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Why build payment infrastructure in the cloud? Examining the pitfalls and best practices

Given its ability to fuel innovation through flexible resource distribution and scalable systems, the cloud will be the future of payments. In this article we will discuss the advantages of moving payment solutions to the cloud, as well as the possible pitfalls you need to look out for and the best practices to observe. 

 

Advantages of cloud-native approach to payments orchestration

Here are a couple of reasons why it is ideal to move payment orchestration to the cloud:

1. Resilience and scalability

Record-breaking payment volumes are a common occurrence for businesses. Unfortunately, profits get slashed significantly because the existing payment infrastructure is plagued by government regulation and decreased fees due to market competition.

Luckily, cloud-native payments can scale as needed to meet the changing volumes and provide the capacity for growth. Furthermore, some systems can detect anomalies and automatically apply corrective measures to keep the company’s critical services running.

2. Agility

Cloudifying payments are a core way to ensure your business is agile enough to respond to future competition. It’s also the biggest factor that prompts companies to migrate to the cloud so they can easily transform and meet the changing needs of their customers.

3. Complying with new standards

To operate, payment companies need to comply with market laws by upgrading to the latest compliance standards, like PSD2 and ISO 20022. The problem is these rules keep changing and this can mean that companies with legacy technologies can struggle to catch up.

But with cloud integrations in place, companies that deal with large amounts of payments can implement new updates faster or run multiple versions that will allow them to transition quickly from one to another. This mitigates unnecessary loss generating delays.

4. Unleashing productivity

Modernized payment infrastructures are packed with tools that can help organizations better cater to their customers. For instance, automation tools can help teams spend time on activities that matter instead of handling repetitive tasks.

What's more, during the modernization process to the cloud, a bridge between the new and old tech can be laid out. This enables merchants and financial institutions to start enjoying the fruits of their new resource engine before its official launch.

5. No hardware costs or additional expenses 

It is relatively inexpensive and far easier to migrate payment systems to the cloud compared to acquiring and setting up hardware units. 

6. Quick adoption of new messaging formats and standards

Payment processors must link and integrate with numerous messaging formats both within and outside the organization. The problem is, doing this on traditional tech stack is extremely time intensive. In the end, longer transaction times will push customers away.

Surprisingly, when merchants or fintech companies switch to cloud-based integrations, they have a chance to work with multiple messaging formats and standards. These can be created and deployed easily through point and click browser-based tools and prebuilt delivery channels, making the transformation process rapid and effortless.

In short, the cloud allows payment providers to initiate multiple routes, connections and transformations in any ecosystem using pre-built templates. Team members do not need to focus on integration but rather on other important things that move the needle. This results in happy customers and a profitable company.

7. Counter the ever-growing financial crimes

Worldwide, financial institutions face the greatest number of fines from data breaches. If this happens several times, a company could find itself in extremely troubled waters.

The truth is when companies process high-volume real-time transactions, cyber adversaries can easily leap in undetected. Thankfully, cloud platforms now allow companies to deploy artificial intelligence and machine learning algorithms that sniff out illicit payment activities. This can help your company stay within the boundaries of compliance regulations.

Besides the existence of AI and ML for better security, merchants also have the freedom to store data in a public, private or hybrid cloud. Large organizations lean more towards hybrid environments so their data can be kept private and moved to the public when the demand to scale arises. 

 

Things to keep in mind when building a cloud-based payments infrastructure

Potential for anomalies and system variations

Transforming a payment technology isn’t without its hurdles. Anomalies are likely to crop up if there are no active debugging systems. This could lead to costly customer-facing problems.

Therefore, it is essential to place multiple service listeners and automated monitoring tools that consistently scan for anomalies and variations. When a bug, broken link or other glitch is detected, a notification alert will be sent to the designated team for immediate response.

TDD (Test-Driven Development)

You need to run TDD during development and deployment to ensure the software is high quality and bug-free. This is set up at checkpoints where new releases pass through or points where frequent customer updates are adopted.

TTD should strictly adhere to the requirements of the design and coding implementation. In the design phase, the code needs to stick to the demands of the business and therefore be open to future changes.

As for coding implementation, the application’s code should be testable from the onset so defects can be rooted out before the final release. Don’t forget automated tests — these are a good idea for reducing frequent human intervention.

Prioritize DevSecOps approach

An effective risk management plan during a payment technology change should include DevSecOps. This is one of the best security practices and shields businesses against potential hacking incidents. Even better, the costs for automating security checks and urgent bug solutions will be considerably lower.

 

Other challenges your IT department may face along the way, based on DataArt’s experience 

  • Regulatory compliance and data-centric privacy concerns

In some countries, there are rules that prevent payment companies and processors from breaking their monolithic stacks. These measures are in place to protect their citizens’ data. As such, many merchants will find it extremely difficult to distribute their payment methods in different regions. One of the possible means to address the challenge is to have a hybrid setup, using Kubernetes both on premises and in the cloud. 

  • Running multi-region applications can pose risks

Companies that are running a multi-region infrastructure should expect to deal with different region-specific services. Notwithstanding providers may differ as well. Under such circumstances the existing tech stack needs to display two key qualities: scalability and seamless integration. This is why you need to think over the abstraction level of the architecture and application logic in advance to make it fault-tolerant and with low latency for geographically dispersed users. 

  • Security restrictions sometimes impact the development process

Not every tool is going to be acceptable when it comes to designing your infrastructure with security restrictions in mind. This is something you don’t expect but may discover in the midst of the development process. A good example is CI/CD tools. Some of them (including Google’s) don’t support private clusters. 

When DataArt had a situation like this, the only way forward was to create another tool that didn’t compromise security.

  • Integration pitfalls during growth

As the business grows, the number of integrations with service providers and partners increases. This challenges infrastructure and the development process. In one of the projects where the DataArt’s team performed a migration of payments systems to the cloud, integrations were impeded during the testing stage because not all of the integrated systems had test or dev instances. So the DataArt’s team built good mock services to mimic them on the lower and local environments.

 

Wrap up

Moving to the cloud can improve scalability and offer opportunities to create cloud-based self-updating vault, artificial intelligence and Edge computing that keeps transactions compliant with local regulations. Companies that adapt now will stay ahead of the competition and look to the future with their heads held high.

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Anna Serebryannikova

Anna Serebryannikova

Senior Account Director

DataArt

Member since

09 Dec 2021

Location

London

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2

This post is from a series of posts in the group:

Cloud Banking out of the Box

Cloud and Open banking platforms, business model and operational approach tests.


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