Future-Proofing Your Payment Program

In Digital Transactional Processing, Insights by Blake McClelland

If I could redraw the famous Evolution of Man image for banking, the hunched-over homo habilis would be clutching a mess of paper cheques and withdrawal slips, homo erectus would have a fat wallet full of payment cards, and the modern man would hold just a streamlined smartphone.

 

by Blake McClelland
Director of Business Development

Somehow, much of the payments world is still lingering in the homo erectus period, while the financial around them is evolving. User capability is growing, POS infrastructure is falling into place, even Apple is finally on board the NFC train. Everything is in place for mobile payments, but most card programs were developed even before the earliest iterations of our favourite smartphones. As a program manager or issuer you likely didn’t anticipate ubiquitous NFC on mobile phones when choosing your processor and technology partners. Your legacy platform was most likely developed for mag-stripe plastics and not for the more dynamic mobile and digital products that are driving the future of the payments industry.But here they are. And they are spreading fast—particularly as emerging markets jump on board. In fact, unburdened by existing infrastructure, many emerging markets—countries in South America and Africa in particular—are leapfrogging technologies altogether. Those new players aren’t even trying to play catch up to our existing payment models, they’re jumping ahead to the next thing: mobile. Likewise, the youth market—a significant prepaid audience and one of the fastest growing smartphone user groups—is ripe for mobile payments.

It won’t be long before we’re using our phones to get on the subway, buy our lunch, decide where to get happy hour drinks and then access our condos at the end of the day. Deploying programs on legacy technology can run the risk of losing relevance and, more importantly, market share. Programs need to adapt to keep up with consumer demand for new technology.

How do you keep your program relevant and encourage customers to keep using your card as the market evolves towards mobile and virtual accounts?

To be ready for the future, you have two real options:

  1. Migrate your processor & update your foundationThis is the tear down vs. renovate approach. When you start from scratch with a clean slate you have unrestricted capability and can maximize your options. Depending on your card portfolio and roadmap, it may be an option to deploy new products with new technology and slowly migrate as cards and programs roll over.
  2. Build onto the one you haveChoose a modular next-generation processor that layers on top of your legacy infrastructure. Adapt to new and future technologies without starting from scratch. A next-generation processor can seamlessly migrate thousands of cards with no break in service—and current cardholders can keep using existing plastics. When the next evolution of payments emerges, layer that new technology on, and make yet another smooth transition.

If Apple’s recent Apple Watch announcement is any indication, it’s hard to predict what’s coming next. Make sure your program is built on a processor that can handle anything the future brings.