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A GUIDE TO SUCCESSFUL

PAYMENT-SWITCH MIGRATIONS

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Contents

Introduction ................................................................................................................ 3

The Hunt for a New Switch .......................................................................................... 3

Migration Approach .................................................................................................... 4

Table 1. The Business Impact of the Switch Migration Decision ............................... 4

Factors Influencing Migration Strategy Selection .......................................................... 5

The Phased Migration Approach .................................................................................... 6

Table 2. Phased Approach Advantages/Disadvantages ............................................. 6

The Big-Bang Migration Approach .................................................................................. 7

Table 3. Big Bang Approach Advantages/Disadvantages ........................................... 7

Key Migration Project Milestones ............................................................................... 8

Best Practices: An Overview ...................................................................................... 10

About Opus Consulting.............................................................................................. 11

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Introduction

It’s hard to maintain a legacy switch given the growing market demand for better payment services.

The growing popularity of online shopping -- and online banking -- is driving the demand for better

payment services, and mobile-payment technologies are further raising consumer expectations for

additional payment systems features and functionality. The ability to provide a unique and seamless

customer experience is the key goal for next-generation systems. Regulatory compliance and

regional- provider mandates are additional factors to be addressed by new payment systems. A

fiercely competitive market for acquirers also requires bank issuers and payment processors to tailor

their systems to meet business needs in a timely and cost-effective manner.

The Hunt for a New Switch

With the launch of every new payment product or function, the legacy-switch performance is

impacted by increases in transaction volume, customer demands, narrowing profit margin and

increasing manual operations. Vendors who cease support for their older products (aka product

"sunsets") also drive switch-migration decisions.

Every new payment product builds on the availability, technology, scalability and reliability of a

switch, which means it constantly requires maintenance support. There is, consequently a growing

need for a multiplatform solution, which can acquire transactions across many different channels;

manage electronic payment devices, and also perform high-volume switching, routing and

authorization services.

In retail payments, the dividing lines between card payments, mobile payments, electronic funds

transfers, and new alternative payments methods are narrowing. Providing a seamless payments

experience depends on an open and flexible switch that can deliver an integrated experience across

all these channels. Real-time processing, speed of response, and round-the clock availability are also

vital in order to meet customer expectations.

To summarize, the drivers for switch migration include:

New payment channels

More Payment types

Technology Lifecycle

Customer expectations

Increased competitions

Globalization

Compliance requirements

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Migration Approach

Once the decision to either buy an Off the Shelf (OTS) product or build a custom solution is made, an

important question remains: how will the migration be accomplished? How does the organization

choose the correct migration services provider? What confidence do we have that the provider can

complete the migration to the new switch on time and within budget?

As described in Table 1, switch migrations are crucial decisions for organizations. Systems with higher

complexity need a totally different migration approach as compared to common complex systems.

Considering the increasing functions -- and the heavier transaction load -- which a switch has to

support today, the experience of the migration-services provider must be proportionately greater to

qualify for selection.

Table 1. The Business Impact of the Switch Migration Decision

Business Area Switch Migration Avoided Switch Migration Enacted

Hardware and Software cost

No incremental implementation costs for hardware or software (maintenance costs are high, but can be budgeted/managed)

Need to spend on hardware and software licences to scale up

Business Continuity

Stability of operations and continuity of high availability

Need to realign operational activity according to migration strategy and business continuity may hamper

Revenue No growth on revenue front May achieve growth in revenue and lower maintenance costs

Functionality May have to customize alot to gain a little new functionality

Support new payment channels and functions with less development/implementation cost

Technology support

Product support "sunset" limits legacy switch improvements

Continuous technology support to new payment switch

Business Benefits No new business benefit Open new business streamlines and revenue opportunity

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The options for data- migration have changed in recent years. Migrating from an existing switch

requires careful consideration to ensure a seamless migration with minimum or no impact to ongoing

business operations. It is crucial to obtain a clear understanding of the existing business, operation

and application environment. This information is required to develop a successful migration strategy.

With proper planning, an existing switch application can be either migrated or upgraded to become

the new switch system.

Perhaps the most important decision -- one that can directly impact the success or failure of the

switch-migration project -- is whether the transition from the current platform to the new platform

should be (1) an instant switch-over, that is a 'Big Bang' (all at once) Approach, or (2) a phased

approach. The factors to be considered in making this decision follow.

