Payments’ ‘Best Kept Secret?’

If you haven’t heard of Transaction Network Services (TNS), the company is probably OK with that.

One element of its business model, in fact, is to let its customers — the core of whom are acquirers — put their own brands on the services that TNS provides in the realm of connectivity. As Lisa Shipley, Executive Vice President and Managing Director at TNS, recently discussed with MPD CEO Karen Webster, TNS is on a mission to allow any company in the payments space to connect to whatever end point it needs, anywhere in the world, regardless of the type of transaction or methodology of communication.

It’s a big world out there; TNS is just trying to make it — at least for merchants and acquirers — feel smaller.

KW: TNS has been around the payments ecosystem for quite a long time. You’re kind of “the brand behind the brand” for a lot of what happens in payments.

Explain to us what you guys do.

LS: I like to tell people we’re “the best kept secret in the industry.” We’ve been in it for 25 years now. Our role in payments is a unique one; no other company really does what we do, especially on a global scale.

In a nutshell, TNS provides the central hub for all the major players in payments — and that includes over 450 different connections across 68 countries worldwide. We kind of act like the United Nations of payments by allowing any company to connect, via TNS, to any of the end points it needs to access.

The service is not just for merchants. Our biggest customers are actually the major banks and acquirers across the globe. All the spokes that a company has to connect to can be reduced by connecting to just one central hub that TNS provides, saving it money on infrastructure, the security that those links mandate, the PCI regulations, and so on.

KW: To make it very tangible — and without naming names, of course — tell us about a client that uses your network, in terms of what you specifically do for them.

LS: There isn’t a major acquirer that we’re not physically connected to. For some of them, we are actually 100 percent of their interface from what’s coming out at the point of sale.

When a terminal is swiped or an SSL transaction is made online, it doesn’t actually go into the client first; it comes to us, in the format applicable to the specific end device — and it doesn’t matter to us what that end device is. We then provide it back to the acquirer in the format and the methodology that it wants.

Typically, a dial transaction bogs down the giant networks of these big acquirers; they don’t want it in a dial. TNS brings it in, in a secure fashion, converts it — usually to an SSL transaction — and sends it back to the acquirer.

KW: How did TNS get started?

LS: There are three different parts of the company. One deals with trading commodities, another provides a physical link between all of the telcos, and the third — related to what we’re discussing — started with the implementation of what we call POPs, physical points of presence, across the globe to facilitate connectivity.

We’ve been kind of niche-y in providing unique solutions one by one to a variety of customers. Over the course of 25 years, that has led to us amassing a giant footprint of being able to provide that connectivity, that telco connection, to all of these players. Now we’ve kind of put a wrapper around all of that and are getting the message out to let the market understand who we are and what we do.

It’s more than just the telco piece. We supply and support a variety of different encryption solutions and tokenization services; we sell pieces of hardware that are basically routers that connect unattended points of commerce — such as ATMs and vending machines — that need to communicate.

KW: There is quite a variety of end points, from vending machines to any number of examples within the Internet of Things: these all require a connection of some kind back through an acquirer because a commerce transaction is taking place.

Is that what you are enabling, as well?

LS: Yes, that’s a great example.

Here’s another: If we’re doing business with a large acquirer in the U.S. who has a major global retailer, and they need to get a transaction from Hong Kong for that merchant back to the states, that acquirer is not going to have the physical point of presence to be able to do that. We provide that front end for them and we get that transaction back to the acquirer.

It provides the acquirers the ability to say they are truly global, without having to build a global infrastructure themselves.

KW: When merchants really do want to take advantage of cross-border and the global opportunities it provides, you’re able — through your acquiring relationships — to make that possible. Is that right?

LS: Correct. And we white-label what we do; we don’t really compete with the large acquirers. Anything that TNS provides, from a service or connectivity perspective, we welcome our customers to put their own label on it.

KW:  I would imagine that works on the other side, as well. I know you’ve done some things with UnionPay; describe that relationship and what it unlocks.

LS:  UnionPay is a gateway; it’s where Visa, MasterCard, and all different flavors of transactions need to go.

With it coming from China into the U.S., customers without a physical connection into UnionPay need to address that. They can either invest and take on all the elements necessary — put in the pipes, provide the security, the PCI, and so on — to build their own connection to UnionPay…or they can simply turn to TNS, because we already have the physical connection to the UnionPay scheme.

One partner, for example, who benefited from that is Travelex. They’ve been front-ending their transactions to us for years and didn’t need to do anything to connect to UnionPay. We provide that connection for them.

KW: What kind of transactions are you referring to? Is it all card-based?

LS: It can be card-based; it can be Web-based — it doesn’t matter. We don’t care what the end device is or what the methodology of communication is. The transaction could be on a Square device, on a tablet…it could come over to us in dial or GPRS — we take all of that out.

