ACI's wholesale payment engine - MTS

The Money Transfer System (MTS) stemmed from ACI's acquisition of Intranet Worldwide, with the corporate brand killed off within a restructuring by ACI in November 2005. Prior to the arrival of MTS, ACI had a Tandem-based wholesale payments offering called MoneyNet, but MTS was positioned as the successor. Some MoneyNet customers moved across, others went
elsewhere (United Missouri Bank, for instance, moved from MoneyNet to Fundtech's PayPlus, with MTS rejected at the shortlist stage in 2001).

MTS is a multi-bank and multi-currency global payments processing and risk management system. It has interfaces to SwiftNet, plus multiple RTGS and low-value networks, so can span domestic and international payments processing. It also supports processing for SEPA Credit Transfers and Direct Debits. It started on DEC VAX under VMS but was ported to Unix. Today, it can use Oracle for record keeping and has a proprietary data store, built by Intranet, for transactions.  
The user base of MTS was largely in the US. By 2007, ACI could claim MTS was used by 15 of the top 25 US banks for highvalue and bulk payments processing and as a hub for payment switching. In Europe, the largest and broadest taker was Fortis Bank; American Express Bank also used the system to process its European payments out of Frankfurt. The SEPA support for MTS was unveiled in May 2006. The main work needed was around scalability and extending the ACH processing capabilities.
Linked to the first of these two aspects, ACI unveiled benchmark figures with IBM for the system, showing a throughput of 3.7 million payments per hour.

The improved throughput was based on concepts that had evolved over a number of years, said ACI CTO, Tony Smith, particularly at Commonwealth Bank of Australia (CBA). A pilot at the bank ran for nine months and, while it did not result in a commercial roll-out, a lot was learnt, he said. The need, particularly with SEPA, was felt to be a hybrid payments architecture which could handle both large, complex cross-border payments and simple mass payments. ACI had adopted a 'container'
concept. In the past, each payment was treated as a separate message and passed through the necessary complex workflows. For more simple payments, the idea is to group together similar ones, based on their key attributes, and process them together.

At the same time, based on input from banks in Europe, there was also still likely to be the need for the payments in these containers to go through different processing stages, such as account validation and fraud checking, so this had been incorporated into the design. The benchmark tests were intended to replicate this model, said Smith, with multiple host interactions. They were carried out in IBM's Innovation Center in Waltham, Mass, and used a 16 processor Unix server. While a
large box, it was not top of the line, he said.

There has been some chopping and changing of branding of MTS. For a while there was 'MTS-eps' (and before this Base24-wps – Wholesale Payments System) but these brands were dropped. Unlike Base24-eps, MTS is not a new system, as the way forward for the wholesale system has been a gradual rebuild.

MTS underpinned ACI's Swift bureau plans, with the company granted bureau status in October 2007. It started to offer services through its On-Demand SaaS model.  

In 2008, ACI signed an agreement with IBM to make MTS available on the IBM System z hardware (see below). The plan for MTS was still being worked out at the time of the announcement but the fact that it runs on the IBM System p and that IBM's AIX Unix can now run on a partition on the System z means this has become the mainframe route for MTS. Overall, the strategy for MTS is one of phased evolution. In the latter part of 2010, work was under way for enhanced bulk file management, additional work to expose functionality (e.g. sanctions monitoring) as services, and a 'technology refresh', of which DB2 support would be one part.  

Despite this activity, there seemed to be dwindling sales for MTS and there were fewer announcements from ACI for this product than for most of its other flagships. For instance, in early 2008, ACI trumpeted 49 new customers in 2007 and gave a breakdown of most of these (eg. 14 for Base24-eps), but there was no mention of MTS. Jonathan Eber, director, product management for MTS, claimed 30 customers, including seven or eight in Europe, three in Australia and a recent first recruit, which he declined to name, in the Middle East, replacing Logica's Bess. However, MTS was on the way out at this time at CBA in Australia, to be replaced by Clear2Pay's Open Payment Framework, and would also be replaced, along with Base24, at BankWest, as this acquired bank was brought into CBA.  

ACI Product - Base24-eps

ACI set about attempting to overhaul its old product, with the rewrite encapsulated within 'Base24-es' (extended services). ACI was touting Base24-es as 'next generation' software. Underlying coding was to be centred on object-oriented C++ and Java. The re-write was intended to bring support for a wider range of platforms than its predecessor, including Sun, IBM and HP. It was stated that users of the original Tandem-based Base24 would be able to migrate or could retain their existing platform and link into the es version to take advantage of the latter's features.

A few banks bought into this, including Abu Dhabi Commercial Bank (ADCB). It was a new ACI customer and signed in late 2004 as it sought to consolidate two systems for POS and ATM transaction authentication, routing, switching and authorisation. The bank was looking for a centralised system for its ATM and POS networks to aid compliance with the Europay, Mastercard, Visa mandate calling for Chip and PIN cards. ADCB planned to run Base24-es on Sun Solaris.

ACI then acquired Germany-based Electronic Payment Systems AG (EPS). The mid-2006 deal was valued at €28.2 million. At the time of the deal, the emphasis was largely on extending ACI's European presence. At this time, around one-third of ACI's business was outside the US, and it had little presence in Germany. A recent market study carried out by ACI indicated that Germany was the third largest electronic payments market in the world, and with significant growth predicted. Here, as
elsewhere in Europe, the advent of SEPA was expected to cause considerable payment systems replacement activity.

EPS was set up in late 1998 and had grown to 70 staff. Its two founders, Christian Jaron and Johann Praschinger, moved across to ACI. EPS's payment engine reflected the relatively young age of the company and was based on reasonably new technology (it was written in C++). Customers gained by EPS AG included ATOS Worldwide Processing, CardProcess, Citibank, Commerzbank, Deutsche Bank, Pluscard, UBS and Visa International.

EPS also brought testing and simulation tools, which would fit with ACI's product set (most of EPS's large payment system users had these); ACI had applications such as its fraud detection software that would fit with EPS's suite. EPS also had a Romanian development centre and this would become part of ACI's evolving offshore development resources. ACI was in the early stages of setting up a global product development centre in Ireland.

The background of the two EPS founders was within German card payments processor, GZS, which was acquired by First Data. Development of the EPS platform had started in 1996, within a small group of developers; EPS bought the intellectual property rights to this and gained an initial four takers in 2000. The first to go live, after a six month project, was First-e, a now defunct
Irish internet bank, followed by UBS.

ACI approached EPS, said Praschinger. However, EPS was already coming round to the idea of gaining greater reach. 'We had the feeling that to get big international deals we needed a global presence,' he said. This was for delivering, supporting and maintaining its systems across the globe. 'It is a big obstacle for a small entity.' In terms of overlap in the product sets, at the core payment engine level, the mid to long-term strategy would be best of breed, he said, so there would be some form of consolidated platform.

By October 2006, ACI was talking about Base24-eps (electronic payment system) as the way forward (ACI on occasions referred to Base24-eps as 'formerly Base24-es'). It is difficult to know what was from the Base24-es route and the EPS route (the renaming as Base24-eps meant it was easy to conclude that the German system was a contributor). Either way, at this stage Base24-eps was officially reclassified as a 'Category A' product, meaning it was deemed to be sufficiently mature for revenue to be recognised at the time of product shipment rather than customer acceptance. To push it as the successor to Base24 was a brave decision. Base24-eps was described as having been built from the bottom up. It is C++-based, as stated, with the reason for the use of this technology given as reliability.

In terms of migrations from Base24 to Base24-eps, some users have moved across. ACI's director, solutions marketing, Andy Brown, said in September 2010: 'It is a case of finding a time that is relevant to their businesses.' In many cases, Base24 has been in place for a decade or more and at many sites there have been a lot of extensions and customisation. The system has also
become tightly embedded in many organisations, often with point-to-point interfaces.

The core Base24 functionality is available in Base24-eps but the newer system is considerably less well travelled than the older, so there are particularly some country requirements that will be missing, including message formats. This is being addressed. In a new release in October 2009, for instance, ACI promised support for market requirements in Australia, China, Germany, Greece, New Zealand, Spain and the US. Base24-eps provides a single view of account activity and balances, and handles both ATM and POS issuing and acquiring of private label and international card scheme traffic. It allows retailers, financial institutions and processors to authorise on-us transactions and switch not-on-us transactions out to the appropriate international card scheme or other domestic issuer systems.

One benefit of Base24-eps is that it can run on multiple platforms, including HP's Tandem-derived NonStop, which might ease the choice for Base24 clients that want to do a phased migration. Base24-eps also runs on Sun Solaris and HP-UX, as well as IBM's System z and System p.

Overall, by September 2010, ACI claimed around 75 takers of Base24-eps (in May 2009, it had said it had 40 live sites). ACI claims one customer processing more than 26 million transactions per day, with peak rates of more than 700 transactions per second. Another customer manages 2250 ATMs. Five of the UK banks in the Faster Payments initiative had selected a solution spanning MTS and Base24-eps, including LloydsTSB, and ABSA Bank in South Africa has implemented it for issuer
processing, starting a phased migration from Base24. A large European retailer has it for acquiring, switching and Authorization.

ACI Overview

Overview

This long-standing US-based player has an extremely broad suite of payment applications, across both wholesale and retail. It has been highly acquisitive, so a fair number of the applications stem from this route. This meant ACI was left with a mix of offerings with different backgrounds, technologies, strengths and weaknesses. Of late, it has sought to rationalise this, selecting
a flagship application per sector and putting in place an integration strategy.

