For 20 years Barclaycard has used BASE24 software to manage point-of-sale terminals, route and switch transactions.
Colin Hudson oversees a merchant acquiring system that exemplifies the standard of “every second, every day” service. As Head of Change Delivery for Barclaycard Corporate, he is responsible for round-the-clock credit card authorizations that reach 131,000 merchant locations and 12 million cardholders.
“Barclays’ customers rely on our technology to carry out their business,” Colin said. “We can’t miss a beat or our customers suffer.”
Colin enjoys the nonstop challenge. “IT operations are the heart and lungs of this business,” he said. “We can’t exist for any length of time without an authorization service. We could survive for a time without acquiring any new customers, but without operations converting transactions and customer interactions into value, we wouldn’t be in business.”
By any measure, the Heart-and-lungs operation at Barclaycard is healthy. For nearly 20 years, the world’s 13th largest bank has used BASE24 software to manage point-of-sale terminals, route on-us transactions to their host for authorization, and switch not-on-us transactions to other issuers. In 2003 they processed 1.8 billion transactions on BASE24, more than 8 million of them during a single day in December. Ten years earlier, their peak day totaled 1 million transactions
Availability is key
Barclaycard does all this without missing a beat. “We maintain a mirrored copy of our primary site and replicate data in real-time,” Colin said. “In the event of an outage, we can instantly switch over to our back-up system and resume authorization service in less than a minute. Once a quarter, we switch for a weekend to make sure the back-up site is always ready and always works.” That kind of preparation won the attention of the International Tandem Users Group (ITUG), which each year awards one Nonstop Himalaya user for their high availability and recovery procedures. Barclaycard won the award in 2002. Derek Donnan, senior management consultant to Colin, said, “Our availability during core hours was 100 percent. It was 99.996 percent when we factored in planned outages during a 24-hour period. Today we’re down for just a few minutes a few times each year to implement changes or add communications ports.”
Donnan noted that when Barclaycard won the ITUG award, they had just completed a migration from custom ACI software to mainstream BASE24, upgraded their servers from K to S series, consolidated three data centers to two, and did it all with no impact to merchants or transactions. Managing change is Colin’s forte. He oversees a team of project managers, business analysts and project support officers responsible for delivering strategic IT change across Barclaycard Corporate. In addition to implementing technology, Colin has a hand in choosing applications to ensure they’re fit for purpose within the business unit.
The performance bar has always been high at Barclays. In 1959 they became the first UK bank to order a computer. In 1966 they issued the first UK credit card. Their Visa-branded card became so popular that consumers in England today still refer to Visa cards as Barclaycards. In 1987 the bank issued the first UK debit card.
As the largest card issuer in Europe, Barclays will make a huge investment over the next few years as UK banks complete the migration of all their debit and credit cards from magnetic stripe to chip. The government-backed project is aimed at reducing plastic card fraud, which is projected to reach more than 800 million pounds Sterling by 2005. Colin explained, “We’re changing the entire face of the card industry, and that hasn’t happened in 20 years. It’s a huge project, and the scale of our investment is commensurate with that.”
Derek added, “Every payment card in the UK will be reissued, every terminal upgraded, and every merchant location with a cash point will be changed.” A trial in the city of Northampton, where Barclaycard is headquartered, provided a learning opportunity for card issuers, retailers, equipment suppliers and consumers. ACI participated with an enhanced version of BASE24.
“The biggest lesson we learned during the pilot was about the time and care needed to educate merchants,” Colin said. “We need to make sure they understand what they’re getting and can put it into practice. As a result, we’ve changed our procedures to provide more personal guidance to help merchants use the new technology.”
At the same time they evolve payment cards to chip, Barclaycard is updating a service that allows consumers to top up prepaid mobile phone accounts. “Our service has been available for two years,” Derek said. “It’s outsourced now, but we’re moving to an ACI solution since we have the infrastructure and skills to support it in-house. We want to leverage that to offer more products at a lower cost.”
Derek explained how the system works. “We have online real-time interfaces to all six telcos that offer mobile top-up. We’ve deployed software so that in addition to swiping credit cards at our merchant locations, you can swipe your mobile phone card, which identifies the company providing your mobile service. You then enter the amount of top-up you want, give your money to the cashier, and the transaction goes off to the mobile provider, who authorizes the transaction and credits the phone with the funds in just a few minutes. There are no paper vouchers and no codes to key in.” Merchants will have the option of offering vouchers if their terminals are equipped to print them.
“One of the big value propositions around e-top-up is the ability to be rid of traditional phone card inventory and handling problems, card manufacturing, shipping and theft,” Derek said. “We have close to 10,000 outlets taking part in the service. Some large merchants operate their own cash point service but want to send us authorizations for topup, so we’re developing that capability to integrate into their terminals. Basically we will take the transaction out of their EPOS system and process it.”
Leveraging a partnership
The move to ACI’s top-up solution is part of a broader strategy to leverage partners. “We have a buy-not-build philosophy,” Colin said. “Where it’s key to be in control of our own destiny, we buy a product and as far as possible adapt our business processes to the product that we adopt. The key is to customize only where it will add measurable value to our business. To be a world-class organization, you need one or two relationships with powerful players who can work with you as business partners and manage all the integration, rather than managing a fragmented supply chain. We’ve had a relationship with ACI for 20 years that’s been very good for both of us.
“The BASE24 product that we use is really the best,” Colin continued. “We chose it for it’s world-leading availability. That’s a very attractive benefit to large organizations.”
Indeed, Barclays helped ACI define an extended performance version of BASE24 in the late 1980s. Designed to process high volumes more efficiently, it helped Barclaycard meet their business needs and ultimately yielded a stronger product plan for mainstream BASE24, which Barclaycard uses today.
“We continue to look for economies of scale to help other parts of our business unit, and that may take us beyond credit card processing,” Colin said. “Our philosophy is that we have a large, powerful asset in BASE24 that is capable of doing quite a lot for the group if opportunities arise and economics make sense.”
The Head of Change Delivery naturally embraces change. “There is general agreement that we’ll see consolidation in the acquiring market,” Colin said. “International boundaries are falling, chip and PIN, the Euro – all these changes create both opportunities and threats. As a business, we have enormous potential to change the way we approach merchant acquiring by putting operations and IT at the heart of that. It’s an exciting and interesting place to be.”