We can provide and will provide tokenization encryption; we can work with whatever solution the merchant provides that’s their own: a Verifone solution, an Ingenico solution, a homegrown solution…it makes no difference to us. We can support it all.

KW:  Sounds like it’s magic.

LS: It’s just close to 30 years of doing this and bringing it all together.

KW: I think as commerce has become global and there are so many more end points, the ability to simplify how all of it gets connected for the benefit of the banks and the retailers — and the infrastructure that surrounds it — obviously becomes increasingly important.

Talk a little about your partnership with Verifone and the capabilities around point-to-point encryption. How is it going to make the process easier for merchants that want to take advantage of that solution?

LS: We’ve been a good partner with Verifone for five-plus years, now. We interface and do business with them in many countries across the globe.

When they came to us, they were looking for a partner that could basically do the managed-services component of the encryption solution they offer. Previously, a merchant who wanted to implement a Verifone solution would have to buy new hardware, establish software interfaces and support all of that infrastructure in-house.

With us, now the retailer doesn’t have to do that. It can still embrace the Verifone solution on the hardware that they have chosen, and utilize TNS to provide the service as a managed service, to provide the security and the PCI, and free them from having to deal with any of that internally.

At the end of the day, merchants are just trying to sell stuff. They’ve been burdened with all these tasks related to security and payments; with us, they don’t have to worry about that anymore. We’re essentially one-stop shopping for the merchant that requires very little work on their end.

Not only do we do it with Verifone, we do it with Ingenico and Trustwave, for example; also, again, a merchant can bring their own solution. We will work with whatever the customer needs us to support.

KW: Speaking of burdens, the race to the EMV deadline certainly is one. What role do you play in simplifying that migration for your partners?

LS: There are still a lot of networks out there that can’t support an EMV transaction, period. For those who aren’t ready, we can actually sit in front of that. We’re EMV certified, so those transactions can be rerouted to us and we’ll get it to the end point until such time as they are EMV ready.

I think we all agree that EMV is one thing, but it doesn’t address security in totality. It’s not going to stop data from being stolen in-flight or at rest; there’s a lot more that needs to be done.

Another obstacle is major hardware manufacturers having to take out massive amounts of devices because they’re not EMV certified, and then so much recertification has to happen. We can accelerate their ability to do that by providing — with a single interface to us — connection back into all of the acquirers that we do business with and allow them to simplify and expedite the certification of EMV.

We’re seeing a lot of requests for that — and not just because of EMV. For any hardware player that’s trying to get into a new region — one that’s in China and trying to move into the U.S., for example — it’s a very painful process. We provide them with a toolset — a terminal application, if you will — to interface with us, and that drastically reduces the cost and the time relative to getting into new regions.

KW: Talk a little bit about the Internet of Things. It’s a concept that is still a little out there, but we’re beginning to think about connected cars, things like Amazon Dash buttons, and other enablers of commerce creating millions and millions of end points.

Does the capability that you enable allow merchants and acquirers and banks to make good on their promise of delivering commerce to those end points?

LS: Absolutely. Any new player that’s looking for a way to include value-added applications or connections still faces the complexity of having to go one acquirer at a time to build it into the end device. Without naming names, we’re having conversations with all sorts of niche players, helping them to understand the acceleration we can provide to that process.

And they’re not necessarily looking to get into payments. They want to add their unique app without the pain of going down to the application level, or getting into the payment piece at all. They want the marketing, they want the information; and we can provide that gateway to spin that information over to them.

For retailers — who have a lot of things they want folded into the very complex world of the payment app — we can provide that rail on top, allowing them a secure and simple way to see all of the different interfaces coming in across all the areas of their business. That’s a lot of where our new business is coming from: customers who need those connections.

That said, our bread and butter remains the acquirers and the banks. The acquirers are still trying to figure out how to keep their payments piece and allow their retailers to implement those value-added applications. They want to be able to find partners to help them do that easily and they want to be able to expand globally.

Recently, there is an acquirer customer of ours that we have literally brought across the globe. Using our physical connectivity and footprint, we were able to penetrate for them most of the major countries in Asia. They can truly say that they are probably the largest worldwide acquirer right now — and they achieved that by using TNS as their connection point.

KW: You alluded to conversations about some exciting new opportunities made possible by your capabilities. Is there anything you can hint at that we should be looking for in the future from TNS?

LS: I think what you’re going to find is that, particularly in the European regions, there’s going to be more consolidation…and TNS is going to play a key role in allowing that to happen.

In Europe right now, payments tend to be very country-specific and don’t easily lend themselves to cross-border. With the education that we’ve provided to the European market, however, I think you’re going to see some really interesting partnerships involving big acquirers in those regions. TNS is working with them to make some unique things happen in that marketplace.