That strategy is relatively clear but there are challenges, particularly in the migration of customers from old applications to new. A particular legacy base is on one of the industry's traditional payment engines, Base24, with ACI seeking to move this to the much newer Base24-eps. Some customers have gone this way (and a phased migration is feasible) but some have headed elsewhere. The wholesale payment engine is MTS.

In early October 2011, after an episode with a few twists and turns, it was announced that ACI was to acquire S1 Corporation.

Categories: 

• Retail payments processing
• Wholesale payments processing
• Card management (credit, debit, smartcard, prepaid), 
• Acquirer services
• Retailer services 
• E-banking
• Fraud management
• AML
• Exceptions management 

Summary History

1975 – Applied Communications Inc set up in Omaha to develop software for Tandem hardware, largely on a bespoke basis.

1982 – Launch of first  product, Base24.

1993 November – ACI Worldwide formed in Delaware, primarily from Applied Communications Inc, which was acquired from Tandem Computers.

1995 – Listed on Nasdaq, initially as Transaction Systems Architects (TSA).

1998 – Acquires wholesale payments systems supplier, Intranet Inc.

2001 – Intranet brand revived for TSA's wholesale payments business.

2005 – Defines long-term strategy. Local development was one theme.

2005 July – Acquires S2 Systems, largely centred on the OpeN/2 payment platform, with Base24 now positioned for this user base.

2006 – Buys Germany-based Electronic Payment Systems AG.

2006 October – Acquires corporate cash management systems specialist, P&H Solutions, for $150 million. TSA announces it is to rebrand as ACI Worldwide. Three primary operating functions are defined: ACI Global Solutions for R&D; ACI Distribution Channels (Americas, based in New York, EMEA based in Watford, UK, and Asia Pacific, based in Singapore); and Software as a Service (with P&H Solutions' business to be a cornerstone of this and to be headed by P&H CEO, Ralph Danelmaier). Base24-eps is recognised as ACI's strategic platform for all new 

development and as the core for convergence of other ACI products. 

'Classic products' to be sold on a tactical basis, depending on timeframes or platform preferences, are defined as Base24, OpeN/2, ON/2, AS/X and the ACI Retail Commerce Server, among others. The bases of each to be encouraged to move to new offerings (identified at this time by all coming under the Base24 brand). In fact, the situation with the Retail Commerce Server electronic payment and authorisation product for retailers becomes unclear, as ACI continues to sell it (five new customers were claimed in the 15 months to January 2008).

2007 January – Filings delayed for the 2006 accounts and TSA/ACI threatened with delisting by Nasdaq. Other notifications received in May and December 2007.

2007 July  – Rebrand occurs.

2007 December – Global alliance announced with IBM, availability of applications on zOS mainframe platform is part of this.

2008 January – Partnership with IBM is extended, giving IBM warrants to acquire up to eight per cent of ACI.

2008 March – ACI signs to outsource all of its internal IT to IBM.

2011 August – A bid for S1 Corporation is rejected.

2011 October – A renewed bid for S1 is accepted. 

FIS Product Suite

Product suite

FIS's solutions are firmly in the retail payments arena and particularly stem from Certegy, eFunds and now Metavante. Its offerings span all forms of retail payments, including debit, credit and prepaid cards, and are based on a range of technologies.

Around 60 per cent of FIS's US business is payments, where it is a huge processor. It is also a strong player in Asia and Australasia. In Europe, its business is somewhat more balanced, in part through its German-specific Kordoba core banking business. In the Middle East, it has a reasonable number of payment system users, typically on a licence basis.

FIS covers both the acquiring and switching sides of the sector. There is some overlap between the applications but the positioning is reasonably clear.

On the switch side, the eFunds-derived Connex is one of FIS's long-established workhorses. It runs on Hewlett-Packard's Tandem-derived NonStop or IBM zOS platforms, with flat files or DB2, and is written in TAL, Cobol and Assembler at the back-end. Not surprisingly, it is used by large banks, such as RBS, or large national switches, such as Vocalink in the UK, where it underpins the largest ATM network in the world and this ACH's Faster Payments scheme. There are between 40 and 50 licence users but the number of banks that it supports is much higher, largely due to its use in the US on a bureau basis to support around 9000 banks.

At Société Générale, Connex has been steadily rolled out from one hub for multiple countries (around 14, with Ghana the latest to be added) to support the bank's BHFM subsidiary, which was set up in the late 1990s to manage all of the French bank's foreign retail banking operations.

The open systems equivalent of Connex is another eFunds-derived platform, IST (eFunds itself had been an acquisitive company and this was one business that it had bought). Functionally, Connex and IST are similar. The IST back-end is written in C++ and it runs on HP and IBM Unix as well as the mainframe, and supports both Oracle and DB2. Users include the Saudi Monetary Authority and the Finnish and Turkish national switches.

The IST/Switch solution provides switching, routing and authorisation for issuing, acquiring and network participants for ATM/POS, debit, credit and Web transactions. It can process credit/debit transactions through all major card associations and networks, including Visa, MasterCard, Interac, American Express, Diners Club, JCB, STAR and NYCE.

The IST suite comprises: FIS IST/Merchant Accounting & Settlement for integration of payment transaction processing with back office accounting and general ledger systems; FIS IST/Clearing for crediting merchant accounts and debiting cardholder accounts; and the core FIS IST/Switch, a payment engine that handles payment authorisation processing.

Collectively, eFunds' suite was branded as the Enterprise Payments Platform, comprising Connex, IST/Switch, DataNavigator, FraudManager and Enterprise View (see below). As a result of an alliance with IBM, these were made available in 2007 on the IBM zSeries mainframe, with support for Linux on this platform, plus IBM's WebSphere application integration middleware
and DB2 at the database level.

On the credit card side, FIS's offering is the mainframe-based Base2000, which competes with the other heavyweights, First Data and T-Sys. This stemmed from Certegy, and it covers transaction authorisation, statement generation, card issuance and customer service. Base2000 supports both consumer and commercial accounts, including business, corporate, fleet and purchasing cards. First installed in 1998, Base2000 processes more than 56 million accounts worldwide.

Cortex is Fidelity's debit card solution. It is Unix-based and also covers prepaid and credit cards (the latter being an area of overlap with Base2000). Cortex stemmed from UK-based Nomad, which, as mentioned, had been acquired by Metavante in early 2008, for $58 million. The Cortex business is a high-growth one for FIS, on the back of the shift from credit to debit cards.

The customers have become more mainstream and this part of the business was expected to grow by 30 per cent in 2010. That Cortex is fairly well-travelled is reflected in the fact that it has been integrated with a number of core banking systems, including Fidelity's Profile, plus Misys' Equation and Bankmaster, Oracle FSS's Flexcube and Temenos' T24. It also underpins a number of prepaid card providers, such as Advanced Payment Solutions in the UK.

FIS claims it can support Instant Issuance, with the production of fully personalised EMV cards in branch locations (this capability was launched for Asia in April 2010). Historically, card issuance for new and replacement credit and debit cards has taken up to two weeks. FIS's Instant Issuance product operates as a stand-alone solution or as part of the overall Cortex card management system.

Around these processing systems, FIS has other applications for fraud management and MIS. The fraud offering, Fraud Navigator, came with eFunds and is relatively low-end, so does not compete with more complex offerings from the likes of Fair Isaac and Actimize (indeed, FIS has partnered with the latter on bids and signed a partnership in 2008). Fraud Navigator is often used alongside IST.

The MIS offering, also with eFunds roots, is Data Navigator, a transaction database (Oracle), populated from near real-time or batch feeds from transaction processing systems, which is used to drive transaction enquiries, settlement and card scheme exception management. Understandably, Data Navigator has been integrated with FIS's own systems and it is a common component alongside these (Vocalink, for instance, uses it with Connex, with Data Navigator constituting an enquiry
database for UK financial institutions).

Derived from EFD, FIS also has a US risk management line including ChexSystems, a service used by more than 9000 US financial institutions. ChexSystems is built around a database of closed-for-cause bank accounts. When a new customer opens an account at a bank, the bank can query the database on whether that customer has a history of defrauding or otherwise troubling other banks with bad cheques. Another popular service is the SCAN cheque verification network for retail merchants.

Merchants use SCAN to help when deciding whether or not to accept a paper cheque for payment at the point of sale. SCAN returns a verdict on the validity of the cheque.

FIS also has the wholly-owned, Metavante-derived subsidiary, NYCE Payments Network, LLC, which has an ATM and point of sale network, plus NYCE Direct Bill Payment service, offering online bill payment via customers' deposit accounts.

And there are niche solutions such as FIS Healthcare Remittance Manager, also derived from Metavante, a data bridge between insurers and medical providers, electronically capturing, reconciling and processing US healthcare payment information.

FIS Overview and History..

Overview

Fidelity Information Services (FIS) is firmly in the retail payments space, with a long-standing pedigree, much of it in the US, and a wide suite of applications. To a large degree, this has come via acquisitions, particularly those of Certegy and eFunds. When FIS merged with Metavante in 2009, this brought additional systems, particularly the Nomad-derived debit card solution, Cortex, which now has a central role in FIS's overall payments product strategy.

