Payments data has become a crucial cornerstone for any company that processes transactions. Despite the availability of powerful analytics tools, many companies can’t leverage the true potential of their payments data because their information is siloed and scattered across multiple systems.
In a recent PaymentsJournal podcast, Mike Meeks, Chief Technology Officer at BHMI, Jon Protaskey, Director of Software Engineering at BHMI, and Brian Riley, Co-Head of Payments at Javelin Strategy & Research, discussed the approaches that enable companies to tap into the power of payments data.
Transforming Transaction Data
Payments data is consolidated through a secure centralized repository where transaction data is stored, managed, and accessed. The first step is to pinpoint all relevant sources, such as data from authorization systems, information from external transactional systems, and even data from internal CRM systems.
Then the data is extracted using methods like APIs, parsing of structured files, and database queries. That captures a wide variety of payment-related information like transactions, customer details, and financial records.
After extraction, the data is transformed into a standardized format and enriched, where necessary, with details like client participation, programs, relationship with other participants, and billing terms. The data is then integrated into a central repository.
“There was a time when it made sense to have payments data in silos, whether it be for security reasons or simply the limitations of technology,” Riley said. “However, now being able to bring it all together into an actionable form is truly transformative.”
Key Competitive Advantages
Throughout the process, consolidation providers should prioritize data governance, delineation of ownership, implementation of access control, and compliance. Once the consolidation is complete, businesses will have several key advantages.
“The biggest advantage of a consolidated payments data platform is it gives companies a uniform enterprise view of all their transactional data,” Meeks said. “It’s a challenge to implement an enterprise-wide data management strategy that provides access to all payments data regardless of transaction type or source. However, the centralized viewpoint makes it worth the effort.”
A data repository can eliminate challenges like duplicate data or missing data due to silos. It also allows businesses to normalize data from disparate sources to make it more understandable. Payments data consolidation sets up companies to leverage advanced analytics and reporting tools that can generate real-time insights. That enables informed decision-making and improves operational efficiency.
As data is ingested, a company could calculate fees, reconcile transactions from different sources, and link transactions from diverse sources to create transaction life cycles. The business can also process disputes as soon as the data arrives.
“On top of those benefits, there’s a substantial cost savings that goes along with it,” Protaskey said. “Eliminating data silos from redundant systems reduces overall maintenance costs and lowers a system’s complexity. It allows companies to allocate resources more efficiently and focus on innovation and value-added activities, instead of wrangling data and reconciling disputes.”
The Right Repository
Payments data consolidation hinges on the data repository, so it’s important to select the right platform from the start. The process starts with examining disparate systems and detailing how they will be tied together.
“It takes time and expertise to do it right, but putting in the effort to create an effective system is just good data hygiene,” Riley said. “The beauty of the process is once it’s set up properly, the inputs become routinized and the structure can be repeated, or enhanced, as time goes on.”
Because there are a wide variety of data sources that all have unique characteristics, automating data loading can have a significant impact. It simplifies the data-gathering process and takes the load off operations staff.
Data should be continuously loaded through a real-time feed or by chasing an authorization log file. That allows a business to substantially improve their ability to meet tight SLA windows at the end of the business day. It’s also important to have a repository that can ensure data quality. If a transaction record doesn’t pass validation checks, the system shouldn’t stop processing.
“A best practice is to set the transaction aside into an exception list, continue processing, and notify operations staff,” Meeks said. “Oftentimes, it is a simple issue like a new merchant has been onboarded, but their configuration wasn’t entered into the system. Operations staff can correct the issue and resubmit just the exceptions for processing.”
Right for the Future
Another important aspect of a data repository is that it’s scalable, and not just in terms of supporting increased transaction volumes. The system should also support constantly evolving payment types. For instance, the protocol for card transactions is ISO 8583, but systems should also be able to handle ISO 20022, which supports the emerging real-time and cross-border payment types.
“It’s important to address your current needs, but it’s just as important to get it right for the future,” Protaskey said. “The repository should be flexible enough to leverage future technologies like AI and custom data analytics tools. It’s difficult in a constantly evolving environment, but you don’t want to be stuck in a system where you can’t move forward as the technology and the industry advances.”
Payments have a short SLA, and companies need to respond quickly to complete transactions. That means a data repository shouldn’t impact the performance of the system. To that end, the repository should be externalized from the production system so it can be managed independently and leave payments unaffected.
If it’s externalized, however, the repository should have a secure PCI compliant user interface where authorized users can navigate and find payment data in one location. In addition, an external data repository should have extensive security protocols, so there’s no way for an unauthorized user to access the data.
Overall, consolidated payments data repositories can improve compliance, mitigate risk, perform back office processing, and even optimize marketing functions.