsSnafu)?;
 
         tracing::info!("runned migrations; connecting to DB");
         let repository = tokio::task::spawn_blocking(|| {
diff --git a/offchain/test-fixtures/src/repository.rs b/offchain/test-fixtures/src/repository.rs
index 14b470727..db6bb87ff 100644
--- a/offchain/test-fixtures/src/repository.rs
+++ b/offchain/test-fixtures/src/repository.rs
@@ -2,7 +2,7 @@
 // SPDX-License-Identifier: Apache-2.0 (see LICENSE)
 
 use backoff::ExponentialBackoffBuilder;
-use rollups_data::{Redacted, Repository, RepositoryConfig};
+use rollups_data::{RedactedUrl, Repository, RepositoryConfig, Url};
 use std::time::Duration;
 use testcontainers::clients::Cli;
 
@@ -68,12 +68,19 @@ impl RepositoryFixture<'_> {
 
 fn create_repository_config(postgres_port: u16) -> RepositoryConfig {
     use crate::data::*;
+    let redacted_endpoint = Some(RedactedUrl::new(
+        Url::parse(&format!(
+            "postgres://{}:{}@{}:{}/{}",
+            POSTGRES_USER,
+            POSTGRES_PASSWORD,
+            POSTGRES_HOST,
+            postgres_port,
+            POSTGRES_DB,
+        ))
+        .expect("failed to generate Postgres endpoint"),
+    ));
     RepositoryConfig {
-        user: POSTGRES_USER.to_owned(),
-        password: Redacted::new(POSTGRES_PASSWORD.to_owned()),
-        hostname: POSTGRES_HOST.to_owned(),
-        port: postgres_port,
-        db: POSTGRES_DB.to_owned(),
+        redacted_endpoint,
         connection_pool_size: 1,
         backoff: Default::default(),
     }