The suite clearly comprises a mix of applications with different roots and of different ages and technology. FIS is seeking to apply web services and a common look and feel through a 'wrapper' approach, with Cortex contributing to this. FIS also has core banking systems (including the mainframe-based Systematics, Sanchez-derived Profile, German-specific Kordoba, trade
finance/low-end universal-oriented AllProfits, and Danish rural bank-derived Corebank plus syndicated lending offering, ACBS, and delivery channels solution, Touchpoint). In the US, it is a major provider of outsource processing, often with its payments offerings as part of the overall solution.

Payments products: 

• Connex, 
• IST/Switch, 
• Data Navigator, 
• IST/Clearing, 
• IST/MAS, 
• Fraud Navigator, 
• Liability Manager, 
• EnterpriseView, 
• Cortex, 
• CSF 

Categories: 

• Retail payments processing, 
• Card management (credit, debit, smartcard, prepaid), 
• Fraud management, 
• Cheque image processing

Summary History

February 2003: Fidelity National Financial (FNF) buys Alltel Information Services for $1.05 billion to create Fidelity Information Services (FIS). Alltel brought mortgage servicing and retail banking operations, commercial lending, online banking and wholesale banking offerings, and community and regional bank divisions. For the first time, it gave FNF an international business.   

September 2004: FNF drops plans to file for a $500 million IPO, citing 'a weak and unpredictable equity market' and its recent acquisition of Intercept, which provided outsourced and in-house banking solutions for 425 community banks, plus item processing and cheque imaging services for 720 customers. 

January 2005: FNF undertakes a $500 million recapitalisation programme, selling a 25 per cent stake to equity firms Thomas H Lee Partners and Texas Pacific Group.

September 2005: FIS merges with Florida-based card and cheque processing vendor, Certegy. The arrangement is based on a stock-for-stock deal, and gives FIS majority control of the new combined public company, to be known as Fidelity National Information Services (FNIS). FIS gains a 67.5 per cent stake, while Certegy shareholders pick up 32.5 per cent. FNF owns half of the new company.

The merger finally lay to rest FIS's long-running search for a way to go public. Although FIS was the acquirer from an ownership perspective, the company merges into Certegy as a public company.

February 2006: From 1st February, FNIS becomes operational as a spun-off company from FNF Inc., with estimated revenues of $4 billion, 19,000 employees and over 60,000 customers. While much of the focus was on organic growth, it was stated that FNIS would have 'its own currency' – its stock – and would actively pursue other opportunities. A little under half of the ownership of FNIS remained with FNF. The aim was to turn FNF more or less into a holding company, with the other 

businesses also being turned into separate companies. One key aim would be to take some of the applications and processes in the US and move them out into the international market.   

July 2007: FNIS acquires payments processor EFD/eFunds Corporation of Arizona. The all-cash transaction was valued at $1.8 billion. EFD had been spun off by US paper cheque printer Deluxe Corporation in 2000. The company had total revenues of $552 million in 2006.

Fidelity gained three lines of business: US payments, US risk management, and international. EFD's US payments line gave Fidelity a strong ATM, debit, prepaid, and gift card processing business, as well as smaller operations that processed ACH and electronic government benefits transactions. EFD's processing platforms utilised the vendor's own technology, including the 

Connex and IST electronic funds transfer software packages.EFD's international business line marketed its software and provided ATM and debit card processing, with an emphasis on 

Central and Eastern Europe and south Asia. Thirteen per cent of EFD's revenues came from its international business, 34 per cent from US risk management, and 53 per cent from US payments. EFD had a customer base of about 4400 community banks and credit unions, around double that of FIS.

EFD also had a prepaid card platform, which FIS was lacking. Fidelity also lacked ATM and debit card processing services outside of the US. The acquisition also brought together EFD's large outsourcing operation in India with Fidelity's recently expanded offshore presence there, having acquired a company called Second Foundation in India earlier in the year.

January 2008: Metavante buys UK-based prepaid cards and debit card processing specialist, Nomad Software, for $58 million.

1st April 2009: FNIS acquires Metavante, creating a colossus in the US payment and financial core processing sector, bringing together 8000 customers from the former and 14,000 from the latter. On the payments side, Metavante Payment Solutions had offerings for fraud prevention/monitoring and risk management. Metavante also had an ATM/PIN-debit network, NYCE, mobile financial services, online bill pay, government payments, credit and debit payment cards, merchant-issued and networkbranded prepaid cards (derived from Nomad), as well as ACH and check image processing. Metavante also offered consumer healthcare payment solutions for patients, providers, plan administrators and financial institutions. And it had core banking, ebanking and AML solutions, among others outside its Payment Solutions business.

February 2011: FIS acquires Gifts Software. The latter had been around since 1996. The deal added wire transfer, Swift interface and AML offerings. While the latter product has an international user base, users of the rest of the Gifts' suite are largely in the US (domestic banks and international operations of foreign banks). There was already a partnership between FIS and Gifts. The back office wire transfer space was seen as a gap in the offerings of FIS and Metavante. FIS has started to offer 

the Gifts solutions on an ASP basis. The wire transfer product, which includes Chips and Fedwire support, has also been linked to a range of FIS core systems, initially those that are US-centric, as well as to its e-banking offerings. Gail Angel, FIS’s head of commercial treasury solutions, indicated in November 2011 that the company was also considering setting up a Swift service 

bureau.    

Clear2Pay (FIS) Product

Corporate Overview

Clear2Pay was set up in September 2001 with start-up capital. Co-founder and CEO, Michel Akkermans, previously founded a Belgian regulatory reporting company, FICS, which was subsequently sold to S1. The other co-founder, Jürgen Ingels, is ex-Dexia, where he specialised in helping start-ups. Unlike FICS, which grew organically, Clear2Pay had an acquisitive strategy
from an early stage. Its first breakthrough came in the middle of 2002 when its emerging PayPark solution was acquired by Visa. The emphasis for that project was card-to-card payments, with the offering subsequently broadened for other forms of person-to-person (P2P) money transfer.

There have been other capital injections (one of which saw Intel take a minority stake) and a sequence of acquisitions (see below) which brought an e-business transaction platform (with Tectrade NV); cash management solution (with Maxware in the Netherlands); 3-D secure certified products for acquirers and issuers (with Element NV); and the Bank Payment Hub and an Asia Pacific presence with Sienna Technologies, with others added since then. Sienna was particularly important as its product is at the heart of Clear2Pay's suite.

By the start of 2011 it had over 500 staff, of which around 110 were in China (where it had made two acquisitions). Less than one year later, the headcount figure had doubled, in part through the acquisition of UK-based ATM testing automation firm, Level Four, and US/India-based card and payments consulting firm, ISTS. Ownership of Clear2Pay is spread across a range of
investment companies, plus the senior management.

Summary History

2001 September: Company founded.

2002: Wins first major deal, from Visa, for a card-to-card solution based on its emerging PayPark system.

2004 May: Clear2Pay acquires Australian company, Sienna Technologies, and its Bank Payment Hub (BPH). This Java-based offering comes to form the main payment platform from the Belgian supplier. It was stated that Sienna's payments products would complement Clear2Pay's 'next generation payment processing platform, PayPark'. The Sienna products would enhance
PayPark with components to service the full range of retail, SME, corporate and institutional clients.As a result, the Clear2Pay solutions would broaden the coverage of the full financial value chain from initiation to settlement for high-value as well as low-value payments for both domestic and cross-border transactions.

Sienna's users in Australia included National Australia Bank, Commonwealth Bank of Australia, ANZ, St George Bank and Reserve Bank of Australia. Asian customers included BCS in Singapore and Krung Thai Computer Services (KCS), part of Krung Thai Group in Thailand. Sienna was set up almost ten years earlier and was backed by Technology Venture Partners (TVP), the largest specialist technology venture capital firm in Australia.

2005 November: Clear2Pay opens a first US office as it starts to make headway in north America. It claims at this time to be working with one large US bank that had entered a pilot phase with PayPark to support payments between the US and Mexico, and two other projects in the US with small 'community groups'.

2006: Unisys selects Clear2Pay to underpin its Open Payments Platform (OPP). OPP is intended to be based on a Service Oriented Architecture (SOA) and J2EE, with Unisys settling on a buy versus build route at an early stage.

2007: IBM announces its Enterprise Payments Platform (EPP), its Websphere and DB2-based, SOA-centric payments strategy. Clear2Pay is one of the companies cited as a partner for this.

2007: In China, Clear2Pay buys an 85-person payments company, Data House. There is a network called CNAPS to which banks in the country must connect for international payments and cheque image exchange. Data House provided connectivity to this, with customers spanning both domestic players and the Chinese operations of overseas banks, such as Crédit Agricole and BNP Paribas.

2007 November: Clear2Pay buys Integri, a Belgian supplier of test tools and test services for payments, ticketing and mobile applications.

Mid-2009: Unisys ties up with Dovetail as its main OPP partner, seemingly reversing the decision to go with Clear2Pay. The two companies gained a high profile win in the first half of 2007 with the Federal Reserve Bank of Cleveland for a cheque and image processing system for itself and eleven other US federal reserve banks. Rein Geerdes, Unisys' business development head, payments solutions and services, said only that Unisys was still available as a system integrator for Clear2Pay projects.Unisys undertook a thorough investigation before making the decision, said Geerdes. It felt Dovetail's single platform and architecture was superior to all of its competitors. In addition, Dovetail's focus on being a development shop meant it complemented Unisys' systems integration and services skills.

