Banks processing their own debit cards should modify their networks to accept new payment technologies, but it may be too soon to determine whether vendors pushing software to make that process easier will trigger a quick change, an industry analyst says.
Two software companies, Distra Pty. Ltd. and Luup International Ltd., in the past week released product information designed to enable banks and payment processors to accept payments made from mobile phones or through cloud computing formats with an emphasis on immediate transaction settlements.
Major banks are likely to make this sort of transition fairly smoothly because many already process various emerging payment types and could adjust to the different ways to address mobile and virtual-payment scenarios, Gwenn Bézard, analyst and research director for Boston-based Aite Group, tells PaymentsSource.
“Is this just a matter of replacing switches from the point of sale to the merchant acquirer? That will be the question,” Bézard says.
A growing trend calls for merchants to accommodate various payment forms and read messages, including marketing messages, and acquirers are seeking ways to get a better handle on the data, Bézard adds.
“I don’t know at this point if the banks will have an appetite for that,” he says.
Distra executives hope banks will see the logic behind replacing or upgrading payment networks to enable interaction with customers and help merchants or the bank with marketing messages as purchases are being made.
Sydney, Australia-based Distra promotes its Vblock package, part of its Universal Payments Platform operated on a Cisco computing system, as a way for banks to process payments in a “virtual environment” by accepting new payment methods and instantly offering consumers coupons or rewards, David Luther, Distra general manager for North America, tells PaymentsSource.
“More and more, consumers are expecting payment transactions to be in real time and also are expecting payment channels to accept and handle those payments,” Luther says.
The Vblock system enables the bank payment network to relay value-added information such as coupons, loyalty rewards or merchant offers to the consumer at the point of sale or via mobile phone. That way, a bank or a processor may provide merchants more marketing and advertising services and possibly create more revenue, Luther says.
Banks or processors would use the Vblock software as a “front-end system” to the network being used to accept new clients who use newer payment methods, Luther adds.
Distra intends to work with financial institutions using Vblock to transfer older client transaction data from an existing payments network and mainframe to the Distra system, Luther says.
The payments industry changes quickly, creating pressure on a bank’s payment processing network to keep up, a Cisco executive says.
Banks and processors should respond to a customer transaction as it occurs, rather than days later, as occurs in older payment environments that were wired and do not accommodate immediate response to transactions, Leni Selvaggio, global marketing manager at Cisco, tells PaymentsSource.
Retailers and bankers are looking to derive value from payments, such as feedback or loyalty points, making it more important to immediately process transactions that occur through cloud computing or mobile phones, Selvaggio suggests.
London-based Luup says it has created the first universal mobile-payment platform for banks by integrating the Temenos T24 core banking application and Microsoft BizTalk with Luup’s mobile-payment software.
The program allows banks to manage large numbers of mobile payments and meet regulatory and security requirements. Luup CEO Martin Wilson says
“Through Luup, banks have the opportunity to serve corporate and retail markets using a single universal mobile-payments platform,” Wilson stated in a company press release. “They can now offer mobile-payment services in developed and emerging markets anywhere in the world through any mobile device and on any network.”
While enabling banks to offer new mobile services for corporate customers, Luup has also created a branchless mobile-banking service for large “unbanked populations in emerging markets,” according to the release.
It all gives financial institutions something to ponder in the coming years, says Bézard, who contends the financial or retail industries regularly replace hardware or upgrade software in their payments networks.
“The question now is whether these new software applications can create a huge wave of replacement, or will it just be the start of a steady stream of replacement?” Bézard asks.
What do you think about this? Send us your feedback.
