Vendors Proliferate in Payments Technology

While mergers and acquisitions are leading to fewer providers in many areas, financial institution are facing an increasing number of payment technology vendors, according to a new report from TowerGroup. 

Payments technology has split into two groups, payments framework providers and payments application providers, giving rise to the increase in vendors, according to Colin Kerr, Tower research area director, payments practice, and author of the research note, “Enterprise Payment Vendors: The Integration Approach to Global Payments.”

Enterprise framework vendors are the big boys – companies like IBM, LogicaCMG, Microsoft, Sterling Commerce and Unisys, according to the research, which looks at these companies in more detail.

This group has arisen separately from payment application providers because financial institutions increasingly need technologies that 1) are deployable as bank payment operations solutions, 2) are capable of processing multiple payment types in multiple countries and 3) provide payment integration and process management capabilities.

(TowerGroup plans to release research on payment application vendors in the future.)

The Framework vendors offer widely different solutions, Kerr writes.

IBM’s Financial Services SOA (Service Oriented Architecture) Payments Framework, according to the report “is perhaps less reliant on its third-party partners than any other enterprise framework.” The technology is in use at 30 banks.

LogicaCMG’s All Payments Solution is a components-based payments framework that provides end-to-end payments functionality delivered through an integrated mix of the client’s and third-party hosted solutions.

Microsoft’s enterprise payments approach is based on the Microsoft BizTalk Server 2006, which supports SOA and enterprise bus applications while also including flat-file electronic data interchange schemas.

Sterling Commerce’s Multi Enterprise Financial Gateway is a proprietary business-to-business data integration toolset adapted for internal application integration. By positioning the technology in business-to-bank as well as in bank-to-clearing infrastructures, Sterling has differentiated itself from other providers, according to TowerGroup.

Unisys has developed the Open Payments Platform, based on the client financial institution’s infrastructure and business process management tools. The Unisys model employs three core architectural segments integrated by the Unisys Enterprise Payments Bus.

“No single approach fits all institutions, and some level of custom development and integration is to be expected. The vendors with the strongest integration tooling, combined with modular configurable, reliable payments components, and backed up by payments business expertise, have the clearest shot at the prize,” Kerr concludes.