PODCAST: Turning Card Program Managers into Processors Through the Cloud

by PaymentsJournal 0

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The following is a transcript of the podcast episode with TAS Group

PaymentsJournal

Welcome to the PaymentsJournal podcast. I’m your host Ryan Mac. On today’s episode we’re going to be talking about turning card program managers into processors through the cloud, and to help me with that conversation I have Peter Caiazzi, Managing Director of TAS Group USA. I also have Ennio Ponzetto, SVP of Business Development at TAS Group USA. So Peter, I will start with you. Could you please give us a brief overview of TAS Group?

Peter Caiazzi

TAS Group is a fintech market leader in payments technology, delivering software solutions and innovation in cards and payment systems. For over 30 years we’ve been delivering payments solutions and improving the way in which banks, fintechs, companies, and local government interact with their customers in the rapidly evolving technology and regulatory framework.

Our mission is to innovate and optimize mission-critical applications – to reimagine and, you could even say, revolutionize the payments process in this new digital age.

Today we have a global presence, with offices in the U.S., Germany, Switzerland, Italy, Spain, France, and Brazil. Our systems manage millions of financial messages each day for the European Central Bank and over 100 million cards are managed on our platforms (35 million for BancoPosta, one of the biggest issuers of prepaid cards in Europe).

Since 2016 TAS Group is under new executive direction and has adopted a more international vision aimed at propelling our go-to-market and delivery model abroad. The U.S. is a key strategic market for TAS Group.

PaymentsJournal

TAS Group was one of Oracle’s first strategic partners to offer payment software through its digital innovation platform, which is as I understand is a cloud-based platform. My question for you is, Why the cloud, and why now?

Peter Caiazzi

We’re seeing unprecedented change in the payments landscape. However, there’s been nothing to equal the potential created by the cloud, both in terms of drastic reduction in costs that it allows and in openness and richness of business services that are being exposed through open banking. We think these are real game changers.

Cloud computing is enabling digital transformation and innovation at a rate that we’ve never seen before. The economies of scale that it enables are reducing enterprise costs so fast that small and medium card processors using the cloud actually have a competitive cost advantage to larger processors that are managing their own data centers.

TAS Group intends to be a leader in this space. We’ve already reengineered our card management and card processing functionality and are making it available through the cloud via APIs. Also we’re allowing banks and PSPs to improve their offerings to their end customers to be more competitive. Card program managers will have more flexibility and a faster time to market as they’ll be able to develop interfaces, for example, their mobile apps with a superior user experience in a much faster time. TAS Group has been a long-standing partner of Oracle. So becoming one of the first to offer payment solutions through their digital innovation cloud platform made sense. The modularity, flexibility, robustness of our card management system called Card 3.0, which manages the card issuing, processing side of side of the business, makes it an ideal fit. And by making it available through the cloud, customers will have all the flexibility and scalability they need.

PaymentsJournal

I know that TAS Group is seeing success here in the United States, but what I really want to know is what is TAS Group’s winning solution? What is their secret sauce, so to say?

Peter Caiazzi

I think we have a competitive edge due to four factors:

First is that we believe we have the best software. Card 3.0, which is part of our Cashless 3.0 suite, is a cloud-native, robust, modular, scalable, and easy to customize and integrate with other functionality through the use of its APIs.

Second reason is through solution customization. We help clients create customized solutions through the use of our hundreds of APIs, and we’re happy to work with customers’ existing local partners.

The third reason is flexible licensing. TAS Group is the card solutions company that offers the most flexible licensing terms. We offer on-premise or SaaS licensing models; we offer per-user or one-shot pricing. We work with customers to find a licensing model that fits their needs.

Fourth and final reason that I think really distinguishes TAS is that we offer one-stop shopping. TAS Group’s customers can have a single solution provider for all of their card-related business needs related to card issuance, transaction processing, acquiring, and fraud management. We offer everything in the card space.

PaymentsJournal

Now, Ennio, how will your solution be a changer for card program managers?

