Other payment processors also are working to stay ahead of escalating transaction volumes. MasterCard International has finished a five-year, $160 million upgrade of its Banknet transaction system. As part of the upgrade, MasterCard replaced dedicated lines with a VPN, cutting costs and response times to authorize credit transactions. It switched to leasing lines from AT&T on an as-needed basis, giving the payment processor more flexibility to adjust to changes in transaction volumes, says Mike Manchisi, senior VP of computer and network operations at MasterCard. The enhanced system could let the company offer rebates in real time, giving customers incentives to use MasterCard member banks' cards.
Banknet is a peer-to-peer network that includes IBM workstations at 670 sites worldwide. It can handle peak loads that reach 18 million transaction messages an hour or 5,000 a second. The system can scale to 100 million transaction messages an hour, Manchisi says, though he doesn't anticipate approaching that level.
Banks, too, are dealing with increased demand for E-payments. Consumer use of services such as direct payroll deposits and phone and Internet bill payments is at an all-time high. Forty-one percent made bill payments online, compared with 26% two years ago, according to ABA and Dove Consulting.
Business customers also prefer more automated-payment services. Though checks remain the method of choice for recurring bill payments, businesses increasingly want their banks to convert these paper payments to electronic transactions. Nearly 60 million such conversions were processed in the third quarter, almost twice the number processed in the previous quarter, according to the Electronic Payments Association.
Wells Fargo, a leader in automated payments, late last month processed its billionth transaction this year, an all-time high in a single year. The bank, which has $394 billion in assets, is upgrading its homegrown automated payments-processing system, which was developed by Norwest Bank, a large Midwestern bank that merged with Wells Fargo five years ago. The upgrade to the mainframe system, which uses IBM's DB2 database, is planned for early next year and will include better backup and recovery and improved load balancing among the bank's data centers around the country.