November 2011: Clear2Pay acquires UK-based ATM testing automation software company, Level Four, and US/India-based card and payment consulting company, ISTS.  

Product Suite
The Bank Payment Hub (BPH) was derived from the aforementioned Australian company, Sienna Technologies, acquired by Clear2Pay in 2004. This Java-based payment engine forms the core of Clear2Pay's suite, now dubbed the Open Payment Framework (OPF). Akkermans said the J2EE-based solution had been 'built from the ground up' and this seemed a reasonable claim. Clear2Pay had then been able to use significant venture capital investment to broaden and deepen the offering.

BPH is a centralised payments infrastructure spanning customer interaction, order management and payment execution. It supports SEPA, international payments, billing and bill payment routing, cheque processing, low-value and high-value payments.  There is a component for cheque image processing.For cheque image clearing, Clear2Pay had an early solution but this has been replaced by the BPH component. A couple of US banks use OPF in this domain, so too Bank of Thailand (see below). Using what head of Asia Pacific, Warren Gardiner, describe as the 'precursor to OPF', Clear2Pay also provided the cheque image processing platform for Singapore a few years
earlier. Gardiner was one of the co-founders of Sienna Technologies.

A version of BPH/OPF is positioned for corporates as the Corporate Payment Hub (CPH). It centralises and standardises payment processing and, via workflow, also enables subsidiaries to perform their payment activities. It is meant to allow corporates to eliminate the use of multiple local electronic banking systems and standardises bank interfaces without the need to
adopt bank specific software and standards.

There is a Software Development Kit (SDK) within OPF. This allows customers to add and change components. There are also the Integri-derived testing tools for payment, smartcard and mobile solutions.Clear2Pay also has a Chargeback (CBK) reporting package for management of credit and debit card disputed transactions. This provides a single interface for both issuer and acquirer activity, covering exception processing problems related to disputed transactions or customer claims. Via Sienna, there is also an electronic bill payment and presentment (EBPP) solution, BillView
Integrator.

There is an e-banking solution, stemming from the Diagram acquisition. Now called the OPF eBanking suite, it is intended to cover both corporate and retail banking for internet, mobile, interactive voice, branch banking and on-line trading. Reflecting the French roots of Diagram, it is mainly used in France and French-speaking Africa.

This is sold on a Software-as-a-Service (SaaS) basis as B-Web and is largely used in Africa. One user with B-Web is Bank of Africa, one of the largest banks on the continent, servicing over 700,000 accounts, albeit with a much smaller number of internet banking customers to date. It signed in late 2009 and uses it across multiple countries.

There are two products on the card side. ProxyPay3/M is a platform for processing online payment transactions. As a front-end between the internet or POS servers and the systems of an acquirer, it is used for e-payment transaction validation and processing. ClearPark is a pan-European online payment and settlement solution for acquirers, built in an ASP model. ClearPark allows merchants to accept worldwide electronic payments for transactions using Visa, MasterCard and Amex cards as well local bank paybuttons, from a call centre, a web shop, via web forms, in batch processing mode or through a direct connection to a back-end system. 

Blockchain Technology - II (Data Storage)

DATA STORAGE: What is a blockchain?

A blockchain is just a file.  A blockchain by itself is just a data structure.  That is, how data is logically put together and stored. Other data structures are databases (rows, columns, tables), text files, comma separated values (csv), images, lists, and so on.  You can think of a blockchain competing most closely with a database.

Blocks in a chain = pages in a book
For analogy, a book is a chain of pages. Each page in a book contains:

• the text: for example the story
• information about itself: at the top of the page there is usually the title of the book and sometimes the chapter number or title; at the bottom is usually the page number which tells you where you are in the book. This ‘data about data’ is called meta-data.

Similarly in a blockchain block, each block has:

• the contents of the block, for example in bitcoin is it the bitcoin transactions, and the miner incentive reward (currently 25 BTC).
• a ‘header’ which contains the data about the block.  In bitcoin, the header includes some technical information about the block, a reference to the previous block, and a fingerprint (hash) of the data contained in this block, among other things. This hash is important for ordering.

Blockchain Technology - Public VS Private Blockchain

Blockchain is collection of technologies, like LEGO Toys :) Like LEGO Bag, you can take different bricks/technologies and build and get different results.

Public vs private blockchains

There is a big difference in what technologies you need, depending on whether you allow anyone to write to your blockchain, or known, vetted participants.   Bitcoin allows anyone to write to its ledger.

Public blockchains.  Ledgers can be ‘public’ in two senses:

1. Anyone, without permission granted by another authority, can write data
2. Anyone, without permission granted by another authority, can read data

Usually, when people talk about public blockchains, they mean anyone-can-write.
Because bitcoin is designed as a ‘anyone-can-write’ blockchain, where participants aren’t vetted and can add to the ledger without needing approval, it needs ways of arbitrating discrepancies (there is no ‘boss’ to decide), and defence mechanisms against attacks (anyone can misbehave with relative impunity, if there is a financial incentive to do so).  These create cost and complexity to running this blockchain.

Private blockchains.  Conversely, a ‘private’ blockchain network is where the participants are known and trusted: for example, an industry group, or a group of companies owned by an umbrella company.  Many of the mechanisms aren’t needed – or rather they are replaced with legal contracts – “You’ll behave because you’ve signed this piece of paper.”.  This changes the technical decisions as to which bricks are used to build the solution.

Alaric - Authentic

Overview

Alaric's flagship offering is a relatively new Java-based payments platform, Authentic. The company has had steady progress with this and has around 35 clients. Although not currently as well known as some of its competitors, Alaric has built a good international user list and its system was chosen by Oracle as the pivotal payments engine piece in this supplier's Consumer Payments Services Hub. The company also has a fraud detection system, Fractals.

Corporate Overview

Alaric was set up in 1997 in the UK by a number of experienced payments system professionals. It provided support services for the AST/Transact-derived UM20 system, which covered funds transfer and card processing. The development of the new system commenced in 1999. The company now has offices in the US, Australia and Malaysia, with a development centre in the latter, set up in 2007 and with 32 staff here by the end of 2010 (by this stage there were 35 staff in the UK).  Common competitors have been ACI, Fidelity and S1. The company claims to have increased revenues by 40 to 45 per cent in each of the last couple of years.

Summary History

1997 – Alaric is set up by a number of former AST/S2 employees with backing from two venture capital companies, Foresight Group and NVM Private Equity (which remain in place today, the latter providing Alaric's chairman). Two years earlier, S2 Systems, the software subsidiary of Stratus Computers, had acquired UK-based AST/Transact and its proprietary UM20 payments system running on a Stratus VOS platform. S2 decided to replace UM20 with its OpeN/2 platform. A number of ATS staff were made redundant. Alaric was set up by ex-staff to offer support to the UM20 customers, including adding Y2K compliance. Alaric was king of the Visigoths and the name was apparently chosen as the new company wanted to 'sack the S2 empire'. S2 was later bought by ACI (2005).

1999 – Aware that it was relying solely on maintenance revenue, Alaric set about building a new payments platform. Two UM20 customers were recruited as development partners/pilots: Cornèr Banca in Switzerland, the third largest bank in the country, and Yorkshire Building Society in the UK. The development was done in Java and the system was
launched as Authentic.

2001 – Alaric adds a Java-based fraud detection system, Fractals. Cornèr Banca signs for this. Signs partnership with Oracle.

2005 – Alaric has a major breakthrough when American Express signs a global licence for Authentic. S2 and ACI were beaten at the shortlist stage. Amex has standardised on the system and is now using it to support more than 350 million transactions per month.

2008 – Offices are set up in the US and Australia, plus a development centre in Kuala Lumpur.

2010 – Alaric claims to have added 15 new-name customers during the year.

Product suite

At the heart of Alaric's offerings is the switching system, Authentic. It is meant to support integration of new payments channels and systems, with EFT switching and authorisation for card issuers, acquirers, switches and processors, supporting ATM and POS networks and other payment channels. It has been described by director (and ex-ACI), Steve Lomax, as equivalent in scope
to ACI's Base24. There were around 35 users by the end of 2010.

The solution is touted for wrapping legacy systems (as has been the case at Kuwait Finance House, for instance, see below). Although originally designed for EFT switching, Alaric claims that Authentic can be leveraged as a wholesale payment hub, handling formats such as ISO 20022, and as payments integration middleware.Authentic is written in Java and can support any compliant platform, including Unix, Windows and Linux, with Oracle and DB2 as database options. It is based on a granular object-oriented design and is highly configurable. Examples of objects are tasks
such as check floor limit or validate currency. It ships pre-configured but users can adapt the existing business logic or add new logic, including validation rules. Cornèr Banca runs the system across both Sun Solaris and HP-UX. IBM's AIX is also an option. A fair few users have Linux. The same version runs on any platform, with no code changes needed, and at all customer sites. Alaric claims the system could run on other platforms such as HP's Tandem-derived NonStop if there was the demand.
There is a messaging component, Message Mapper, for message transformation, for mapping formats such as ISO 8583 to XML and ISO 20022 to ISO 8583, fixed fields or tagged formats such as Swift. It was part of Authentic from the outset and is an integral part of the offering. Alaric has said it could be taken in its own right but it has not been sold on this basis to date.In June 2010, Oracle and Alaric announced benchmarks for Authentic running with Oracle's GoldenGate data integration and
replication offering. The tests saw the Oracle components used to offload real-time transactional reporting to a reporting database and to implement active-active database configuration while supporting a 100 million cardholder database for authorisations. Authentic was running on five of Oracle's Sun Sparc Enterprise T5240 application servers using Solaris 10 (each powered by two UltraSparc T2 Plus processors and 32 GB of memory) and Oracle database 11g with Oracle Real Application Clusters running on Sun Sparc Enterprise M9000 servers (each with twelve SPARC64 VII processors and 192 GB of memory).

