It took nearly five years and US$160 million, but MasterCard has at long last launched its global payment processing platform called Banknet.
The company’s old system, INET, had been in use for more than 27 years, but with transaction sizes increasing, processing speeds and new messaging formats – all liabilities under the old system -a completely revamped approach was in order.
The software was all written and developed in-house and MasterCard chose IBM’s mainframes, including DB2 relational databases, relying on Oracle Corp. and Sun Microsystems for their Unix-based solutions.
The platform works with a virtual private network (VPN) that links 210 countries and approximately 25,000 financial institutions and customers to its payments infrastructure. For example, countries such as China, Venezuela and Colombia, that previously relied on satellite communications to send transactions back to their U.S.-based networks, now use the VPN that establishes the local hubs.
Toronto-based Oasis Technology Ltd.’s switch was used for the base platform, and AT&T Corp. is providing the frame relay and network backbone.
The platform was part of the company’s strategy to improve upon all aspects of transaction processing operations that include clearing, settlement, authorization and file transfer. The IP-based VPN platform was originally launched in 1997 and MasterCard said that more than 90 per cent of its customers had already completed technology upgrades and converted to the company’s platform. It is a system the company is heavily touting.
“The VPN handles all of our data, whether it’s through the mainframe, batch processing or our online authorization process,” said Rob Reeg, senior vice-president of systems development at MasterCard in Chesterfield, Mo. He cited setting up the initial testing for early customers on its new system as the biggest challenge the company experienced.
Here in Canada, the two of the most recognized online billing presenters are epost.ca and webdoxs (formerly e-route Inc). However, neither business nor consumers have flocked to sites that offer this service.
“E-billing should take off and the reason it hasn’t is because the banks have non-compatible systems. As a consumer, I want to consolidate my information, not make it more difficult,” said Vito Marbrucco, group vice-president at IDC in Toronto. For the most part, it is a ubiquitous platform that is lacking. Because of this if customers are visiting multiple Web sites just to find their bills, it quickly becomes a less attractive alternative.
If customers have to continually visit multiple sites to pay their bills online, the market is likely to remain flat, with little growth.
One basic problem that MasterCard has experienced is attracting a hybrid of businesses to sign on to its payments service. In order for the potentially huge consumer market to pledge their support to online billing, those that provide payments services must attract the business and retail communities to migrate to their offerings. It is estimated that MasterCard has approximately 1,000 billers they can send payment and remittance information to.
There are two camps in the billing market. One is bill presentment, which is delivering the bill to the consumer and the other is the payment side, which is delivering the consumer’s payment back to the biller. In the U.S., the recognized leader in the electronic bill presentation and payment (EBPP) is Columbus, Ohio-based CheckFree Corp.
MasterCard, a long-time player in the billing space, is now moving toward presentation – or getting the billers to send their bills directly to MasterCard and in turn allowing the banks to get their bills by using Banknet, explained Avivah Litan, vice-president, financial services at the Gartner Group in Stamford, Conn.
Litan agreed with IDC’s Marbrucco that “the banks haven’t had any success because they haven’t done anything to make it easy for people and they just rely on vendors and they don’t have great interfaces,” she said.
On the whole, Litan characterized MasterCard’s efforts as “futuristic” and said the company is building for the future of bill presentation.
MasterCard expects all of their customers to be fully migrated to its new system by April 2003.