Factors Influencing Migration Strategy Selection

A logical segregation of data sets based upon terminal volume helps in deciding the best switch-

migration strategy. A description of the major factors and related data sets follows.

Total Number of Terminals to be Migrated

It is crucial to obtain a clear understanding of the number of terminals to be migrated and their

operational behavior. This information is required to develop a successful migration strategy.

Total Number of Terminals by Volume, Vendor and Model/ Type

A logical segregation of terminals will play a vital role on deciding a migration strategy, this

information is an integral part of migration planning.

ATM/POS Groups

Grouping of ATM/POS can segregate your technical requirements such as keys exchange,

terminal- profile configurations, etc. The result of this grouping activity may suggest, for example,

that all branch ATMs may be migrated first to reduce the impact on business continuity.

Acquiring BINs by Volume, Vendor and Model/Type

An understanding of the institution’s operational environment leads to a successful migration,

avoiding failures that occur due to last- minute changes.

Acquiring BINs

Multiple Acquiring BINs is an indicator that the safer strategy is to migrate terminals in a phased

manner.

Merchant Turnover

Merchant turnover is a critical factor that can reduce risk and maintain business continuity during

migration.

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The Phased Migration Approach

A Phased data migration has a number of names -- iterative data migration, trickle-feed data

migration, synchronized data migration and so on. In essence, they all mean the same thing - the data

will be migrated in smaller increments until there is nothing left to move. Depending on the nature of

the data, phasing the data migration is always less of a risk to a migration project, not only from a

data migration process view, but also from a business transformation view.

Some of the actions to be taken during a phased- approach migration:

Identify deployment architecture

End-to-end planning of testing and UAT stages-

Identification of data set for various phases

Data validation and data integrity checks

Concurrent connectivity for both the platforms

Operational activity (BAU) process re-engineering for working with two end- of- day systems

Performance consideration- monitoring and measuring

Roll- back approach finalization and testing

Stakeholder approval and moving with the next- phase data

Security considerations

Certification planning

Table 2. Phased Approach Advantages/Disadvantages

Advantages Disadvantages

Less risk Longer implementation time to fully convert

Employees learn as they go – there is no dip in performance caused by the need to learn the new system

Not as focused as the Big Bang approach

More time for users to adapt to the new system A state of continuous change can sometimes be disruptive

Small details or issues can be fixed as you go Can have missing information because each module relies on info from others, so in a transitional period there may be some gaps

Skills and experience are gained with each phase which can help smooth the process as you get further along

Temporary bridges need to be made from old to new

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The Big-Bang Migration Approach

A "Big-Bang" data migration is where an entire dataset is moved from the source to the target switch

in one operation. This should typically be carried out over a weekend or planned down-time period.

Large Big Bang migration projects should be avoided if possible, but it is noted that some situations do

require the Big Bang approach. There is no absolute guarantee that, after a Big Bang migration,

everything will be working the next day when you come in and use the system. Roll-back procedures

must be in place to correct any "wrong events" that occur.

Some of the actions to be taken during a big bank migration:

Identify deployment architecture

End to end planning of testing and UAT stages

'Dry run' planning--conduct a 'dry run' of the big bang migration with a few terminals and a

roll-back option

Verification and fixing of issues identified during dry run

Planning for final go-live with all terminals

Avoid roll back unless there are multiple P1 issues

Monitoring performance of migrated switch

Addressing security and compliance need

Table 3. Big Bang Approach Advantages/Disadvantages

Advantages Disadvantages

Shorter implementation time High risk

Lower costs Small details or issues can be overlooked in the rush

Pain and frustrations are condensed into one time period, not drawn out

Users have to learn the new system immediately – this could result in a dip in performance

No one has to operate their business in two different operating systems

Testing of migration and post migration processes is even more critical

Everyone in the company moves forward on the same day Failures in one part of the system can cause problems and failures in others

Training needed only on the new system, not a changeover

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Key Migration Project Milestones

The migration project plan includes all the tasks which are to be carried out before the actual data migration to the new switch system takes place. Factors such as product features, operations, business processes, downtime, cardholder impacts and communication, impacts on ancillary systems, and scheme-certification planning impacted during migration. Below are the major tasks and project milestones to be accomplished during the migration project.

Data Analysis

Data analysis is one of the first and most important activities undertaken to gain an understanding of

the legacy switch source data. The relationships between data elements, primary keys, and the

target- system data- model requirements need to be determined.