Authentic recorded throughput of 10,864 transactions per second with an average response time of 200 milliseconds. GoldenGate enabled bi-directional replication between two active-active sites simulated as being 800 miles apart, the system delivering throughput of 9348 transactions per second without degradation of response times.

The fraud detection system for card issuers and acquirers, Fractals, uses a predictive model, with the ability to 'learn' over time, rather than a neural model. It was added in 2001 and is also written in Java. Although originally developed for card fraud detection, Alaric claims Fractals is also suitable for anti-money laundering (AML) and enterprise fraud detection. There were around twelve users of this by the end of 2010. The software division of Euronet Worldwide signed in 2004 to distribute
Fractals; Euronet itself implemented the system in 2006.

A new release of Fractals, due for availability in Q1 2013, is intended to add enterprise capabilities across internal and external data sources for real-time detection of Card Not Present fraud, plus a mobile online alert capability. Alaric CEO, Mike Alford, said in May 2012 that he expected the company to close eight deals in the first quarter of its new financial year (to 30th June),
with fraud detection the hottest area at this time. Two of the pending deals were for Fractals from US banks; there was also an Authentic deal in the pipeline from Asia Pacific. 'There are some horrendous losses when you go out into the market and get below the surface,' he said. He believed some of the worst publicised security breaches, such as at Princeton-based Heartland Payment Systems (130 million cardholder details hacked) and Atlanta-based Global Payments (potentially two million
cardholder details hacked), took twelve months or more to discover. With the new release of Fractals, it should be possible to spot such breaches much earlier, he claimed.

Authentic Technical Details

First developed: 2000.

Commercially available: 2000.

Origins: Created from scratch.  Not a successor of a legacy product

Original platform: Stratus, IBM, SUN, HP, Dell - anything that supports Java/Oracle/DB2.

Current server platforms: As above.

Current client platforms: Windows based PCs

Method of holding data: Uses either Oracle or DB2 database.

Language written in: Java.

Misys Payment Portal, Misys Cash Portal, Misys Payment Manager

Overview

Misys, best known for its core banking and treasury and capital markets (TCM) systems, has a long-standing messaging solution, Meridian Middleware. It has used this extensively as an interface layer for its different banking applications. On top of this it has built a routing solution, Message Manager, and of late has added what it claims is a full payments engine, Misys Payment Manager.

Summary History

1998 September – Misys unveils Meridien Middleware, a middleware offering for interfacing between its own systems and between those systems and third-party ones.

1999 – There are 20 takers of Meridien Middleware by the start of the year, including Unibank in Denmark, Belgian Bank in Hong Kong, NordLB in Singapore, Bank of East Asia Singapore, United Bulgarian Bank, BIG Bank and ABN Amro. All used it with other Misys applications.

1999 – Misys adds Meridien Link, touted as a generic messaging system, built on top of Meridien Middleware. This was initially for Equation, with links to Swift. It went live in September 1999 at Equation user, US Bancorp in Minneapolis. As well as support for all Swift message types, Misys claimed to have added exception processing facilities, bulk file processing and release, improved reporting and query support. It was subsequently integrated with Swift's Accord matching service.

2005 – Misys moves Meridian Middleware and the messaging component, now Misys Message Manager, to Java.

2008 September – Misys signs a partnership whereby it intends to offer Dovetail's payments platform, initially for SEPA Direct Debits (SDDs), plus as a gateway for Fedwire and Chips in the US. Existing Misys partner, HCL, was expected to provide payment related services. The Dovetail solution would be pre-integrated with Misys' banking systems, including Bankfusion Universal Banking System, and Message Manager. Misys claimed to already support SEPA Credit Transfers (SCTs).  

Product Suite

The 'backbone' to Misys' messaging and payments offerings is Misys Message Manager. With its origins in the Meridian Link messaging platform, Misys Message Manager underwent a technical refresh in 2005 to move it to J2EE. At the time, it was positioned as a potential replacement for the likes of IBM's Merva, with subsets of the system having been tailored for SwiftNet services. The first components covered FileAct and Cash Reporting; subsequent releases were for cash management, bulk payments and funds solutions. These new components would negate the need for a bank to replace its entire message infrastructure, with the ability to reside alongside existing systems, potentially adding functionality which was not available within older messaging systems. ABSA Bank and Standard Bank both replaced the mainframe-based Merva solution with the Misys system, on a Windows cluster and Sun Unix boxes respectively. Misys Message Manager is now used by around 300 banks as a messaging infrastructure, mostly linked to Misys' core banking systems. A few banks (ABSA is one) use it as an 'architectural piece' within their payments infrastructure.

The payments solution itself stems from a number of components. Misys Exceptions & Investigations was the first to be announced, at Sibos 2007. Misys explained that following an approach from Swift, it had embarked on building a solution to support the Society's SwiftNet Exceptions & Investigations service. This was on top of Message Manager and, since this platform already supported FIN, FileAct, InterAct and ISO 20022, it was apparently simply a matter of adding four workflows and a case manager on top to support the Swift service.It was touted as an alternative to the heavy and costly existing exceptions management systems typically used by large banks.

The functionality could be extended and Misys was apparently talking to a number of banks about the solution, potentially to introduce to their own banking partners and corporate customers. From Swift's perspective, a key enabler for the take-up of the service is compliant application software. It was expected that there would be dashboard and reference data partners within the eventual Misys solution, with tie-ups to be announced, as well as links to matching and reconciliation systems. The aim was for availability of the Misys E&I solution by the middle of 2008, in line with the overall strategy for Misys which was to provide an 'end-to-end payment processing environment'. A prototype for this was indeed built, but it remained under review in 2009 as Swift's E&I initiative was yet to pick up momentum.

This project was followed by a component which fitted into the opposite end of the Payment Services spectrum. In February 2008 Misys signed an agreement with Petra Financial to adopt that company's customer payment initiation software within its own applications and as an offering in its own right. 'Payments initiation is an area where we have seen a degree of interest from some customers and from other banks that we have been talking to,' said Misys' solutions manager, Barry Kislingbury. 'The demand is for a more innovative front-end, so when you press the button to generate a payment, it has been checked against reference data and is an STP message'.

Petra Financial emerged in 2007 with two initial reference data offerings built on Interchange middleware and it forged a partnership to use CB.Net's data. Via Petra's front-end application, Touchstone – a solution that can be used at both bank branch and customer levels to fully capture, validate and route payment instructions – Misys planned to use the data within its own applications and also to build its own payments initiation offering using the technology. A number of Misys customers already used CB.Net's services, but while there had been 'numerous' conversations with the company, there was never a formal partnership. Petra added the ability to take the CB.Net data, and potentially other data as well, 'and do something interesting with it, making it available in a more intelligent manner', according to Kislingbury. The Java nature of the Petra offering meant
it would be 'pretty easy' to integrate with Misys' payment offerings, he said.  The Customer Payments Initiation solution could be licensed standalone or as part of the integrated Misys payments solution.

Misys' plan was to productise this process by adding new functionality to Message Manager and releasing a new product, to be known as Misys Payments Manager. The direction in which Misys had been developing Message Manager had apparently been driven by some of its larger users. Kislingbury suggested in mid-2009 that banks had been adding their own functionality to
Message Manager and looking to use it as a payments hub. This would be 'not necessarily to glue in a payment engine, but really to orchestrate everything that needs to be done to a payment, by integrating all the different back office systems. It's about integration and automation rather than chucking out what they have got and buying a nice big expensive engine,' Kislingbury
explained. The main advantage of this approach was that it would avoid the 'political rows' associated with putting in a new enterprise-wide payment system, and would allow siloes at the banks to remain in place.

Misys Payment Manager is built on top of Message Manager and the supplier's portal platform (see below). It is described by the supplier as automating the processing of all payment types, from high-value cross-border to low-value, high volume domestic retail, on the same platform. It spans payment initiation; payment processing including validation, prioritisation, defaulting and enrichment of data, routing, calculation of fees, risk monitoring and reporting; payment delivery, with
reformatting for the target execution mechanism such as Swift FIN, SEPA, Target2, Step2 and Swift bulk payments; and postprocessingfor matching and reconciliation, exception handling, rejection processing, audit and archive. Misys claims that Misys Payments Manager also supports Swift's Workers' Remittances service. The supplier says the solution can be deployed as a centralised payment processing hub replacing complex payment flows between existing core processing systems. It can also be used, it is claimed, to wrap existing legacy payment engines, to bring more agility and flexibility.

A potentially complementary area is cash management. In the second half of 2008, Misys unveiled Global Cash Portal. This is a version of its trade finance portal, Trade Portal, which sits in front of its flagship trade finance system, Trade Innovation. Trade Portal allows banks to connect to corporates; an early taker was BNP Paribas working with Carrefour. A multi-bank version allows corporates to access multiple banks from a single front-end to manage domestic and international trade transactions, with KBC a pioneer here. As well as standard trade finance instruments, it is meant to support open account transactions. One connectivity option is SwiftNet, facilitated by Swift's decision to extend its Score corporate access model to include support for trade messages.On the Global Cash Portal side, head of banking, Guy Warren, said adding cash management capabilities to the trade capabilities was felt to be logical and came at a time when there was ever more corporate pressure to understand cash positions.

