Leveraging Cloud Based Payments Effectively
Payment industry has seen enormous changes in last few decades all over the world. From cash to cheque to electronic payments, the industry has evolved to reduce the transaction cost, increase the convenience and ensure safety and security for the transactions.
Today largely all financial institutions keep payment experience at the forefront of their business strategies to acquire and retain customers. This required investment in technology platforms as well as on boarding and retaining the skill sets to maintain and manage the infrastructure to deliver highest standard of services. And largely they have been successful in doing so till previous decade where the payment industry was largely focused on Cards, ATMs, POS, RTGS and NEFT. Since inception of cards payment, the time and technology evolution have been at a medium pace and EFT switch took care of ATM, POS where RTGS and NEFT was taken care by additional modules around CBS. In the beginning of current decade, the changes are happening rapidly and new form factors are emerging on digital payments platform.
While the financial institutions created the requisite infrastructure and expertise to operate ATMs and POS, cost pressures as well as certain innovative accounting practices attracted them towards outsourcing of end to end operations. While institutions moved towards outsourcing but it was largely excluding the technology infrastructure since they always wanted to control the authorization process for whatever reasons. Now that the tech scenarios in payments are changing very frequently, institutions are finding it difficult to keep pace with it.
Some of the challenges can be easily listed down as
1. New technology implementation on a homogeneous platform such as QR Code, NFC, UPI, IMPS is not possible given the rigidity of legacy solutions and architecture.
2. Managing multiple solutions on different platforms and from different vendors is tedious, complex and costly.
3. Acquiring and retaining talent in specific domain and specific solution is difficult and hence person dependency becomes an issue.
4. Lack of strong business case to sustain the cost in capex model especially when market is not clear which form factor will work more and which one will not.
5. Managing fraud and risk for different channels of payments requires integration of all payment systems and different rules for each mode of payment and precise monitoring of fraud and risk.
6. Compliance management such as PCI DSS, VISA PIN Security, RBI regulations becomes a challenge since the security requirements are increasing every year and thus increasing the cost.
7. Go to market for any new functionality is time consuming since project delivery on the legacy architecture takes more time.
It is here that payments cloud has a role to play by helping enterprises in the fintech segment overcome the above mentioned challenges. Basically a service provider having complete technology and expertise in payments can provide all of the payment processing services using state of the art infrastructure on a pay per use model with faster go to market with agile architecture at the same time completely matured security and fraud monitoring capabilities.
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