Celent: Beating the Challenges in Payment Cards

Payment cards have a real problem. That’s what Celent says in a recent report it sent our way, and that problem is the “legacy problem.” The legacy problem, or what happens when a current system starts to age to the point where it doesn’t work the way it should, can represent loss of faith in a system or even the complete loss of a system’s user base. Solving the legacy problem can be difficult, and Celent detailed a series of ways to address this problem.

There are effectively three ways to address the legacy problem in payment cards. First, legacy systems can be replaced. Legacy systems can also be minimized, or managed. Replacing legacy systems can be done by a complete rebuilding of the current system, a complete replacing to a different product entirely, or outsourcing the product, bringing in product-as-a-service operations. Minimizing legacy systems, meanwhile, can be done by setting up a payment hub or minimizing the core overall.

Managing legacy systems offers the most potential in terms of options; users can address the connectivity layer, use gap-filling measures, optimize cost or capacity, automate the overall process, or seek interoperability among the various processes.

Some strategies, like rebuilding from scratch, have potentially large effects on both performance and innovation, but also have substantially large risks and require a lot of effort. Other approaches like seeking interoperability, have comparatively low risk and effort involved, but also have little impact on performance. There is, however, a substantial impact on overall innovation.

Not every solution works equally well, but there’s good news here too. No matter what the situation, there’s a likely potential solution. Need low risk? Moderate innovation? Excellent performance? One of the 10 options Celent presents should work here. As for what works for the payment card legacy problem, no one solution worked here. In fact, Celent offered several stories of different businesses that took different angles and ultimately solved their various legacy problems.

What the Celent study teaches above all is that different problems call for different solutions. Whether it’s addressing the