2nd Generation Payment Processing
The world of payments processing has gone through a lengthy period of stagnancy over the last few years, with software providing support to ensure payments are executed correctly with an adequate degree of automation. During this time, the pressures on payments processing departments have been to provide this service as cost effectively, efficiently and reliably as possible, while also mitigating the risk of errors. Over time, payments processing products have been upgraded to try to squeeze out more performance while pushing costs down. However, there is a growing feeling that perhaps the current technology base supporting payments processing is no longer up to the task of satisfying the rapidly increasing and changing pressures of today.
Globalization has had a dramatic impact on financial operations. Competition has increased, cost models have changed and volumes are surging. At the same time, regulatory activity has grown more frequent, in response to needs such as enhanced cross-border trading and concerns over fraudulent and negligent activity. As a result, financial institutions are desperately searching for ways to improve internal efficiency, differentiate from competition, maintain profit margins and generate new revenues. Payments processing forms a key part of the overall financial transaction, and is now being seen as an area of opportunity to innovate and differentiate instead of simply an overhead to be minimized at all costs. But existing payments processing technology was never designed with agility and flexibility in mind, and it is struggling to cope with this new wave of demands.
The good news is that the software industry is not standing still, and now a new generation of payments processing technology is emerging to address the rapidly shifting market needs. Leveraging some of the latest innovations in software architecture and development, this new technology base has been designed to be agile, responding to changes quickly, safely and cost-effectively. It offers a closer alignment to business objectives, providing greater business visibility and control of all payments operations on a consolidated, end-to-end basis, while at the same time supporting enterprise governance, compliance and risk management initiatives more effectively. Also, the new technology base is extensible, reducing costs by providing more granular packaging combined with the ability to purchase and ‘plug in’ new functions only when needed. And of course, it continues to provide the same basic payments processing support offered by the previous generation of products, supporting higher volumes, increased straight-through processing and greater efficiency.
This paper takes a closer look at this new development in payments processing – the 2nd generation payments processing platform