Facilities include intra-bank and inter-bank fund transfers, bulk uploads, recurring transfers, account balances, sweeping and pooling services, SCTs, a report designer and audit trail. As with Trade Portal, it can be hosted on an ASP basis by Misys. Banks can still apply their branded front-ends to the solution and there is support for XML, Swift FIN messages and ISO 20022, plus custom-built interfaces and links to ERP systems.

The company has a Swift bureau service as part of its Confirmation Matching Service (CMS) and has gradually opened up the SwiftNet connectivity from this Citibank-derived corporate offering that has been around for 20 years or so. The first phase was to make it available to users of Trade Innovation, followed by an announcement in October 2010 that it would also now be available to banks, fund managers and non-CMS corporates.

Oracle FSS – Flexcube Payments

Overview

Oracle has a mix of its own and third party solutions, across a broad span of payments functionality. Clearly, Oracle is a huge company, with its traditional database and ERP roots. It has diversified through acquisitions, including those of Peoplesoft and Sun, and has bought a number of financial services applications, including I-flex Solutions and its core banking system, Flexcube.

The latter's payments module is part of Oracle's suite, along with a range of third party solutions and some acquired or home-grown offerings. Clearly, there is technical commonality, in that they support the Oracle database, but they come from different roots and there are different levels of integration.

Summary History

2001 – Oracle partners with emerging retail payment system supplier, UK-based Alaric.
2005 – Oracle buys stake from Citibank in India-based core banking system supplier, I-flex Solutions, giving it a majority holding.
2006 August – Oracle buys US-based Mantas, an AML specialist, in an all-cash deal worth•  $122.6 million.
2007 August – Oracle buys US-base online identity theft and fraud software vendor, Bharosa.
2008 January – Oracle partners with Australian payments system supplier, Distra. This is for Distra Switch for card and payment processing including consumer/corporate payments, ATM and POS device driving, channel integration, authorisation request processing, and routing and connectivity to external parties such as processors, beneficiaries, card schemes and hosts.
2008 April – I-flex Solutions becomes Oracle Financial Services Software (Oracle FSS).
2009 April – Oracle agrees to acquire Sun Microsystems for approximately $7.4 billion.
2009 – Oracle extends partnership with Alaric, with this supplier's solution at the heart of Oracle's Consumer Payment Services Hub.

Product Suite

Oracle claims it can provide a full payments solution, including the technology and infrastructure. Oracle Payments is the central payment engine for Oracle E-Business Suite. Oracle claims key features are a central payment engine, configurable formatting framework, flexible validation model, payment data repository, electronic payment transmission, support for various business payment models, dashboards for monitoring payment processes, credit card support including validation, authorisation and settlement, PIN-less debit card transactions, integration with leading payment processors, and open, extensible interfaces for integrating with other payment systems.
This is in part through its own offerings, particularly the payments portion of its I-flex Solutions-derived Flexcube, plus other in-house components such as Mantas for AML. There is the Flexcube SwiftNet Services Integrator (Flexcube SSI) including a messaging hub and business-specific tools that help banks implement SwiftNet services across various lines of business and market infrastructure services, such as Step2 and Target2 within SEPA. Flexcube SSI includes support for Swift FileAct and InterAct.

Oracle's payments hand is also made up of some third party components, including Alaric's payments switch and fraud detection offerings to underpin Oracle's Consumer Payment Services Hub. Alaric has been an Oracle partner since 2001, saw this extended to a full international distribution arrangement in 2007 and an announcement about joint development on the retail hub in late 2009. Alaric's Authentic system provides the multi-channel payment switching and authentication capability in the hub solution; Alaric's Fractals solution provides multi-instrument fraud detection and prevention capability. For ATM, POS, and payments information management, Oracle partners with Australian firm, Distra. Oracle has also worked with Vocalink to provide a solution for UK Faster Payments, with Distra part of this.

Mantas is apparently integrated with Fractals. However, even in this area of fraud, things do not seem overly clear. In 2009,

Oracle announced that real-time payments and online fraud detection combined with intelligent alert correlation capabilities were now part of a range of new features for Mantas. The system's extended functionality had been enabled, Oracle stated, by integration with its own Adaptive Access Manager and Complex Events Processing products.

Other components within the hub include Oracle Business Activity Monitoring, Oracle's Demantra for physical cash management, Oracle Business Intelligence Enterprise Edition Plus (OBIEE) and Adaptive Access Manager from the Oracle Fusion Middleware suite, as well as high availability and disaster tolerant data integration solutions derived from GoldenGate Software.

The hub is meant to span device management, switching, security and authentication, reconciliations and settlement, data management, customer acquisition and cash management and control, as well as the technical platform.There is also Oracle Financial Gateway.

It is touted as a centralised framework for payments processing for banks and corporates. It enables a corporate to manage all payments from a single platform, and helps with the preparation, formatting, validation, approval and release of clean payment instructions to the bank or external payment system, including directly from ERP systems.

However, in this same space, in October 2010, Oracle signed with payments systems provider, Fundtech, and ERP connectivity specialist, Sierra Atlantic, to provide a solution to integrate bank payments and receivables processing systems with corporate clients' ERP systems. Joe Mazzetti, executive vice president for corporate development at Fundtech, said Oracle made the approaches as it sought to address the age-old problem of corporate-to-bank connectivity.

The combined solution, dubbed Seamless STP, is centred on Sierra's hosted BankON to take in files from Oracle's ERP systems and route them to Fundtech's Global PayPlus (GPP), sitting in front of a bank's existing channels. GPP passes the corporate payment instructions to banks around the world for payment execution. A bank could use Seamless STP to provide a single point of contact for its customers' multi-bank relationships, thereby giving corporate treasurers a single view of their cashflows. The hosted nature of the service means the partners are suggesting a short implementation cycle. California-based Sierra is a longstanding Oracle partner.

Strategy 

Not always easy to work out. Further integration of the components and continued fleshing out of its own Flexcube functionality are on the cards. There has not been known progress to date with Alaric, although this supplier has made good progress under its own steam.

Tieto – Tieto Payments Suite, ProSwitch

Overview

Founded in 1968, Finland-based Tieto provides both traditional cross-border payments and SEPA compliant payment solutions. Tieto is the largest IT services company in the Nordic countries. Its financial services division operates in multiple countries, with around 70 per cent of sales coming from Nordic countries but with users as well in the Baltic countries, Russia and the UK. Nonetheless, Tieto has had some tough times in recent years, with poor financials and cost-cutting. Its traditional payments solution stems from the 1990s and for a long while was sold as ProPay. It is mainframe-based. There is a much newer Javabased solution, with SEPA as the initial focus.

Corporate Overview

Tieto has its origins in two separate companies, which came together in 1999: the Tieto Corporation (a Finnish company which began as a data processing service company and developed into a full-service IT group), and the Enator Group (which was created in 1995 when Celsius AB, a Swedish listed company, hived off its IT-related operations). They formed Tietoenator, with the name shortened in 2009.

In the years following the merger, a number of acquisitions took place in selected geographical areas and target industries, until the company reached its present position.

In 2008, Tieto itself was the target for an unsuccessful takeover bid by Cidron Services Oy. The following year saw Tieto undergo reorganisation, restructuring and cost-saving programmes which, it claimed, saved almost €30 million. In 2010, it shed businesses in France, the US and Canada as part of a strategy to exit non-core industries. By 2011, there was some speculation that the UK might be next. This was denied by Liam Howard, Tieto's UK delivery and development director, financial services. However, Tieto's corporate HQ in Helsinki declined to either confirm or deny this development. Around the same time, Tieto drafted in Lasse Heinonen as new CFO, replacing Seppo Haapalainen who had been in the position for over two decades. Heinonen would also assume control of finance, treasury, corporate ICT, risk management, procurement, and communications
and investor relations.

For the year-ended 31st December 2010, Tieto had pre-tax profits of €66.1 million on net sales of €1,173.7 million. This compared with 2009 pre-tax profits of €70.3 million on net sales of €1,706.3 million.

Summary History

1968 – Tieto is established.
• 1990 – Development of ProSwitch.
• 1995 – Creation of the Enator Group when Swedish-listed Celsius AB spun off its IT-related operations.
• 1999 – Coming together of the Tieto Corporation and the Enator Group to create Tietoenator.
• 2001 – Provida is acquired by Tietoenator.
2006 – Official launch of Tietoenator Financial Solutions UK. The company had had a UK presence for some time but its acquisition of Attentiv Systems shortly before provided a platform from which the company could launch fully into the UK financial services market.
• 2009 – Tietoenator shortens its name to Tieto.
• 2009 – Launch of Payments Manager.
• 2009 – Claims €30 million in savings following a cost-cutting and restructuring programme.
• 2010 – Sheds businesses in France, the US and Canada.

Product Suite

Tieto's Global Payments Solution is an integrated, component-based solution, developed in the second half of the 1990s. It manages complex payments transactions and supports all forms of multi-banking requirements. ProPay is the payments engine at the core of this solution. This product was derived from Norwegian software vendor Provida (briefly known as Ementor Financial Systems), which was acquired by Tieto in 2001. The ProPay engine is based on the zOS environment (so IBM
mainframe) and this will continue to be the target platform for the foreseeable future.