Ennio Ponzetto

Well Ryan, with our management platform managed through the cloud, TAS is able to empower card program managers in the freedom from costly relationships with traditional processors. This way, they can regain control, boost profitability, and improve time to market. For the same reasons, this new model also benefits the banks and allows them to retain a greater share of fee income. One of TAS’s goals for the U.S. market is simply to turn every card program manager into a processor. The value proposition is very clear and can be summed up with the words “improved profitability and control.” Today the biggest pain point that program managers suffer is punishing fee-per-transaction arrangements that are implemented by the traditional processors. These start with guaranteed minimum fees regardless of the program manager’s business model and go on to “The higher the volume, the revenue, the more you owe the processor” approach. Instead, the TAS Group approach is to offer flexible licensing terms, including an upper card basis. This is a better match for the program managers’ business model, radically decreasing their costs. According to our simulation, a typical program manager with high transaction volumes could expect to see up to 40 percent reduction in pure processing costs. For program managers with small to medium volumes, the savings could be even higher. Clearly TAS’s flexible model favors the small to medium program manager in a start-up mode. They are ill fit for the traditional processor priorities and the commercial approach geared more for high volume. TAS’s approach decouples in large part the volume from the fees and effectively gives money back to the program managers. Furthermore, the model becomes more economical in the long run as the card volume increases as the license fee payments end, and the program manager only pays for ongoing maintenance and support.

The second aspect is the control piece of the value proposition. Typically any new program to be launched is subject to processer workload, the pipeline, and the priority it gives to the program, typically dependent on forecasted card volume. The processor therefore adds to the delay rather than acting as a facilitator. Cashless 3.0 makes available an extremely powerful and flexible card management system that allows the quick and easy setup of very complex programs directly by the program managers, thus cutting down substantially the time to market of new programs. The direct relationship with the bank then allows for quicker bank approval cycles.

The Oracle relationship and the made-for-the-cloud architecture are instrumental to make TAS’s vision work. The use of Oracle cloud and the software-as-a-service model adopted by TAS greatly reduces the capital investment required compared to on-premise models. The cloud makes TAS’s proposition affordable to a larger population of program managers. The technology is modern, intuitive, easy to manage. This greatly reduces the additional structural costs that are implicit in a program manager becoming a processor. Clearly this new approach requires that that the issuing banks today sponsoring primarily the traditional processors are open to endorse these new entities. And there are several compelling reason why this should and will happen quickly.

PaymentsJournal

Do you think you could break this down a little more for us? Get a little bit more in detail and possibly bullet point those reasons out for us?

Ennio Ponzetto

First, banks can achieve more favorable conditions by dealing directly with program managers rather than the large processors. Second, the program managers are today burdened financially by processing fees that account for a large portion of the program manager’s overall cost. It is in the banks’ best interest to support the full potential of their customers. Third, reducing card transaction costs will ultimately result in program managers increasing their market share in the overall payment space. The sponsoring banks actively participating in this transition will gain more new program manager customers that bring in additional card volumes and deposits. Ultimately this can be considered a disruptive approach, and its large-scale adoption will take time. At TAS, however, we believe that our state-of-the-art technology coupled with this innovative and attractive business model can truly be a game changer

PaymentsJournal

At the beginning of your response, you brought up the U.S. market. I’d be interested to dig a little bit deeper into TAS Group’s plan for bringing its expertise in its solutions to the U.S.

Ennio Ponzetto

Well Ryan, as I mentioned earlier, the U.S. is a key strategic market for us. Having been involved in EMV migration throughout Europe for the last 18 years, we decided to bring our expertise and solutions to the U.S. market to facilitate and accelerate transition to the new technological standard. With offices in New York and Las Vegas and local payment expertise, we are well positioned to develop our market penetration in the U.S. We look forward to bringing our cloud-based card management solutions to an ever-evolving market, addressing both traditional and new industry plays, enabling an innovative business model that will benefit program managers, banks, and cardholders alike.

PaymentsJournal

Well, thank you very much Peter and Ennio for taking the time today to speak to us about turning card program managers into processors through the cloud.

Ennio Ponzetto

Well thanks for having us, Ryan.

Peter Caiazzi

Thanks Ryan. We appreciate it.