An increasing number of consumers worldwide are going cashless leading to a surging demand for digital payment options.
Bill Farris, head of issuing and acquiring at ACI Worldwide – the global provider of real-time digital payments software, explores how Dutch banking services company Rabobank modernised its payment systems to keep up with customer demands.
Cash transactions continue to decline in Dutch markets. Consumers in the Netherlands strongly favour using debit cards versus credit cards or cash. Ninety-six per cent of all payments are completed using a debit card versus a credit card. This signals an increased demand for digital payment options.
Together with ACI, Rabobank modernised its debit and credit card systems into one solution using the capabilities available through ACIR® Issuing™.
This allows the bank to authorise, switch and process customers’ transactions, finalise clearing and settlements, as well as manage all chargebacks and disputes. ACI and Rabobank used three phases to complete this transformation:
- Switching and transaction processing modernisation
- Credit card issuing transformation
- Debit card issuing transformation
Switching and transaction processing modernisation
The challenge
Rabobank’s transformation project began with the ‘Transaction Processing Infrastructure Renewal’ (TAPIR). Although there was a risk of missing out on unique selling points, Rabobank executives felt that the uniqueness would come by offering new standard services faster than the competition.
The solution
The main solution used for this project was BASE24-eps® for switching, authentication and authorisation on real-time balance and real-time transaction processing together with other ACI solutions, such as ACI Interchange™ for the clearing and settlement, ACI Automated Dispute Manager™ for disputes, and ACI Payments Monitoring (powered by IR Transact) for dashboarding, alerting and monitoring. The first decision was to create a new transaction processing environment next to the existing one, so both solutions were able to run in parallel and gradually migrate transactions to the new system.
The results
The TAPIR project started in 2014. Millions of accounts and cardholders are dependent on the absolute certainty that the retail payments go through, every second of the day and without a second of downtime, so the timing was critical. In 2016, the first transactions were migrated, and by 2017, all transaction flows were running through the new system:
- Rabobank is now able to add schemes and select both national and international central infrastructures
- Additional business case benefits include increased speed to market, standardisation, ability to move to Linux and public cloud, and more
Credit card issuing
The challenge
Rabobank had a relatively small credit card portfolio and outsourced that business to an external party. This contract was ending, so a replacement solution had to be found within one year. Bringing it back in-house was the best option because it offered:
- Considerable cost savings using the ACI packaged solution
- Easier access to card transactions and controls for credit cardholders
- Risk-based analysis using integral customer data
- Fraud management and dispute management
- The introduction of tokenisation products for credit and debit
- Development of new credit card products and features
- A low-limit credit card with the ability to increase the spending limit directly out of the current account
In addition to these benefits, Rabobank wanted to replace the Maestro debit card with Mastercard and Visa debit cards due to higher acceptance rates worldwide. This requires a credit card management and transaction processing setup – the perfect stepstone to moving Rabobank closer to its desired goals.
The solution
Rabobank only offers charge cards that are paid off fully by the end of the month. The decision was made not to move the full credit card account over, but to issue a brand-new account and a new credit card. This would have an impact on their clients but was believed to be an acceptable advantage to end users.
The results
Given the very limited timelines for implementation and replacement, the project was a complete success:
- The process was transparent to the end user, except for the replacement of the physical card
- The modernisation generated major savings for Rabobank’s credit card processing costs
- Rabobank created a direct connection with Mastercard to reduce the processing cost per transaction, especially cross-border transactions
Debit card issuing
The challenge
The credit card project allowed Rabobank to move into the final phase: replacing its debit card portfolio. They had an in-house management system, but it blocked innovation. The primary account number debit account (PANDA) was created to replace the Maestro debit card solution. Moving from Dutch PAN to the real PAN would prepare Rabobank for the increasing demand from its consumers. This project focused on specific product settings that needed to be implemented around debit card payments versus new technology being introduced.
The solution
Rabobank expanded the existing ACI Issuing solution deployed to activate debit card management capabilities and move from an in-house proprietary solution. The bank also chose to use:
- Any payment type support
- Optimised consumer experience
- Parameters-based configuration
- Consumer payments flexibility
- Advanced analytics and reporting
- Loyalty and alternative financing
- Enhanced customer segmentation
The results
In 2021, the PANDA project began to replace all Maestro debit cards with Mastercard and Visa debit cards. Rabobank’s next goal is to offer new debit card solutions and expand into other digital payment possibilities by early 2023.
Key takeaways
As a result of this modernisation journey, Rabobank will achieve several benefits from its new environment:
- Improved synergies and reduced costs
- Ability to create new products and services within weeks or months versus years, improving their time to market
- New initiatives with agility around merchant tokenisation, like the Mastercard Digital Enablement Services (MDES) for merchants (M4M) and eCommerce payments like Click-to-Pay.
Rabobank continues to demonstrate leadership in the Dutch card payments market and is at the forefront of international developments on a global scale.
Consistently meet consumer expectations with the right issuing solution by reading:
The Five Must-Haves in a Modern Issuing Solution
