If the slightest glitch occurs at a company like NETS,
there's no hiding from the effects: payment might not
go through at a retailer, or an ATM machine might not
show the correct account balance, such is the importance
of the company's financial network.
Thankfully, such errors are kept so infrequent that
many consumers do not even encounter them in their everyday
transactions at retailers, ATM machines and over newer
forms of financial transactions like with the mobile
phone or Internet.
If NETS is a factory for processing these transactions,
then it has to be super-efficient in the same way a
factory makes, say, cars, TVs or washing machines.
With the right systems and practice in place, NETS
sees less than 1.5 errors for every one million transactions
(or 99.9999% efficiency). That's even better than the
strict standard set by Six Sigma, the popular management
strategy, which expects about 3.4 errors every million
transactions (or 99.9997% efficiency).
Being accurate is one thing; being fast is another.
At peak, NETS handles 600 to 700 financial transactions
a second, whether this is via a retailer, bank, ATM
machine or offline modes like ERP (electronic road pricing)
gantries or stored-value CashCards.
This huge capacity ensures that CashCard transactions
are almost instantaneous, while users are not kept waiting
when they pay for an item at a shopping centre or withdraw
cash at an ATM machine.
At the same time, consumers are demanding flexibility
in payment. Besides swiping or flashing a card at the
usual POS (point-of-sales) terminals at retailers, the
tech-savvy are increasingly demanding new channels of
payment, say, on the phone or on the Internet.
Satisfying the demands of all these activities is just
another day at NETS, where the key is in having the
right technologies.
The payment processor, which has seen annual transactions
go up from 300 million three years ago to 500 million
now, has set about using technology to maximise utility
to consumers as well as give it an edge in terms of
business agility.
The technology strategy has two main thrusts:
1) to serve customers better
2) to ensure cost competitiveness at NETS
1.
Serving the customer
a. ensuring "fast and accurate" service
To ensure that customers are always served quickly and
accurately, NETS has extensive DR (disaster recovery)
plans in place to enable transactions to be smoothly
carried out at all times.
While NETS transactions at centrally carried out at
its Tiong Bahru headquarters, it has DR servers in place
in a second location in Singapore to ensure failover
and fault tolerance.
Unlike many backup schemes elsewhere, the systems are
regularly run and tested to ensure that they are in
tip-top, ready-to-go condition, should they be called
up to stand in for the main system.
Every transaction is mirrored in a "hot/warm"
configuration in real time. This means the backup is
sometimes called into action, instead of being always
kept in a "cold" state of standby.
And instead of dummy tests on the backup systems, real-world
tests are run on them and some transactions are routed
through them as well. This built-in redundancy is aimed
at ensuring services are up, despite the fact the anticipated
failure of components over time.
b. enough links for peaks
To handle up to hundreds of transactions a second, especially
during peak periods like Christmas and Chinese New Year,
NETS ensures that there are enough PSTN (public switched
telephone network) lines and dialup terminals to cater
to the heavy shopping periods.
The lines number up to 600 and are meant to cater to
spikes during such busy periods. With 600 lines, up
to 600 retailer POS terminals can be dialling in at
the same time and get connected instantly.
As a result, the average response time is 4.5 seconds
at a retailer's POS (point-of-sales) terminal for a
transaction.
This is a good return for a system that is tasked with
supporting no fewer than 36,000 POS terminals out in
the market, which can dial up any time a customer walks
up to pay for an item.
c. development of future payment devices
Besides backend payment systems, NETS also endeavours
to develop new payment methods for an increasingly tech-savvy
audience.
One area of focus is the mobile phone, believed by
many to be the payment device of the future, following
successes in mobile wallet applications in countries
such as Japan.
On the mobile device, NETS has concentrated efforts
in both near-field communications (NFC) phone wallets,
as well mobile commerce that enables users to log in
via a phone and buy tickets or transfer funds.
There are two reasons for such "forward-looking"
technology investments.
Firstly, NETS believes in investing in the future,
where the gains would be much greater than in current
technology, where margins are significantly lower because
of commoditisation.
