Seeking A Better Way To Test The Newest Payments Tech

Alongside the expansion of payments technologies, payment testing service providers have had to grow and flex to meet market needs. Companies like Paragon Application Systems, which provides payment testing solutions for traditional and alternative financial service providers, are witnessing not just greater demand for their services as payment technologies evolve but are also having to approach their services in different ways as FinTech pushes the boundaries of how a payment gets done.

Last week, Paragon announced a partnership with payment infrastructure developer RS Software to meet those changing demands.

“The payments landscape has grown increasingly more complex over the past decade,” Paragon CEO Jim Perry said in a statement announcing the collaboration. “A steep increase in the number and variety of endpoints, an expanding number of consumer devices and payment apps, the rising expectation of ‘always-on’ availability and increased levels of regulatory scrutiny have all contributed to that fact.”

PYMNTS wanted to know more about how FinTech has forced financial service providers to change the way they deliver payment solutions and change the way they approach the testing of those payment tools.

“A lot of organizations have had to take a hard look at their legacy processes,” explained Paragon Director of Global Product Marketing Steve Gilde in an interview with PYMNTS. Many organizations, he added, still conduct manual testing, with test scripts that are laid out in Excel spreadsheets.

That’s a tricky, inefficient way to test the reliability, compliance, speed and other metrics of payments technologies, especially when demands for faster, more efficient payments are inescapable.

“It’s hard to scale that and support the pace of change that takes place in today’s FinTech-driven environment,” he warned. “Significant amounts of investment are going into the banking and payments areas, and there is a lot of competition, a lot of innovation. The old type of annual processing and testing isn’t effective anymore.”

Faster payments initiatives are just one example of how a changing payments landscape means institutions need to alter their testing approaches, Gilde said.

“You can’t stay current with the types of things you’ll have to do in a faster payments landscape if you use your legacy approaches,” he stated. “You have to be prepared to respond more quickly, to move towards an automated testing environment where you can respond to the legal and regulatory aspect and the competitive side as other entrants move into the faster payment environment.”

And speaking of regulations, payments innovation is introducing new requirements among financial institutions and FinTech players (mostly the former) to remain compliant with regulations. That, too, is another component of payments testing that Gilde said has become more challenging.

Today, Paragon tends to focus on consumer payments with a particular eye on ISO interfaces and ATMs. But the changing payments landscape means the payments testing software firm is also evolving. Gilde explained that Paragon has its eye on B2B and commercial payments, especially when it comes to messaging standards.

“There is a lot of blurring between the ISO 8583 format and ISO 20022 format, which starts to move you towards the commercial banking side,” he said. Plus, with blockchain on the close horizon, payments testing will continue to get more complex with at least a hand in the corporate payments side. “The idea that blockchain is going to have a long-term impact,” he added, “I think the answer to that is yes.”