Demonetisation — Are Digital Payment Providers Ready for the Paradigm Shift?

November 8th 2016 will be remembered as the date when the Indian economy took a major step towards becoming a cashless ecosystem.

PM Narendra Modi made a surprise announcement that Rs.500/- and Rs.1000/- notes would seize to be legal tenders.

This announcement had a ripple effect in the Indian market and the digital transactions per day increased by 10 folds in just one month.

According to the recent reports by the Ministry of Information Technology of India, digital transactions per day increased from 17 lakhs to a massive 63 lakhs, in case of eWallets and this is just the tip of the iceberg.

Every mode of digital transaction has experienced a dramatic surge in last one month.

The transactions using UPI increased from 3721 to 48238 per day, PoS from 50 lakhs to 98 lakhs per day and so on.

Do we have the Infrastructure for Cashless Economy?

The first requirement for a cashless society is the availability of an infrastructure that nurtures cashless transactions. India lacks in this position.

However, banks and financial institutes are upgrading their systems, to avoid any technical lagging.

Also, the data service i.e. Digital wallet provider companies have to make sure that there is no complications in completing the transactions.

In such vast interconnected infrastructure where many micro services depend on each other, even a small glitch can create a lot of issues and jeopardize user experience.

For businesses looking to become a payment provider, it’s crucial to understand these challenges.

Every service provider must continuously monitor network flow to detect suspicious behaviors, actively monitor payment gateways’ API performance, and manage logs from firewalls, routers, and security devices to red-flag and rectify DDoS attacks, malicious threats, and performance glitches.

Simplifying collection of key monitoring parameters and analyzing machine data so that operational team can gain deep visibility across full application and infrastructure stack that powers the transaction — is the need of the hour.

In the last one month, the usage trend of digital payment systems has increased.

Not only it is overwhelming for banks and other financial institutes, but it is also putting a lot of pressure on telecom companies and mobile market.

In India you can do cashless transactions via PoS machines, eWallets, USSD, UPI and soon via Aadhaar cards as well.

All these systems have to be interconnected for smoother transactions and user experience.

Such interconnecting points make the system vulnerable as well.

It is very important for the service provider to monitor the data flow between two points.

The software or hardware based vulnerabilities may cause the delay in transactions or in worse cases information leak.

The IT infrastructure which includes network devices, server, applications, payment gateway API etc. must be monitored at every point.

The regular monitoring ensures that the performance and security measures are not being compromised.

Specific guidelines for PCI DSS compliance

Until 2006, all the card companies were following different norms for security.

Then the five major card providers American Express, Discover, JCB International, MasterCard and Visa Inc. came together and formed a council to keep a check on the security of the whole payment card ecosystem.

It is mandatory for financial institutes to comply with the security standards of Payment Card Industry Data Security Standard also known as PCI DSS.

In the list of 12 main requirements of PCI DSS; one states that the financial institution has to track and monitor all access to network resources and cardholder data.

Without proper network flow management and log management, it is next to impossible to keep a track of that much data.

Monitoring the health of services and network traffic behavior helps in determining whether the security guidelines are in compliance or not.

The amount of data that flows between service providers, merchants and banks is massive and continuous intelligent monitoring will ensure its safety.

Importance of end-to-end monitoring to avoid technical glitches

There are more than 700 KPIs that are directly or indirectly related to financial transactions.

From transactions per branch to total deposits per branch, and debit card transactions to NEFT transactions, every single KPI provides crucial data.

The monitoring of key performance indicators or KPIs helps in determining the main mode of network flow.

These KPIs can change from time to time depending on the requirement of the customer.

For example, the use of eWallets has increased in higher percentage in comparison to the use of USSD based transactions.

Such analytic points help the network administrator to put in more resources for the heavily surged service.

It also helps in determining the cause of slow transaction completion speed and point out the faulty ports.

The administrator can route the traffic to other ports while the hardware or software glitch gets rectified.

When you swipe a card at any shop, the swipe machine registers the encrypted data and sends it to the server.

The API calls the information from the card issuer’s servers and check for its authenticity and validity.

Once validated by the bank, payment goes through. There are a lot of steps involved in digital payment processing thus continuous monitoring is very important.