Secondly, the experience of running a new system is
crucial to getting up and running when a new wave reaches
its peak in terms of consumer adoption and technology
maturity.
With this in mind, NETS conducted several live NFC
trials with telecom partner SingTel, as well as merchants
such as Bengawan Solo Cake Shop at Ang Mo Kio hub in
2008.
The trial exposed consumers and merchants to the new
technology, which enables a user to simply flash his
phone to pay for purchases. At the same time, it learnt
valuable lessons for NETS, even as it provided training
to merchants on how to handle the new payment device.
The same idea is present in another NETS effort - a
Java application that transforms phones into mobile
payment kioks and online booking systems. This application,
downloadable on most phones, will let users book cinema
tickets and even transfer funds from their bank accounts,
on the small screen of their mobile devices.
As with other forms of NETS transactions, end-to-end
security is built in. Important transactions are pre-empted
by a password, and the phone only serves as a conduit
for the transactions, which are still performed remotely
at NETS' secure systems.
On top of this, if a phone is lost or misplaced, for
example, a user can simply call a NETS hotline to deactivate
the financial accounts linked to it.
2.
Efficient at the backend
As outlined above, NETS also strives to keep costs down
and beef up security by turning to technology that gives
it a competitive business edge.
a. server virtualisation
Like many organisations looking for nimbleness in its
IT infrastructure, NETS has turned to virtualisation
technology.
By running tasks on "virtual" servers that
maximise the use of its server hardware, the company
is able to maximise its investments in IT. This compares
favourably to buying dedicated server computers to handle
specific tasks, which leaves them idling at times when
there are no workloads.
b. thin clients
The company also employs Sun Microsystems thin clients
in its corporate offices at Tiong Bahru to maximise
efficiency.
The centralisation of the infrastructure has brought
several benefits over a network of "fat client"
PCs that have been the mainstay of many corporations
until recently.
In terms of security, thin clients prevent unauthorised
users from plugging in an USB drive and simply copying
data over to an unsecure location. Those who require
USB access can be given access on a case-by-case basis.
Running Windows and Lotus Notes, the workstations are
regularly patched - centrally - to prevent any potential
loopholes from being exploited by would-be attackers.
Patching centrally - instead of pushing the patches
to each individual user's desktop or laptop - is more
efficient and interferes less with daily operations.
Finally, the thin clients also enable staff to "hot-desk".
A corporate network engineered to support the thin clients
lets them simply insert an access card and have instant
access to their desktop applications on any available
machine.
This is especially useful to the call centre, where
staff on different shifts can log in on the same hardware
and run their own individual applications.
c. to provide security
After each transaction is processed, NETS carries out
a settlement process. For example, for a transaction
at a retailer, it needs to tell the bank to take the
amount to pay a merchant where the purchase is made
by a cardholder.
Then, NETS has to compute the service fee involved
and collect the amount for its payment processing service.
The process is made more challenging by the fact that
NETS has to cater for the several different channels
- be it an ATM card, phone or kioks - that a transaction
is carried out from.
This chain, though transparent to consumers, is crucial
in the entire electronic payment process, and is based
on international and open standards.
Safeguards are put in, with cryptography and secure
electronic keys, to ensure that no "middleman"
can tap into the stream of information transmitted electronically
to suss out any information. Privacy of a user's data
and the security of the transmission is of utmost importance.
Conclusion:
At a financial institution like NETS, where speed and
accuracy in processing transactions are its life blood,
technology plays a pivotal part in its everyday operations.
Besides ensuring smooth and secure transactions at
retailers, banks, ATM machines and kiosks, new technology
is being developed to offer consumers more flexibility.
This is seen in payment technologies developed for
the phone, in the form of NFC payments and a mobile
commerce application allowing for a "kiosk in a
phone" for users.
Going forward, NETS expects to fully tap on emerging
technologies both to maximise efficiency in the backend
and to offer consumers a richer experience with their
daily transactions.
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