Defining a Payment Services Hub: Why Can't We Just All Agree?

by Zilvinas Bareisis, November 22, 2010
Product Trends/ Reviews
Global, Asia-Pacific, EMEA, Latin America, North America

Abstract

Over the last few years, the concept of payment services hubs (PSH) has been promoted by vendors and industry analysts as the leading approach to modernising banks’ payment infrastructures. However, more work needs to be done to get everyone to standardize the language and to agree on key definitions.

“Payment services hubs,” “payment engines,” “payment factories,” and other terms seem to be used interchangeably. What do these terms mean, and why can’t we all agree? In this report, Defining a Payment Services Hub, Celent defines the PSH concept and clarifies the key terminology related to this topic. The report describes the scope, functionality, and technology architecture requirements for a solution to qualify as a true payment services hub. It then describes the four types of payment services hubs being implemented in the market today.

“A payment services hub is an architectural vision, which can guide any bank embarking on a payments infrastructure modernisation project,” says Zilvinas Bareisis, Senior Analyst with Celent’s Banking Group and author of the report. “Every bank is approaching it slightly differently, which contributes to a lack of agreement on terminology.”

This is the first report in a series on payment services hubs. An upcoming report will review relevant vendor offerings and capabilities, and a third will explore the drivers of PSH adoption and review different approaches to how banks use the PSH concept to upgrade their payments infrastructures.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned subsidiary of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary

3

Introduction

4

Payment Services Hub: What Is It After All?

5

 

Scope

7

 

Core Functionality

8

 

Technology Architecture

12

Payment Services Hubs in Practice

17

 

Four Main Types of Payment Services Hubs

17

 

Additional Terminology Considerations

22

Conclusion

23

Leveraging Celent’s Expertise

24

 

Support for Financial Institutions

24

 

Support for Vendors

24

Related Celent Research

25

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