In addition to this, and complementary to it, Tieto has been developing a new platform-independent payments framework, initially to handle low-value payments, based upon Java. The first module delivered under this framework was the SEPA Credit Transfer module which has already been installed in five operational sites, serving close to 100 individual banks. A second module was for SEPA Direct Debits, for which Tieto claimed to have a couple of projects in late 2009, one of which was at a large European bank. This may have been in relation to Tieto's partnership with Sentenial, in which case the identity of the bank was likely to be RBS. Tieto states that it will continue to develop new payment modules and features under a Java architecture while still ensuring the 'continuity and future-orientation' of the zOS deployment.

Tieto launched the Payments Manager solution at Swift's Sibos show in 2009. This is for the middle office, and is designed to transfer data away from the back office and create a single instance environment in the middle office, that interacts with customers through multiple channels. The hope is that this will negate the need for expensive reengineering of the back office. Four modules are available as part of this solution. These are Payment Instruction Manager, Product Manager, Customer Manager and Information Manager.

The Tieto Payment Suite runs on the following hardware platforms: IBM z series (zOS), Solaris, Windows and Linux using DB2 and Oracle databases. The system is written in Java and Cobol. User interfaces are browser-based and 3270 screens. Interfaces are provided to Swift FIN, FileAct, InterAct, EBA STEP2 SCT and to various domestic clearing systems. Tieto's payment solutions have been certified SwiftReady for more than ten years.

Tieto's Payment Suite enables the processing of a large number of payment types including: high-value/RTGS; crossborder/cross-currency; SEPA Credit Transfers (SCT); SEPA Direct Debits (SDD); domestic credit transfers and direct debits;

It comprises the following principal elements: SwiftNet gateway for FIN as well as FileAct; payment engine; single data repository (customer related data, business/processing rules, reference data, payments etc); payment repair module; payment embargo and sanction monitoring module; optional additional SDD services for creditors and debtors; payments matching module; liquidity management module; supplier finance module; cash management module; eBanking module. The modular
structure of the Payment Suite facilitates a gradual implementation/migration approach. It includes multi-entity, multi-lingual and multi-time-zone support; multi-CSM support, with routing and settlement rules; business processing rules configurable via user interface; insourcing/white labelling capabilities, SCT and SDD compliance; integration layer based on API and web services for integration with external (bank) systems. Tieto claims that it can host a complete payment processing infrastructure.

In terms of helping banks to improve their messaging infrastructure, Tieto points to the Provida-derived ProSwitch – a messaging solution, providing a single window to SwiftNet for all related services, including FIN, FileAct and InterAct. Developed initially in 1990 for Nordea, ProSwitch also provides a single connectivity point for all business applications that
need to connect to one or more of these Swift services.

ProSwitch can be implemented independently, to provide complete Swift messaging functionality, or with the rest of Tieto's Payments Suite.

Several banks have implemented ProSwitch as a global Swift messaging hub serving all of their domestic and foreign branches/offices, thereby replacing a number of local Swift solutions and improving control of their global Swift traffic. Tieto claims its solutions handle 70 per cent of Nordic Swift traffic. It also has a matching system, ProMatch, which is used by 20+ banks.

ACE Software Solutions Inc – Pelican

Corporate Overview

Set up in 1991 to provide end-to-end STP solutions based on Artificial Intelligence techniques, US-based ACE now specialises  in message processing and STP solutions for financial institutions. Claiming around 30 clients worldwide, ACE now has overseas offices in the UK and India. Pelican is ACE's flagship platform and within this there are two principal messaging solutions (Pelican for SwiftNet and the Pelican Payment Messaging Hub) and two payments processing solutions (Pelican for Payments and Pelican for SEPA). All products are about 90 per cent the same, the difference between them being the business rules.

Summary History

1991 – ACE established.
2007 – ACE repackages its Pelican offerings to include new industry-specific solutions: Pelican for SEPA, Pelican for SwiftNet and Pelican for Corporates.

Overview

Pelican for SwiftNet provides a Swift gateway for low-end messaging. A dashboard is available for Pelican for channel management, which is aimed more at larger financial institutions which have multiple back office systems to be managed.

The Payment Messaging Hub is intended to provide visibility and end-to-end transaction tracking of the different types of messages. This allows users to see which messages are stuck, which need priority and so on. This hub is aimed at high-end financial institutions, which need control of the messaging aspect of Swift and payments. The vendor also states that the hub allows an institution to consolidate its messaging infrastructure, including domestic and cross-border and both high- and lowvalue.Parth Desai, president and CEO of ACE, claims that, while many systems allow the same type of visibility, ACE's platform allows users to act on information, to take corrective action. This should reduce operational risk and lower cost, Desai believes.

Pelican also offers a number of different functionalities such as automatic repair (used by Crédit Agricole for the last twelve years or so), which Desai claims will solve between 60 and 80 per cent of problems for international payment messages. This relies on fixing the addresses of destination banks. Another piece of functionality is a BIC IBAN module, which links BIC and IBAN codes.

Pelican for Payments is aimed at mid-sized banks, and is used mostly in the Middle East and Asia, often as a connectivity module between various networks, as well as to do AML, OFAC checking and so on. Examples of customers are State Bank of India, Abu Dhabi Commercial Bank and Bank of Baroda.

Pelican for SEPA was launched in 2007 to provide a low risk, cost effective solution aimed at achieving SEPA compliance. Then, in January 2009, an agreement was announced whereby Pelican for SEPA would be offered by Capgemini in the Netherlands on a SaaS (Software as a Service) basis. Clients are able to send a file to Capgemini and receive a converted file in return. Bank of Tokyo-Mitsubishi UFJ (BTMU) was the first customer to go live with this solution, for Amsterdam and Paris, in July 2009.

Product Suite 

Pelican runs on Windows Server, using an Oracle 10g database. It is written in Java and C, with thin client (browser-based) user interfaces.
Swift connectivity is provided via Swift Alliance Access and Swift Alliance Gateway; connectivity to other clearing houses is via a directory interface.
Pelican handles all types of payments – high/low-value, bulk messages, future value date etc. It is used to provide a bureau service in the Netherlands and France.

Pelican business functionality includes:
- Routing, repair, re-format and validation of payment messages
- Built-in financial EAI and STP functionality
- Support for the complete transaction life-cycle
- Modular and configurable to support high-value and low-value processing environments through messaging workflows and business rules
- Reporting of repairs/violations
- Multi-institution, multi-branch
- Exception processing
- Administration and monitoring

Distra – Distra Universal Payments Platform

Overview

Formed in 1999, Distra is an Australian software company specialising in the development of high performance, high availability payment applications. Distra's products have been designed for use by financial institutions, payments processors and other institutions operating in the payments chain. National Australia Bank holds a minority stake in the firm. The company has overseas offices in Atlanta, the UK and Singapore.

Corporate Overview

Distra's origins coincided with the Y2K upheaval, with legacy systems coming under scrutiny – not just because of concerns about the 'millennium bug', but more generally because of the difficulty and high costs associated with maintaining them. Cofounders Craig Worrall and CTO, Ken Larsen, saw an opportunity to develop a solution that was not reliant on proprietary technologies. Their vision was to develop a platform that was agnostic in terms of hardware, operating system and database and
would incorporate fault tolerance through the software, rather than requiring the traditional high-end, fault-tolerant hardware architecture configuration to achieve this. Larsen was regarded as a 'Java guru' and saw this as being the route forward – there was no real Java-based solution available at that time.

Summary History

1999 – Distra founded by Craig Worrall•  and Ken Larsen.
2005 – Starfish Ventures invests in Distra, enabling the supplier to complete product development and sell to
international customers.
2006 – UK office established, in part to support Vocalink partnership.
2008 – National Australia Bank takes a minority stake in the supplier.
2010 – Opening of US office.

Overview

Adopting the application server approach, the Distra payments platform, Distra Universal Payments Platform, provides a faulttolerant run-time environment for payments applications, known as the Mission Critical Application Server or MCAS. The platform follows an SOA model, with the application services distributed, across multiple nodes or servers and across sites.

Distra has developed the frameworks for a number of different applications, built around EFT payment requirements, and has used these frameworks to build a transaction processing platform. The company claims that the solution contains around 95 per cent of the functionality typically required by a bank. The remainder is added by Distra, the bank or a systems integrator to meet specific requirements usually through configuration, according to the supplier, rather than having to develop software code. If development is required, this is done in Java and XML.

The system can be implemented as an end-to-end payments solution, alongside or behind legacy systems. One scenario the company has encountered is where a bank has retained its legacy systems to handle the existing POS infrastructure but is using Distra Switch to handle new products and channels.  

Distra Universal Payments Platform has been designed with payments convergence in mind. The system is touted as able to handle all types of payments and enable new payments channels to be introduced rapidly, regardless of the messaging type, structure or type of device from which the transaction originates.

Distra takes a broad view of convergence. Distra Universal Payments Platform allows real-time risk management to be carried out across all 'end points' (device, network, incoming or outgoing source etc), across retail and wholesale activities. Similarly, the system supports real-time liquidity management across the payments environment.

