Bank and Processor, card processing infrastructures have been built organically over the last 30 years. A handful of vendors account for 80% of the market share. Today, Payment solutions have reached a significant crossroads where existing infrastructure and requirements are under intense review.
Increase in the number of Payment Channels. A wide-spread increase in the use of electronic payment instruments, such as Prepaid Gift Cards, Contactless devices, Mobile Payments, etc over and above traditional credit and debit instruments, has triggered a need among Banks and Processors to augment their payment processing capabilities.
Increase operational efficiency& reduce risk. Banks currently have a delivery infrastructure that is one (or a mixture of) the following:
- Built in-house using a selection of card software vendors’ products
- Built in-house using home-grown, custom applications
- Outsourced to a processor, whose infrastructure is built on one of the two options above
Banks are looking to improve operational efficiencies, while reducing risk, by consolidating multiple, similar payments types under their own single open infrastructure.
Recent surge in market activity and uncertainty driven from globalization, merger and acquisition, and technology upgrade. Debate and discussions amongst Banks and Processors is fuelled by unprecedented recent changes in the card acquiring software business including announcements of the intended “end of life” status on market leader’s flagship product, consolidation and convergence of other product vendors. As costs of maintaining these systems go up, Banks will look at replacement options.
Alternate channels as a way of growing business & controlling costs. In the current day competitive environment where customer expectation is growing & margins are shrinking, Banks are looking at the electronic channels of Payments (like ATMs, POS, Internet, IVR & Mobile) to not only reduce pressure on the traditional delivery channels (like Branches) and in the process reduce costs but also to acquire New-to-Bank Clients and cross sell & up sell other products & services to existing customers.