Legacy technology has been beaten throughout the pandemic – and rightly so, many would say, as merchants and their payment partners seek to create new experiences that weren’t technologically possible before, while managing levels high risk that ensues.

Merchants, in particular, are looking at payments through a digital transformation lens and see immense potential in replacing familiar systems with superior cloud offerings.

Yael Barak, vice president of product at Checkout.com, told PYMNTS, “When I think of legacy technology, I think of platforms that are… cobbled-together pieces of technology. This could be from acquisitions over the years or from systems that have been purchased and integrated where this has created inefficiencies of data moving between systems.

E-commerce businesses that rely on legacy systems are missing out on the speed, access and convenience that newer architectures provide, Barak said. And that means processing data in batches rather than real-time, while relying on the Automated Clearing House (ACH) and settlement rails.

“It’s still, for me, an aspect of legacy technology – this kind of cobbled-together architecture, whereas when I think of digital solutions today, I think of stacks that are end-to-end [and] uniform. What I mean by that is maybe a combination of microservices accessed through APIs. »

A cloud-based, API-accessible architecture, on the other hand, may not sound sexy, Barak said, but it can scale to accurately handle all the large, high-value transactions that changing e-commerce demands place on it. The cloud also frees organizations from on-premises systems and maintenance costs, not to mention the idea that the cloud is forever, while aging on-premises systems are decidedly not.

“If something happens to your data center, you’re pretty much dead in the water. In the cloud, you can deploy faster,” she said. “Your data is kept in places where it should be kept from a compliance standpoint, but also from a scalability standpoint. You can react quickly to incidents and scale processing power quickly.

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Building on solid foundations

Barak said Checkout.com isn’t wary of blockchain technology, which, minus the glare of crypto, is proving a solid system for facilitating how money should move in 2022.

Barak told PYMNTS, “If you put cryptocurrencies aside for a while, blockchain technology allows us to cross borders and do it 24/7, with no downtime, no holidays. , with real-time processing. The use cases for this technology are game-changing.”

This reality stings if you’re still waist deep in legacy technology as the great digital shift rages all around, but legacy still has its uses in applications that require high security and have data sets stable.

“If I think of traditional banks, it’s high-risk data management. They manage money, bank accounts and business balances,” she said. “This is where maybe having your data center in the basement of a highly secure building [is] the right place for him to be.

Except it doesn’t have to be that way anymore, as FinTechs are making the cloud more secure and easier for merchants and PSPs to migrate as an integrated end-to-end solution.

Value-added services that traditional financial institutions (FIs) “are either going to be slow to deploy or unable to manage the risk of having something like this built into their technology, that’s where innovation can play” , she said. “Regulation like PSD2 allows FinTechs to create that layer of added value on top of traditional FIs [and] the role they still play.

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The future is unified

In the case of Checkout.com, the company made the strategic decision from day one to own and operate its entire stack, Barak said. As an acquirer, that means it’s built its own integrations with Visa, Mastercard, Amex, and other processors rather than opting for ready-made offerings.

It would have saved money and time, but the PSP realized that only by creating its own payment gateway and token vault could it offer a better experience for e-commerce providers and their customers – and help Checkout.com roll out new services faster. It also provides opportunities to enrich data within a unified system, she said, which can improve routing costs, conversion speeds and other key metrics.

None of this means snubbing legacy technology or the businesses that still depend on it. Legacy still controls much of the commerce and payment experience, so old and new must communicate.

“Where we play with legacy technology, say, obviously, we also have bank accounts and we have to move money in and out of bank accounts, and we have to pay our merchants. So we integrate with traditional financial institutions, but we try to use partners who themselves use better technology,” Barak said. “When we can’t, or when working with legacy technology, we build a layer around it that allows us to maintain the merchant experience.”

Of course, the goal now is to move away from reliance on legacy systems and their growing list of limitations to the possibilities of connected ecosystems that currently exist.

“If I think of the full stack from a merchant’s perspective, it’s ease and convenience that then drives scalability,” Barak said. “If you need to go global, this single integration also reduces integration costs and operating costs. Your financial reconciliation is going to be unified globally,” so the data looks the same no matter what region you are reconciling.



About: Results from PYMNTS’ new study, “The Super App Shift: How Consumers Want To Save, Shop And Spend In The Connected Economy,” a collaboration with PayPal, analyzed responses from 9,904 consumers in Australia, Germany, UK and USA. and showed strong demand for one super multi-functional app rather than using dozens of individual apps.