Managing liquidity is an important feature of the Distra Universal Payments Platform solution for the UK scheme. In addition to providing member banks with a gateway solution for online access to the FPS infrastructure, the system maintains a real-time settlement position against the other member banks. The Faster Payments solution is marketed through Vocalink, which selected Distra as one of its technology partners (see below).

Product Suite 

Distra's core solution, Distra Universal Payments Platform, together with its various iterations, is hardware and database independent and is written in Java, with thin client user interfaces. All relevant industry interfaces can be provided.

All types of payments are claimed to be handled by the Distra suite of products.

Distra Universal Payments Platform (Formerly Distra Switch) 

A real-time distributed multi-currency payment processing platform, built on open standards and providing cross-site, missioncritical fault tolerance. Incorporating automated fail-over and recovery of both applications and database on any contemporary platform without requiring proprietary clustering or database replication tools. Supporting any payment type, format or channel
including Retail B2B, B2C, C2C, C2B, ATM, POS, Interchange, Mobile and eCommerce. Wholesale and international functionality is provided, delivering real-time risk monitoring and settlement positions, according to the supplier.

Distra Authorisation 

Provides co-operative or complete 'on switch' transaction authorisation for payment or other transaction types. This product supports serial or parallel, multi-leg and multi-party transaction routing, transaction authentication, velocity limits, cryptographic routines, shadow account balances, negative and exception processing and real-time alerts.

Distra Enhanced Payments  

This product provides support for non-payment related information and processing to be applied to existing payment channels. Such non-payment related data and interfaces as e-invoicing, remittances, and multi-party transactions are included and that enhanced data can be maintained along with, or separate from, financial data.

Distra Faster Payments 

As its name suggests, this module provides scheme-compliant gateway functions for Faster Payments member banks and corporates. It supports real-time reporting, risk monitoring, scheme link, MQ connectivity, system interfaces employing ISO 20022, ISO 8583 and batch file transfer.

Distra Builder 

This is a GUI tool that allows non-technical users to build and configure switch functionality. It enables offline editing, configuration repository and remote deployment directly from a user's desktop. A number of banks and corporates use this functionality. 

CSC (Computer Science Corporation) – PTS, CAMS II

Overview

CSC has a payments engine which was developed in Germany. Most users to date are based here but the solution has been  tailored for a number of European countries over the last few years through work with Commerzbank. CSC also has a long established card management system, traditionally sold as CAMS II.

Corporate Overview

Computer Sciences Corporation was founded in 1959, as an IT services firm from the start. Much of its early work was for the  public sector but it moved into financial services in the 1960s, developing a payroll system and a tax return system. Skipping to the 1990s, CSC acquired Ploenzke AG, a German computer services firm, in 1994, and then Continuum, owner of Hogan Systems Inc, in 1996. The former would start developing a payment processing system, PTS, about five years later, and the
latter brought the Hogan core banking solution. CSC has now grown to over 90,000 employees worldwide.

Summary History 

1959 – CSC founded
1994 – Ploenzke acquired
1996 – Continuum acquired
2001 – Development started on PTS
2008 – Commerzbank takes SEPA Direct Debits solution from CSC, and continues country roll-out of PTS

Product Suite

The offering, PTS, was originally written in Smalltalk and is platform independent. The development kicked off in 2001. It came out of CSC's German business unit, CSC Ploenzke, inspired by the belief that banks would need to overhaul their legacy payment infrastructures, something that was borne out with the emergence of SEPA.

The solution has seen good take-up in Germany, with CSC claiming around 70 banks as users. One notable recruit has been Crédit Mutuel (formerly Citibank) for its German retail business at Targobank. A SEPA module was added, with seven banks going live with this for the January 2008 arrival of SEPA Credit Transfers (Commerzbank was among those to do so with this, within a project which went 'very smoothly', according to the bank's head of international payments, Horst Rinkenberger).

The payments system clearly resides within a large parent company with global reach and some other potentially complementary applications (such as its cards processing system). However, CSC is not renowned for its software sales and PTS does not yet have a high profile outside Germany. The intention is to rectify this and to use the continued SEPA wave in particular to push the system beyond Germany. CSC was apparently in contact with one or two UK banks on this front.

PTS is run by a separate 'competency group' within the financial services part of CSC. About 30 people work on the system, some of which are consultants who also work on other areas. The full-time team of 15 people is headed by Thomas Riedel.

PTS is a standardised modular application for processing payments transactions – domestic and cross-border, mass payments and high-value payments. It sits between a bank's core accounting system(s) and the bank's various gateways. It handles all payment processes including formatting, validating, routing, accounting and charging.

PTS allows banks to select routing strategies for payments, according to settlement instructions and bilateral/multilateral agreements including internal routing (multi-branching), bilateral relationships (correspondents) and selection of ACHs (clearing).
PTS provides a many-to-many connection for both incoming and outgoing payment messages. Each core accounting system has one connection for all payment gateways and each payment gateway has one connection for all core accounting systems.

A single instance of PTS can support all the operations of a bank, according to CSC (within and across national borders) as well as catering for in-sourced payment services from other financial institutions. PTS supports full separation of information between operating units and financial institutions.

PTS supports DB2 and Oracle 11g at the database level, with Windows/Unix/z/OS host. It is written in Cobol, Java and Smalltalk (the roadmap is to upgrade to Java) and it has a thin client user interface.

CSC's card and merchant processing system, CAMS II (now part of the vendor's Celeriti suite), has clients such as Equens, Barclaycard, MasterCard and SiNSYS. It is multi-language, multi-currency and multi-operator. It has traditionally been aimed at the top end of the market, with the benchmark tests showing support for 100 million active cardholder accounts, be they credit, debit or prepaid at rates in excess of 3000 transactions per second. CSC has been working to make the offering more
attractive to tier two banks, as opposed to the tier one outfits it was built for.

This decision followed an internal analysis which showed that around 70 per cent of the opportunities for CAMS II had been from small and medium sized banks. This particularly meant working to reduce implementation times. Meanwhile, work was also done to make the offering SOA-enabled. Malcolm Cressey, business consultant at CSC, suggested that this process would
be complete early in 2012.

The CAMS II/Celeriti Cards & Merchants system supports DB2 on z/OS or Linux on the mainframe, fully distributed Linux, Unix and Windows.

It constitutes a core issuing and acquiring system, handling all types of payment cards. The system's functionality includes product definition, pricing and business strategies, operational procedures, relationship management and processing efficiency.

Compass Plus – Tranzware Suite

Overview

Compass Plus was founded in Russia in 1989, having been spun out of a large R&D centre that had been set up in the late  1950s. It moved into the payments space in 1994. It started by acting as a distributor in Russia for international suppliers seeking to break into this country but then set about developing its own system. There was no specific development partner for the original development.

Today, the supplier claims 112 customers for the suite across 28 countries (with claims of ten new customers in the first half of 2011). The broadening suite was rebranded as Tranzware in 2000, at around the time it started to make progress on the international market.

Summary History
1989 – Founded
1995 – Establishes processing centre and launches card management system; commences product development
1998 – Launches first product, now Tranzware Online
2001 – First sales outside CIS (Mongolia and Kosovo)
2004 – First live site in Western Europe, Germany-based Quipu GmbH
2005 – Opens office in UK; gains first customer in Africa (in Nigeria)
2007 – Opens office in Vietnam
2008 – First sales in the Middle East (UAE and Iraq)
2009 – Opens offices in Brazil, Singapore and US
2010 – First customer gained in the US, opens office in Dubai
2010 – Launches mobile banking and internet banking solutions
2011 – First customer gained in Latin America, in Brazil. Also first customer in Kenya.

Product Suite

At the heart of the Tranzware suite is Tranzware Online, a switching, routing and authorisation engine, and Tranzware CMS for card management. The latter spans acquiring and issuing. There is a fraud solution and Tranzware Interchange, a middleware solution for collecting, converting, storing, routing, clearing and settling information in a payment envionment. There is also Tranzware Mobile Banking, used by Almazergienbank, Credit Ural Bank, Moscow Industrial Bank and Uraltransbank. And Compass Plus has an internet banking system, Tranzware Internet Banking, with one user of this being Zapsibcombank in Russia.

Initially, all of the users were in Russia. It moved into neighbouring countries, including CIS states, Ukraine and the Baltic states. The next steps were into central Europe, including early takers in Serbia and Albania.

A breakthrough came in 2004 in Germany, with Compass Plus' solution taken by a processing centre, Quipu (see below). It also made headway in Africa, including in Nigeria, and Asia. The latter region has been one of strong growth and Compass Plus now touts the four largest banks in Vietnam as customers. While not currently naming them, Compass Plus claims two customers in North America, gained in late 2010/early 2011 and a first customer in Latin America, won in April 2011. One of the North American projects apparently spans prepaid cards, credit cards and virtual payments.

The supplier claims scalability, with a reference in Ukraine with more than 20 million cards, thousands of ATMs and tens of thousands of POS terminals supported by the system.

Benchmarks were then carried out in Montpellier in the second half of 2010 for the IBM System p. Using similar criteria to the System z tests (100 million customers, 60,000 terminals), Tranzware Online recorded 1050 TPS. Tranzware CMS ran end of month processing for 20 million active cards in less than eight hours on a statement day and six hours on a standard day.

While modular, with the ability to sell individual components, Compass Plus claims it has a single platform. There is some proprietary technology, dubbed Floraware, plus C++, in the back office and Java for the front office. It can run on Unix, Windows (the most common platform) and Linux with Oracle.