Are Businesses Ready for Future Payment Processes?

By CIOReview | Wednesday, January 23, 2019

The invention of payment processes has increased the urgency for a greater need for a flexible and robust card infrastructure. Mobile services are new, exciting and backed by demonstrable customer demand but they highly rely on card payments.

Mobile banking, e-commerce integration, loyalty, and IoT payments- all these services are linked to cards. Although these innovations are revolving around the card infrastructure that is probably tough for a back-end system, hence one arrives at the question - how can issuers balance a need to be perceived as innovative while providing a reliable, compliant and fit-for-purpose payment infrastructure?

As the payment revenue landscape is falling, issuer’s profit margins are also being affected. The technology is advancing at a rapid pace, faster than internal systems can be updated thereby increasing the demand for developers with skills to design and implement back-end solutions which are growing faster than the supply. These are further impacting the leading banks that are now questioning their go-to-market strategies, and giving a thought concerning the business model where they design, implement and maintain their system is still feasible.

Payment gateways could be the best-suited example here. Banks require a payment gateway to the card schemes as they are the backbone of the e-commerce landscape thereby enabling banks to benefit from the international e-commerce market which is set to grow by $4.5 trillion by 2021. Issuers now have the choice of whether to develop and maintain these gateways themselves or take help from a trusted partner and work in collaboration with them.

1. Banks have to ensure that their payment infrastructure is compliant not only with their EU but also the domestic regulations of other international markets they intend to enter; even the constantly evolving card scheme requirements. As the card scheme compliance demands great responsibility and more resources, the service portfolio diversifies and becomes more complex. This is a complex undertaking as there are dedicated providers of back-end systems who offer full compliance for less than it would cost a bank to create and maintain themselves.

2.  Scalability is crucial. In the evolving world of globalized and financial services, new products must be made available to all the customers at the right time. Stability and security are fundamentals for banks as innovation alone means nothing in this technology-driven world which demands safety.

It is an undeniable fact that smartphones are gaining prominence, but that doesn’t mean that they are the primary and the only contact with their target audience. But with the changing trends, issuers have to consider this and evolve, and they have to invest money where it counts.