Mastercard: How cloud technology is revolutionizing the payments landscape

Payment providers are under more pressure than ever to comply with customer demands, facilitate real-time payments and do so without room for error. And as the benefits of fintech innovation become increasingly accessible, a striking number of providers are turning to the capabilities of the cloud to deliver what their customers really want.

On this note, James Bushby leads a narrative here that examines the highs and lows of mass cloud adoption in payments.

Bushby currently functions as MasterCardsenior VP for real-time payments, and here he leverages his position within one of the world’s leading cloud innovators to detail the considerations around cloud adoption in the wider payments landscape.

Furthermore, Bushby examines how cloud technology supports markets’ transition to real-time payment systems and the impact this has on key areas in the market, such as privacy:

How cloud technology is revolutionizing the payments landscape

In the last decade, we have seen a huge increase in the number of markets looking to modernize their payment systems. Both consumers and businesses want access to smooth, real-time and secure payments, and innovations in areas such as cloud technology play an important role in achieving this.

Cloud computing is not new and certainly not unique to the payments industry. Industries around the world are using cloud services to better meet their customers’ needs, as well as their own. But the growth in adoption is staggering, with research of GFT Financial finds that 86 percent of bankers have now adopted cloud services to some degree to take advantage of its virtually unlimited scalability.

Rapid growth and increasing resilience

So why have we seen this rapid growth? First, cloud technology breaks down old barriers. Previously, systems such as payment systems had to be built, stored and operated internally. Barriers to change, such as cost and complexity, are broken down in favor of efficient, open and scalable platforms available to all. Not only does this mean that it is easier to achieve consistency and compliance, but it also has greater potential to rapidly develop new products and services and bring them to market.

Back in the 1960s, Gordon Moore predicted that computer processing power would double every two years. Although there are some caveats, this prediction has proven to be incredibly accurate and underscores how quickly technology can advance in a short period of time. Today, there are few areas where this is more true than with cloud computing.

New contemporary developments

In fact, technological advances have made it possible to process increasingly complex and critical payment processes in the cloud. Cloud-based services from the likes of Microsoft, Amazon and Google have proven to be very viable and cost-effective solutions for certain aspects of payment processing in production environments. Many have previously implemented cloud technology themselves. But now third parties operate many of these services remotely.

While security, privacy and control will always be paramount within the payments industry, these are continually being improved through focused collaboration with financial institutions and fintechs using cloud technology. With central banks and regulators now examining the most appropriate way to manage the potential risks involved, while realizing the potential, the ability of financial institutions and fintechs to demonstrate increased resilience and address their concerns will be critical to enabling wider use of the cloud. in critical payment applications.

Many of the world’s largest companies are now embracing the cloud. In 2020, Capital One announced that it would go “all in on the cloud” and move away from its traditional eight data centers. Companies included apple, Citi and Goldman Sachs have also said they will embrace cloud technology. The ability to showcase cloud technology’s benefits in key areas will be critical to wider adoption for critical payment applications.

Payments on the edge

So what are the potential pitfalls of cloud adoption and how can they be avoided?

One of the biggest challenges on the horizon is the ever-increasing number of new devices connecting to cloud services. From computers to smartphones, to wearable technology, the amount of information sent back and forth over cloud connections is increasing rapidly. This places more and more burden on central nodes that operate this type of technology.

A new solution to this is to enable more data flow and computation to happen outside of these nodes, at the edges of the network. More and more we see this happening in our daily transactions, such as tapping our card to make a payment. In addition, the shift from private to public clouds enables financial institutions and other businesses to scale up their services without having to build their own data centers, and the transition to 5G networks increases the speed of transferring data to and from devices.

Not only does this allow cloud systems to easily scale, but it also enables exciting new innovations such as ‘smile to pay’ in the payment space, which can increase ease of use by removing the need to reach for a wallet or smartphone when your hands are full. Mastercard’s own work in this area is already leading to advances in how people pay for goods, with our biometric payment program meaning all people need is themselves to pay for goods when they leave a store.

Focus on privacy

While these advancements in cloud technology will be huge in terms of speed and convenience, a further challenge is the issue of data and privacy, which are critical to the necessary trust and security needed to promote the use of a given payment system. A demonstrable commitment to strong data principles, as well as adherence to a common standard, is what builds this trust.

Some markets are considering data localization laws, which provide for storing and processing data within a country’s borders. This attempts to overcome some of the geopolitical concerns we see around the world today, but carries with it the risk of added cost and complexity. In addition, it will be important not to limit the ability to offer services at network level on a global scale, especially in areas such as fraud and cybercrime, where criminals actively exploit schemes, systems and national borders. It is therefore critical that we protect privacy in a way that does not stifle or limit the efforts of financial institutions and payment providers to monitor data on a global scale in the fight against fraud and cybercrime.

We are already seeing solutions to this challenge such as Asia Pacific Economic Cooperation (APEC) system of Cross-Border Privacy Rules (CBPR), which allows companies that comply with internationally recognized data protection standards to share data within a region.

Adoption on a large scale

So, given the benefits, why isn’t adoption on a larger scale? To answer this, we have to consider everything around data and privacy concerns, which are understandably in the eyes of central banks and regulators. Rapid advances in cloud technology also play a role, as keeping up with the pace of change is a significant task.

Despite these challenges, the benefits are clear. Cloud-related technological advances are increasing the pace of payment modernization. This speed thus translates to the speed at which new capabilities enter the market.

The challenge now is for everyone working in the payments landscape to come together to address these concerns and ensure more people can reap the benefits of cloud computing.

This guest post is a continuation of Mastercard’s payments modernization series, with previous segments available here.