How Kabira Is Using Beefier Memory to Drive Big Changes in Processing

A little-known maker of switching software with very well-known clients is counting on a major upgrade in memory horsepower it is helping to pioneer to drive down transaction-processing costs while dramatically boosting the amount of data networks can handle. San Rafael, Calif.-based Kabira Technologies Inc. may not have the immediate name recognition of Visa International, Bank of America Corp., and E*Trade Financial Corp.?all of which are Kabira customers?but it is behind what could be a revolutionary improvement in the way payment networks process transactions and related data. At the heart of this change lies a trend in memory chips towards a doubling in capacity, from 32 to 64 bits, that opens up dramatic new possibilities for transaction processing, from faster tender times to dramatically lower costs for micropayments. “As processing chips go from 16 to 32 bits and then from 32 to 64 bits, the cost of memory becomes cheaper and then, combined with the ubiquity of broadband cable, it becomes easier to process more transactions faster and at a lower cost than ever before,” says Paul Sutton, chief executive of Kabira, which upgraded to 64-bit processing last fall. Besides the speed of authorization, one of the biggest deterrents to getting card payments accepted at fast-food outlets, vending machines, and the like has been the high cost of interchange and card processing. “As technology moves to give greater speeds and power in processing payment transactions increases, the cost of handling each transaction to the financial institutions and other parties will go down,” says Sutton. “If we can increase the speed of the input by a factor of ten and reduce the cost of processing a transaction so that it is 1/10th of what it is today, you can justify card payment for just about any transaction regardless of its size.” Even more important than reducing the cost of processing a transaction, Sutton says, is that a significant reduction in fraud as a result of better transaction information should translate into lower interchange costs in the future. That should make card payments more affordable in those applications where the cost has been too high, such as micropayments. On the horizon, Sutton says, could be a powerful application where cell phones with the ability to take and transmit a photo could be used to provide the ultimate in authentication at ATMs. Using such devices, customers could take photos of themselves at ATMs and then send that information to the payment switch, he predicts. Rather than use a PIN or even biometric data to identify the ATM user, the switch would pass on an actual photo of the ATM user to the card issuer for authorization. That photo could be matched against one kept on file. If the issuer has some uncertainty it could transmit the photo to the authorized cardholder for verification.