Paymentology is a specialist issuer side card payment technology company, working across four continents with challenger banks and mainstream retail banks, as well as non-banking institutions. The Fintech Timescaught up with co-founder Shane O’Hara, who has managed the design, build and operation of prepaid, debit and credit card payment processing systems for more than 15 years.
What inspired you to start Paymentology in 2015?
Back in 2006, I was one of the founders of Global Processing Services (GPS), which was originally set up to support a gift card business. As engineers, we simply had a passion for the building blocks and understanding how processing worked. We enjoyed getting into the depths of it. We didn’t know then that prepaid was about to explode on the global market. By the time I left GPS at the end of 2014, the business was doing very well. At that time the platform was highly reliable, but the market was changing and security challenges were rising. I could see a very significant shortage of expertise in issuer side payment processing. I decided to set up Paymentology to cater for this lack of expertise and to deliver a new flexible processing platform that could cater for wallets, would achieve PCI compliance readily and would address those issues of scalability. So, Paymentology was very much driven to deliver those key needs in the market.
How has your business developed from then until now?
We had some initial business in the Middle East with a company in Bahrain and a bank in that region. We managed to grow for the first couple of years off the back of revenues provided by that company and via revenue from a few other small program managers. We were very much self-funded, and we have been since the outset. We have had offerings of funding along the road, but, to date, we have always declined. However, today we see great opportunities emerging as banks digitise around the world. We are looking afresh at the investment scene so that we may gear the company to optimally capitalise on these opportunities.
When we started Paymentology, we believed we would simply grow a client base of non-banking card issuers and that we would gain a reputation via our new improved platform. However, the markets are changing radically and, in the last 18 months to two years, the banks finally seem to be jumping into the fray. They’re either digitising internally or they’re setting up spin-off challenger banks. That level of activity has skyrocketed. So, we’re now in the space where Paymentology is really starting to focus on banks.
Whilst we believe we are getting many things right, one of our failings has been not to move quickly enough on new opportunities in the Asia-Pacific region. We’ve been signing banks in the Middle East and in Hong Kong but were slow in setting up in Singapore. We have finally rectified this and we now have operations in Singapore, including datacentre and connectivity into the MasterCard network. We are now well placed to provide card processing through Europe, Middle East and Far East. Additionally, we have growing operations in Central and South America.
In essence we are techies and we don’t shout out enough about what we do. What we do is absolutely market leading and I think we’re miles ahead of our various competitors. I would say this is particularly true in relation to our ability to elevate banks’ abilities to compete with the best challenger bank offerings in the world. If a bank is looking to digitise and improve on its ability to offer its consumers a world class payment card experience, I do not believe they will find a better processing partner than Paymentology.
Are you seeing a change in the way the banking sector is reacting to the growth of challenger banks?
I often get asked, ‘why are you focussing on banks when it is known that they frequently take 12 to 24 months cycle to just get a contract?’. My reply is that banks are changing. We are seeing it in evidence more and more around the world. The banks are having to move faster and they are starting to recognise this. Last year, we won a contract with Standard Chartered bank in Hong Kong. Their implementation was, by banking standards, very fast. This trend is common across the banks that we are seeing – they need to finalise the deal more quickly than was traditionally the case. Banks need to be nimble if they are to shift from a legacy processor to one that offers features that are more innovative for their customers. This change is coming from board level so we’re definitely seeing contract signing times reduce from years to months and, in many cases, just a few weeks.
When they want to launch in a matter of weeks, Paymentology is agile enough to support this. We process for open-banking platform Railsbank and we rose to the occasion and got them in a position to launch a card within four weeks of contract for Money 20/20.
What’s the impact on the sector during this time of crisis?
I genuinely don’t think we’ve ever been busier. The market appears to be exceptionally busy, and we have not yet (at the time of writing) seen any immediate catastrophic impact. My observations are based on looking at payment traffic on our platforms; I was expecting a cliff edge drop but this is not the case. Obviously, hospitality spending has dropped to very low numbers. We obviously see almost no card payments in bars and restaurants. We are seeing an expected shift to e-commerce transactions, such as Amazon. Certainly, our business and our program managers and banks are very active.
