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Payment Horizons

August 17, 2016

Transactions Per Second:  We Were Wrong

I have been in the payments industry a long time, decades in fact. My first job was with a leading provider of switching software for point of sale systems. We worked with big issuers around the world who needed high performance, high availability solutions. Each year in late November we would watch with interest as our software was required to handle a growing number of transactions per second (TPS). When the TPS number went over 100 we all stood in awe…and we began enhancing our product to insure it would accommodate the continuing growth in the use of debit and credit cards.

As we were doing the work required to meet this goal, the question began, “How high should we aim in terms of the number of TPS our software needed to handle in the future?” We decided our goal needed to be a “big” number so our customers would have the confidence that we could accommodate any scenario they faced. When we were done, we benchmarked our solution’s performance which proved to be able to handle over 500 TPS. When we started using this number to convince present customers to upgrade, we often received a gentle ribbing from them.

Essentially, few could foresee a future when the kind of performance level that we had engineered for would become a reality. As history often does, that vision of what would come to be in payments was limited. In other words, our company and its customers were sorely underestimating the TPS demands systems would face in the future.

I was made acutely aware of this fact when reading about how one of the world’s largest payment companies facing continued double-digit, annual growth in payment and cross-border volumes across its network decided it was time to increase its TPS capability. At the time, the network was processing transactions generated by billions of cards used at millions of merchants, ATMs and financial institutions around the globe. Estimates place the value of these transactions at trillions of dollars.

As a leader in its space, the company had made a practice of investing in its infrastructure ahead of demand deploying new processors and geographically dispersed central processing complexes to ensure transactions would move without interruption in the services they provided to their customers. However, the company’s leadership knew the continuing growth of electronic payments had reached a level that required investments that provided a strategic foundation for their future.

As is often the case, the network’s in-house engineering and development teams were buried in other priorities, so the organization needed to find a partner with expertise in high performance operations in the payments area. One company was selected out of the many available because it had a ready team of payments network experts with 20+ years of experience. In addition, this company had already done several important projects for the network.

When the project was started, this partner – RS Software – audited the payment company’s system to determine how many TPS the current framework could support. They found that the network’s IT infrastructure, in its current form, was capable of processing 5,000 TPS with zero down time and minimal application and network latency. RS Software recommended and implemented a Highly Parallel Loosely Coupled (HPLC) system within the existing TPF operating environment. The HPLC design supported the use of multiple mainframes with connections to a single, TPF database. To ensure processing consistency, the application engineering team had to ensure that multiple processing complexes remained synchronized in real-time.

Once the project was completed, the network’s system could comfortably handle 15,000 TPS. However, given the anticipated growth in transactions, the company continues to invest in its future. Planning already has begun on a follow up project to develop the strategy for a N-processor routing ecosystem. Obviously, back in the old days we were shortsighted regarding the TPS levels required to support the growth of electronic payments over the next 20 years.

Today, payments are being initiated with mobile phones, tablets, wearables and more. Payment types are proliferating. Consumers expect, as they always have, to use whatever payment device or type they want to – anytime, anywhere – without inconvenience. Increasingly it is those organizations who have a focus and significant experience in the payment space that are required to help companies keep pace while planning for the future.