Business Transformation and Impact on Data Requirements

Migrating to a new or upgraded switch may require the business to either adapt their operational

process or create additional processes to support the system. Each of these processes may require

data to be read from, or written to, data presentation and data formatting. These requirements are

important, as the legacy- source data may not be in the correct format and/or some of that data may

no longer be required for the migration. A lot of time can be wasted validating, cleansing and

transforming irrelevant legacy data. Understanding how the legacy data is going to be used ahead of

its migration could save time and effort.

Data Validation and Mapping Rules Configuration

The outcome of the data analysis activity is needed before the rules for data validation and mapping

can be defined. Source-data validation may be required as some of the target attributes in the target-

system data model may be mandatory. The resulting rules must be present to preserve the integrity

of the target system.

Data Cleansing

Data accuracy is important, since most data attributes are used by the switch to trigger an event or

operation. Cleansing of the legacy-switch data may be required before migration to ensure that the

mandatory target fields are populated. In addition, a data-quality initiative audit maybe required.

Quality and Success Criteria

The migration process must be monitored to determine if it is achieving its purpose. Once all the

project tasks have been defined, each task should be checked to ensure that the quality and success

criteria are defined.

Allocating Responsibility and Ownership

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The migration project plan should include a process to define the accountability and responsibility for

each task, and that this component of the plan is available for reference during migration. The owner

will be accountable for the task and ensure that it is accomplished and meets the specified quality

standard(s). Each task process -- and the related rollback procedures -- should be fully tested and

approved for the related function(s).

Data- and System-Freeze Times

The data-freeze time can be defined as the duration (scheduled date/timeframe) of the Production

phase; no changes to the source data can be made during this time. Depending on the nature of the

data, the actual freeze time is planned to be as brief as possible, since all system operations that

impact the data must cease.

Automated Testing

The risk profile of your migration project can be reduced through automated testing. A real-time,

automated, transaction-based test environment simulates network connections and end-to-end

transaction behavior to ensure all infield scenarios can be tested effectively. Once all the related

tasks have been identified and the task owners have been assigned, the end- to- end process is ready

to be tested. The testing of the complete process is important and should be carried out a number of

times until the process achieves the quality and success criteria/requirements consistently.

Support Your Customers

Successful migrations require the continued support of external parties throughout the process. The

project plan should include the requirements of terminal integrators and merchants or other

payment- channel providers. If you are providing switching services for other banks connected to

your switch, then your migration plan will need to consider how to support their migration.

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Best Practices: An Overview

Employing best practices for payment switch migrations increases the likelihood that your project will

be successful. The first and foremost requirement is to develop a comprehensive project plan for the

migration, specifying the goal and defining the objectives in the project definition document. Your

organization’s business strategy might also play a vital role in switch migration.

If you want to take significant cost, risk and time out of the migration equation, it is essential to:

identify the right migration approach,

identify the factors influencing switch migration, and

identify the appropriate tools.

Emphasizing the testing and data validation tasks as key components of your migration strategy will

significantly reduce project risk, as well as lower overall costs. The right quality checks and success

criteria will help you to design and deliver a migration in a way that meets the needs of your business.

It provides the assurance you need to guarantee performance at every step, from evaluation to

certification and live production. Adopting this best practices approach will keep your organization on

the path to a successful switch migration, as well as deliver significant competitive advantage on an

on-going basis.

Switch migration is an intensive and complex project, involving a broad range of internal and external

stakeholders. Even the best-prepared payments business can find unforeseen difficulties in

migration. We trust this Guide will help your project team avoid the more costly pitfalls.

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About Opus Consulting

Opus Consulting has experience with complex and highly complex payment switch migrations with all

leading third-party products. Opus has the prerequisite payments- domain expertise for consulting,

customization, implementation and support services that suit the dynamic needs of the customers.

We have been an implementation partner for banks where both switch migration approaches -- Big

Bang (instant switch over) as well a phased migration -- have been employed as per business need.

We help customers decide migration strategy by analyzing the likely impact of various approaches to

the migration process.

Opus has a track record of success with payment-switch migration, domain consulting,

implementation and support. This experience includes migrations to and from BASE24 products,

electraSWITCHTM, Postilion, etc. switches. Opus is committed to utilizing industry best practices for

switch migration projects and achieving 100% successful switch migration based on predefined

performance requirements.

Our proprietary toolsets expedite switch migration tasks and reduce the overall duration of the

project. Opus also has compiled more than 3000 test cases to verify and validate the new switch

environment, further reducing project risk, as well as time- to- market.