RS2, a global payments software and managed service provider has announced a tie-up with Quatrro Processing Services (Quatrro), a global FinTech company that specializes in full-service payment processing, to offer an end-to-end hosted credit card processing and acquiring technology platform for banks and financial institutions in India. Let’s Talk Payments interviewed Mr. Radi Abd El Haj, CEO & Executive Director of RS2, to unlock the strategy behind this move.
In the picture: Radi Abd El Haj, CEO & Executive Director, RS2
Mr. El Haj joined RS2 in 1997 as a Project Manager for Tier 1 European banks where he was responsible for the implementation of corporate card programs. He was later promoted to Customer Relationship Manager in 2002 and Head of Sales & Implementation in 2004.
In the cards and payments industry, Mr. El Haj specializes in the areas of Issuing, Acquiring, Clearing and Settlement, E-Commerce and Accounting. His international experience, professional contacts in various regions and working closely with the Technical and Product Development Units within the Group, have contributed in providing RS2’s clients with a global compliant platform. Mr. El Haj was appointed Chief Executive Office in January 2012.
Here are the excerpts from the interview conducted by Nidhi Prabhu, VP of Research at LTP:
Nidhi Prabhu: You have a channel-agnostic platform. From your insights into the markets, where do you see the card business heading?
Radi Abd El Haj: I don't think the card business will vanish for the next couple of years. Everyone is talking about mobile payments and other alternative payments, etc., but the card is still a very convenient vehicle to perform transactions; it is also very secure. More than that, I think card usage is prevalent almost all over the world, so you can use them anywhere. I believe mobile payments will really pick up when you can leave your house and leave your wallet at home, only relying on mobile payments. You will be able to check out of a hotel, you will be able to pay at restaurants… You will be able to pay for everything! In order to achieve that, we need to have a unified infrastructure around the globe. We're not there yet, but still, mobile payments are increasing every year. I think it's becoming a part of our lives for certain transactions, especially when it comes to micropayments and small-value transactions.
From our point of view as a technology provider, we don't really care that much about the source of the transaction. We have always been agnostic when it comes to payment processing. The market and the industry are very dynamic with rapid changes. So you need to cater for these types of changes to survive in the market. You will lose the market if you have to constantly modify your platform to meet the demands of the industry. You will be investing a lot in putting your platform in the right place, which will become costly by the end of the day. Today, the customer not only expects to have a comfortable way of doing transactions but also needs the cost of the transaction to be competitive. Everyone is trying to streamline operations and make the platform very flexible in order to meet these types of requirements.
Nidhi: Do you find it very challenging to make your platform compliant with the regulations across geographies?
Radi: You have two ways: you either do it yourself or you work with partners who have the experience and have done it before; so I don't think that’s an issue. The most important thing really is to make sure that you are always updating your platform to meet regulatory requirements.
Nidhi: What are the geographies you are looking at for expansion?
Radi: At the moment, our focus is on the US and Asia-Pacific like the Philippines, Indonesia, and Vietnam. We are very well-established in Europe. We are now targeting different markets with different approaches. Our strategy in the United States, for example, is to go there by ourselves because right now, we have the right people on board who can open the market for us. In India, we will have cooperation and a joint venture with Quatrro because they are well-established and knowledgeable in the market. We came up with the technology, but they are the ones who run it and operate with the customers because they speak the same language. So in certain markets, we go by ourselves; in other markets, we go with a partner; and in some markets, we consider an acquisition.
If you look at the United States, there are a lot of newcomers who are trying to change their business model in order to participate more in the game, so that's opened up a lot of opportunities for us. The closed loop aspect where we can acquire the transaction and issue the card as well for the same retailer or same merchant – that’s another opportunity in certain countries in which you usually have the issuing side with one entity and the acquiring as another entity. So you can come and combine all that together, and more importantly, you can help certain players in domestic markets take their services international. Through our relationships with different friends in different regions, we are able to consolidate the business for our clients by setting them up once in the system, processing their transactions, transacting with local banks in order to make their clearing and settlement, and consolidating their reporting so they will know exactly what is going on in the implementation of their business internationally. This can all be done in one system instead of working with multiple parties to get their transaction processed, which could create a timing issue. For example, if you have the same merchants transacting in Europe, Asia-Pacific and the US, the time zone differences force you to wait for a day or two to get information about the transaction. In our case, we are able to consolidate all that; they have real-time online access to the information, which is very important.
Nidhi: Which of these geographies are you looking at as high-growth areas?
Radi: I am seeing a lot of it in India, of course. It’s a major market for us. I would predict that at least 25% to 30% of our global growth would be coming from India. The volume is there. The government helped a lot in the transformation of the business. So, from the issuing side, you have a lot of card complications, but the points of acceptance are much below what you would expect for a market like India. That is why we say that the potential for us to be here is huge.
Through the partnership with Quatrro and our experience with other customers in the local market there, we will have great success. Especially with the service we are offering, the flexibility of the platform, the type of functionalities which we support – all that will definitely contribute to our success in the Indian market, and that’s for both issuing and acquiring. Also, you have a lot of companies coming up on the lending side that we can offer our products and services to in order to help them grow their business. We will be offering cards issuance, issuing of loans, managing the funding for the wallets, acquiring of transactions from all, etc. Through our platform, you will be able to acquire transactions through all the channels for the bank, and come with a consolidated statement to the acquirer or to the bank.
Nidhi: What got you first interested in India as a market?
Radi: India was always a great market for us to enter, but it was very difficult to try to do things by yourself from scratch. That’s why, for us, from the strategic point of view, it was evident that we needed to partner with a very well-established company in the market with a good reputation along with being very well resourced. The management and the expertise in the market and the business also help a lot; this helps us make decisions as a company coming from Europe to enter the Indian market. We also saw the success of customers who came to the market using our platform.
