Related to Existing Payment Systems
evolution of isolated payments systems caused a substantial amount of
infrastructure duplication amongst banks. This duplication includes both
software and hardware, which is usually provided by various vendors
consequently result in a high maintenance cost. This duplication concern is
further been compounded due to consolidation within the banking sector. Mergers
and acquisition principally carried out to consolidate infrastructure, whereas
leads to rise in further duplication.
duplication has not been limited to technology. Banks back office staff are
typically employed to ensure smooth processing of payments. The infrastructure
duplication results in duplication of the staff to maintain and monitor the
infrastructure and to repair incorrect payments entered in the system.
existing payment systems that are still in use today were built 2-3 decades
ago. Consequently, being outdated they are difficult to support, and in many
instances, are running on platforms that are, or will soon be, no longer
supported. Variety of issues related to the use of outdated technology
rapidly make changes to payment systems. Inability to make information
available to the customer.
process payment related information including invoices, purchase orders, and
track & trace end-to-end payments made from different channels. Require
same changes to be made in multiple place.
A lack of
available crucial skills to support dated technology.
to Support Growing Volumes
existing payment systems and architectures were designed and built either
before the invention of electronic payments, or at a time when the growth of
electronic payments was not projected to reach the levels that we are
experiencing today or will do in the future. As a result, the existing payment
systems is causing high concerns as the failure of a bank to provide assured
uptime of its payment systems. This leads to multiple backlashes including
related loss of revenues, loss of customers, and penalty costs.
Lack of Straight Through Processing
Through Processing (STP) has become a crucial as banks try to reduce the
payments processing costs. As mentioned earlier, the majority of today’s
payment systems were built a long time ago, and were not designed to address
the needs of today’s electronic age. Therefore, many of the today’s payment
systems unable to cater for the high STP rates. To address this issue, banks
require employing a large back office staff either to assist in manual
re-keying of transactions, or to repair incorrect entries.
of existing messaging standards is one of the biggest problems of the payments
industry. Within the ACH payment standard each country has developed its own
“standard” format. In cross-border transactions, the SWIFT standard is
primarily used however, the variations in standards are huge, and that differs
with country. In addition, SAP, Oracle, and PeopleSoft have their own
proprietary standards. Presence of multiple standards requires banks to invest
high amount in reconciliation software, even though many transactions still
cannot be matched automatically.
Similarly, other issues related to most of the existing
payment system used today are as follows:
1)Slow response to market
2)Lack of flexibility to
be able to offer new competitive products to their customers quickly.
3)Unable to acquire any amount of
payment, anytime, anyplace, and anywhere.
4)Lack of clarity, visibility, and
transparency around payments and the processing of payments.