Shopper making a credit card payment

Migrating Payment Systems and Moving to the Cloud on a Tight Timeline

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Challenge

The payments technology group at our Fortune 500 fashion retail client manages the technology that facilitates customer payments for orders placed online via the company’s website and mobile apps. The team was facing a hard deadline to migrate credit card payments to their third-party processor’s new technical communication standard. The company also wanted to take this opportunity to simultaneously upgrade the entire payments platform.

The existing monolithic, on-premises structure was burdened by antiquated and heavily customized software which required heavy maintenance by the technology team and prohibited installation of critical security upgrades. Stored procedures were not easily maintainable, deployments were entirely manual, and message routing through a shared communication gateway created a significant amount of processing overhead. Analytics had always been a challenge for this team, as the existing system lacked reliable and easily consumable performance metrics.

Modernizing the architecture could boost the company’s scalability for high-volume sales events, reduce processing fees, eliminate software license fees, increase security, and enable monitoring and analytics which would open up new opportunities for fraud detection and prevention. Missing the deadline for the new communication standard would be disastrous to the company, impacting customer sales, incurring fees, and creating processing delays prohibitive to the business. The team spent most of their time managing operations on the existing system and the proposed technology was new and unfamiliar. This created a pressing need for additional resources who could generate momentum in delivering the modernization project.

The client had no previous experience working with the Kalles Group on payments engineering projects, but because of a long, trusted relationship and a history of supplying the right on-demand expertise for platform modernization projects, the Kalles Group was our client’s first choice for a partner to help them tackle this challenge.

Approach

The biggest challenge the team faced would be the extent of the technological complexity being implemented. There were many moving parts to be tackled, and meticulous coordination across various interconnected systems, engineering teams, platform teams, and third parties would be crucial to project success. Additionally, the migration was dependent on the database vendor releasing required features on time.

Experienced Kalles Group team members knew what to anticipate and worked to ensure fail-safe measures were in place. To mitigate the database risk, the Kalles Group team configured a shadow instance with a competing database vendor in case the original vendor failed to meet mission critical feature-release obligations. The Kalles Group also engaged with engineering teams, coordinated integration testing, and provided guidance and support where needed.

Solution

The new architecture would provide the functionality and scalability the organization needed. The Kalles Group worked closely with the engineering team to facilitate transition to the cloud, providing a streamlined architecture and the latest, most secure software versions. Much of the batch processing and cumbersome stored procedures would be replaced with near real-time processing, and foundations would be in place to migrate other processes over time. The solution would streamline slow and unreliable processes, reduce punitive software costs, and eliminate resource-intensive maintenance.

The team worked together to design and build microservices, database schema, messaging protocols and layouts, security, deployment automation, and metrics and analytics. Risk mitigation efforts earned their value when the original database vendor couldn’t meet its obligations and the Kalles Group’s shadow database solution helped the client quickly switch vendors and still meet the deadline.

Initiatives such as AMEX Enhanced Authorization, improved handling of orders with multiple shipments to reference the original authorization, and improved handling of online returns delivered a projected $14M annual reduction in fees and chargebacks.

Results

The new software eliminates security and fraud risks that the company had faced while relying on the old software that couldn’t be upgraded due to heavy customization. The client’s technology team is now freed from the support drag required by the old system and can now focus on future system expansions and improvements.

After tuning, the system has a proven capacity to process 50+ transactions per second with no significant latency increase, and the company is well-positioned to handle high-volume sales events in the future. With telemetry and analytics enabled, the new system provides a dashboard that shows at a glance how the payments system is performing, and alerting has been significantly improved.

The new platform enabled delivery of long-awaited initiatives that streamline time- and labor-intensive processes, reduce fraud risk, and improve overall customer experience. One initiative, the new CVV reduction feature, expedites transactions by capturing and validating the CVV the first time a card is used, so it’s not required when a registered customer makes subsequent purchases with a saved card. This initiative alone resulted in a $60M demand lift with no fraud increase. Implementing additional initiatives such as AMEX Enhanced Authorization, improved handling of orders with multiple shipments to reference the original authorization, and improved handling of online returns add up to a projected $14M annual reduction in fees and chargebacks.

Throughout the engagement, in addition to up-skilling the incumbent engineering team, the Kalles Group helped bridge three senior leadership transitions in the engineering organization, providing a valuable element of stability during a time of critical change.

The new platform was launched in time to meet the migration deadline imposed by our client’s third-party processor. The Kalles Group was asked to remain post-launch to assist with production support and drive new initiatives and features, enabling further optimization and analytics.