When it comes to doing business, we now don’t have to travel anywhere for meetings, we can just get on Zoom, Skype or Teams and meet. We’re actually doing business quicker because of this.
What do you see as the next area of focus within the payments sector?
Probably the biggest change that we’ve seen in issuer side card processing is the delivery of data to the bank. The provision of much enriched data determines the bank’s ability to run an efficient card program and the bank’s ability to deliver an enhanced consumer experience. If you look at companies like Revolut who share a determination to deliver a great consumer experience, you can see that these same companies achieve this through being data focused. For example, when a Revolut customer spends on their card, the receipt typically arrives at the mobile device before it is printed out in the shop. The latest banking apps allow consumers to use sliders and switches to adjust their spending controls, directly from the mobile app. Much of this relies on the processor feeding the entity with the detailed data at the precise time of spend.
If you went back five years, the banks generally sat to one side of their cards business and they let their legacy provider run it. Now, suddenly, the banks have accepted that they need to offer a much more enriched consumer experience, actually getting to know the consumer a lot better and extracting value from the data. Paymentology, for example, enables the bank to look at a consumer in the middle of a spend and understand that this consumer likes travel, or this consumer likes sport or that they are suited to receiving a microloan or even a buy-now-pay-later offer from the bank. Paymentology is doing for the banks what Amazon has done for the retail sector by using the power of data to open up new revenue channels.
Paymentology performs AI-based rules engine analytics in the middle of the spend process so that before the transaction reaches the bank, we’ve already undertaken a whole variety of analytics on that transaction. What the bank gets is a really nice packet of data where the customer credit worthiness and the customer rankings are all being delivered at the spend time. The bank can then make better decisions. That is where we excel – through the provision of that data which really empowers the bank.
Banks are starting to see that they cannot expect to co-exist with hot challenger banks if they do not put the power of this data to good use. As in many other sectors, knowing your customer is key to future success.
Are you now seeing a shift towards your focus more being on banks than program managers?
Yes, in the last 18 months, there has definitely been a change in the market. Originally there was a degree of cynicism as to whether the likes of Revolut or Monzo were going to succeed. There is still an element of scepticism in certain quarters, but there’s also a clear acknowledgement that banks need to digitise core banking processes. We see three clear routes emerging: One, a bank sets up a spin-off, such as NatWest setting up Mettle. This is relatively easy to do and does not significantly disrupt the parent bank. Route number two is where the bank takes a very significant strategic decision to digitise its whole entity and revamps everything it does including its core banking processes. The third route is when the bank does a patchwork effort as they know they need to do something, but they don’t want to invest tens of millions at this point in time. We are involved with banks in each of these routes.
Is the future of banking faceless?
No. It’s very difficult to crystal ball it but I think consumers will always want choice and there will be different flavours to different banks. Just the same as with social networks, perceptions of differences will develop. One bank will be seen to be better for families maybe, and one will be better for young people, and so on. When I look at social networks, the younger crowd gravitate faster in various directions to certain brands. It is the ease of use and that sexiness that people gravitate to. I expect that banks will make better use of loyalty in the future and this will be catered for by their greater knowledge of their customer.
Spotlight on Shane
Shane O’Hara is the CEO of Paymentology, a specialist issuer side card payment technology company working across four continents with challenger banks and mainstream retail banks, as well as non-banking institutions. His 15-year experience in managing design, build and operation of prepaid, debit and credit card payment processing systems in a fast-changing market laid the foundation for establishing Paymentology in 2015. Through continuing software innovation, he has taken Paymentology ahead of the curve in meeting growing demand from both challenger banks and traditional banks that need to digitise. He is a specialist in how these systems work, from technical structure to business needs, and offers client banks a flexible, bespoke and highly advanced card processing solution.