Nidhi: Why Quatrro?
Radi: You know, the ingredients need to be in place before anything else, so I think working with Quatrro is a great asset for us. As I said in regards to their management, they are very knowledgeable in our business and have a great reputation in the market. Again, when you combine the things that we are coming with and the things that Quatrro is coming with in terms of technology, platform, and support, etc., it is clearly the right partner. Also, from the size point of view, it is absolutely the right company to work for. They have proven to be a trustable partner as well. In our business, trust is really a very important element, and we have a lot of trust between each other.
Nidhi: Do the technology pieces fit together? Because there are two different entities and technology platforms.
Radi: Yes, absolutely. They have things which we don't and we have things which they don't. That is why we are complementing each other to offer the entire spectrum to the customer. We are coming with a very robust and flexible performance system for issuing, acquiring, clearing and settlement. They are coming with the data analytics for Big Data with the monitoring of risk and fraud, which is very important in our business. By putting both together, I think we will come up with a complete solution for the client, and that is what we would like to achieve by the end of the day. It's to really offer the client everything related to their business so that they can focus more on servicing their customers and doing marketing & sales for their product.
We don't need to have a customer coming to us with millions of transactions, millions of cards to be serviced; we can work with a startup in order to increase their business. And that’s coming from the flexibility of the platform; we are able to handle this type of customer in a very cost-effective manner so their charge will not be that high. On the other hand, you help in growing their business as well. Also, the speed; these types of companies would like to come into the market in order to win market shares when they start the business. That’s where we can come and help because we don't have a legacy system.
I think what we would like to achieve in India is to have a good market share together with Quatrro, but more importantly, to bring a seamless experience when it comes to payments and conducting a transaction. We also want to try to work on the e-commerce business as well, which is a growing area. Especially considering the mobile penetration in India, I think it is a huge market as well. We can bring a lot of experience from other markets in order to make that business comfortable, secure and more profitable than it is today.
Nidhi: How important do you think it is to have 3D secure?
Radi: The challenge with 3D Secure is that it does not work each time. It needs to work first in order to make the customer happy. If I'm a consumer trying to do a transaction and it's not going through because the 3D Secure System is not working, it’s going to be annoying. It’s also annoying on the acquiring side because I am losing business as a result of my transaction not getting through. So sometimes, people just choose not to use 3D Secure just to let a transaction go. Certain transactions need to have 3D Secure, while others don’t. So the flexibility or a hybrid should be there. But ideally, we would be able to use 3D Secure all the time.
Nidhi: There is a vocal segment of the market which believes that India will just skip the entire card growth phase and just shift to mobile. Do you see that happening? If yes, then would this be happening in the short-term future or somewhere in the long run?
Radi: I think within three to five years, you will see that there is a huge shift into mobile – simply because everyone has it and is using it. If certain banks are aggressive enough to utilize the mobile as a paying device – and also as an acceptance device at the merchant site – it is extremely easy to deploy the service at a very, very small merchant. It can be a kiosk or someone on the street; because he has the device, he utilizes it for other things.
Nidhi: Is it easier to acquire merchants through mobile-based solutions?
Radi: Absolutely, it’s much, much easier because you need to consider various aspects around it. Apart from the cost of the device (of a POS to be implemented at the merchant), you have issues with the communication. You have issues with the merchants themselves because they are paying a high commission, so they don’t want to use the device; they just tell you to give them cash. So, if you are coming with a solution which is the mobile, it’s already owned by the merchant. You're just using it as an infrastructure in order to perform a transaction. The merchant will be able to use it and you need to make sure that they aren’t being charged a high amount to perform that transaction. You do need to give the merchant certain incentives, like cashback or reduced commission linked to a certain number of transactions. So you need to do a lot on the merchant side and incentivize them to use the service.
Nidhi: Do you think it's possible to bring down the cost to the merchant by a substantially by using the mobile as an acquisition device?
Radi: I think so, yes.
Nidhi: Thank you so much for your time.
Radi: You are welcome.
About Quatrro Processing Services:
Quatrro Processing Services (QPS) is a leading payment processing and FinTech services provider to banks, financial institutions, prepaid issuers, wallet companies, merchants and payment gateways worldwide. The company’s core team of over 1000 seasoned associates consists of payments/cards transaction processing analysts, risk management professionals and technology experts with a track record of providing card processing and transaction processing services in USA, India, the Middle East and Southeast Asia. QPS’ payment technologies offer card management systems with an integrated switch that supports issuing (credit, debit, prepaid, forex prepaid and virtual prepaid), acquiring, mobile POS, ATM driving and payment gateways using one platform and interface.
QPS payment solutions are built based on expertise in payment programs, product development, payment processing technology, loyalty & rewards solutions, payment security, consulting, and information services. The company is uniquely positioned to offer next-generation payments processing services providing unmatched ROI to financial institutions, merchants, payment gateways, processors, prepaid issuers, wallet companies and program managers.
For more information, please visit www.quatrroprocessing.com.
RS2 is one of the leading providers of card management systems (CMS) and merchant management systems in the world. RS2 Smart Processing provides dedicated managed services to customers in a variety of business models to suit the largest to the smallest payments organization. With offices around the world, RS2 supports over 250 clients in more than 35 different countries, processing thousands of transactions per second in every major currency supporting all aspects of the card business. An end-to-end, full solution including: card issuance, merchant acquiring, clearing, settlement, transaction switching & routing, authorization, call center customer service – across all channels from mobile and e-commerce through to cardholder-present EMV chip-and-PIN, and ATMs.
RS2 is fully committed to the highest industry standards and comply with the latest standards of data encryption & data masking and are fully PA-DSS certified.