New Super Switch Lets Visa Handle Transaction Growth, Diversity

Visa USA, which on Wednesday announced it has completed a massive, five-year project to overhaul its authorization platform, says the new system will allow the network to handle expected jumps in both the volume and diversity of electronic transactions. The overhaul, which its chief architect, John Partridge, calls “the single largest re-engineering project ever undertaken by Visa,” will also consolidate processing for all credit, debit, prepaid, and ATM volume in one switch and gives the network the ability to gather expanded data sets in the course of an authorization message's 1.4-second round trip. “It's arguably the most powerful [transaction-processing] platform in the world,” says Mike Dreyer, executive vice president for technology solutions at Inovant LLC, Visa's technology arm. Partridge is Inovant's president and chief executive. As part of its announcement, Visa also said it has now moved all applications to a huge new data center it opened late last year in Colorado, where it is now for the first time in its history running redundant authorization engines in one center. All told, Visa now has authorization platforms running in four data centers worldwide. A key factor behind the new platform, called the Visa Integrated Processing solution, is the expected growth in volume Visa sees coming from what are now paper-based transactions. The company estimates U.S. consumers and businesses spend $21 trillion annually on cash and checks. “Our opportunity for growth is tremendous,” says Partridge. “We needed a global platform that's ready for that opportunity.” Partridge also points to the need to handle a broader diversity of transactions stemming from such sources as mobile phones and cards linked to health care programs, government benefits, and mass-transit systems. “The payment ecosystem is expanding and growing more complex,” he says. As things stand, Visa is authorizing 35 billion transactions annually, a volume growing at a rate of 15% to 20% a year, Partridge estimates. Settlement volume is $2.4 trillion. Part of that complexity comes from loyalty-marketing programs merchants are increasingly using. Partridge says the new platform supports so-called account-level processing, or processing of data related to individual accounts, a service Visa introduced last year (Digital Transactions News, June 14, 2005). With its new engine, the network can now collect pertinent frequency data and other rewards information from separate servers and deliver it to the point of sale as part of the authorization message with no slowdown in round-trip time, Partridge says. This shift to what Visa calls real-time processing will have implications for a broad range of transaction types now that Visa is in the process of moving prepaid and ATM traffic onto its new platform. For example, Partridge says, the network will be able to generate real-time risk scores for ATM transactions. Partridge refuses to say how much the new authorization engine cost Visa. “We do invest annually hundreds of million of dollars,” he says. “We did it a piece of code at a time.”