By Naganand Jagadeesh
If Sisyphus were around today, I'd know exactly where to find him. He'd be toiling away in payments EMV (Europay, Mastercard and Visa) certifications. Instead of rolling his boulder up the mountain, watching it roll back down, and repeating the deed forever; he would be seeking certifications and re-certifications for his company's solutions, again and again, ad infinitum.
The business of certifications is an unquestionably necessary and inevitable burden on any enterprise in the digital payments ecosystem. Device makers, software providers, merchants, service providers, gateways and processors are obliged to sink massive loads of IT talent, time and effort into certifications before they can go to market. Acknowledging that certifications are essential for ensuring a product's security, interoperability and functionality, how do we get to a happy medium between necessity and cost?
I asked the operations head of a company with daily transaction volume in the millions to estimate his annual certification expense. "I have no idea – it is all over the place," he replied. "We've tried to capture it, but it is so fragmented, and has to be, with different scripts and processes for every certification we seek or grant. And it's unpredictable. What are you going to do when a test fails, or you're not ready for your short window in the testing queue? You're going to staff up on consultants to get it done fast. I estimate we'll do about 125 to 150 certifications this year, but I have no idea how much they will cost us."
Nor is relief on the horizon. EMV implementations are lagging, creating chaos. The digital revolution is ripe with opportunity. With new ways to pay, legacy providers and nimble startups are rapidly innovating. Consumers love the convenience of mobile wallets and other payment innovations. Each one entails more certifications; each certification sought entails a growing number of granular use cases, each of which must pass. It's pass/fail – no grading on the curve.
A large to mid-sized merchant services company might have a churn rate of 10 to 20 certifications every month. Startups can chew up their talent and blow through their investors' money just to make it through certification.
For a business process dedicated to upholding standards, the certification process is remarkably devoid of its own standards. Big players (à la card schemes) put out massive documents that their certification seekers have to read to see if they are affected and need to recertify. Every big player can, and usually does, create its own unique process and testing script. "Send me your transactions in this format, and in this sequence, and then send me the responses you get, and I'll let you know if you pass." If you don't, it's on you to figure out if the problem is on their end, your end or elsewhere. In the meantime, you've lost your place in the queue – come back in three months and try again.
Intermediate processors also set their own certification requirements. Each has tweaked its systems to cater to the needs of its merchant portfolio, meaning more use cases to test and certify, and recertify when change occurs.
For highly regulated industries, like banking and healthcare, certifying can be even more onerous. Even after their products are successfully certified, they typically take another 90 days to move the release from staging systems into production. By that time, the next set of changes has arrived, and they need to restart the certification process again. Like Charlie Brown and the football, they never quite get to kick it.
Considering these Groundhog Day working conditions, is it any wonder that there's high turnover in certifications? That talented IT workers may choose to seek a different career path? That the constant churn means your company will never be able to improve the quality or efficiency of its certification process?
Clearly, certifications are ripe for a better way, one that leads to excellence and cost-effectiveness in this vital if onerous discipline – a utility or center of excellence.
What does a great utility do? It offers a service essential to many parties. It hires top-level engineers skilled in that particular service. By performing the same service for many clients, it develops a higher level of expertise than its users can do separately. It enables its users to negotiate and thereby predict their costs. It spreads the costs across multiple users to the benefit of all. It can operate on its client's site or remotely.
It creates excellence in two key ways. It constantly improves, raising its own standards and even establishing new standards for its partners. It makes a front-office job out of what had been unesteemed back-office work – a place where talented IT workers know they are their company's revenue producers.
If the growing demand for more and increasingly granular certifications threatens to hinder your innovation and other priorities, a certifications utility or center of excellence may be your solution.
Naganand Jagadeesh is Vice President, Payment and Loyalty Solutions, of ThoughtFocus. He can be reached at email@example.com. In 2018, ThoughtFocus plans to perform primary research on EMV certification volumes and costs. If you would like to participate in the research and receive its results, contact firstname.lastname@example.org.
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