DataLog Finance’s Head of Consulting, Maddy Rognon, shows the path to a successful implementation of a payment factory in this interview
Could you please explain what a “payment factory” is? Lots of our readers are puzzled and name “payment factory” what is maybe only a bank single gateaway approach? Could you please give us your definition and what you mean by these terms?
When referring to a Payment Factory, many people identify it with, or should I say, reduce it to a bank communication platform. Yet, while communication is important in a payment factory project, it is only one of multiple issues at stake. Once you’ve solved communication issues, you still have to answer questions such as: What am I to do with the various file formats of my internal systems? What about the specific requirements of each of my banks regarding format? Once the files of all my entities go through a single connection pipe, how am I to rationalize those flows in order to minimize cost and maximize security? What is I want to set up payments “on behalf of” (POBO)? What about that upstream system that cannot create payments but only invoices? How will I manage my approval workflows? How can I dispatch payments between my banks while sticking to the commitment I made (e.g. 10% to bank A, 25% to bank B, etc.)? What about feedback to other systems regarding payment processing and bank reporting files? Etc. So our definition of a Payment Factory is a system that while offering a single communication gateway, will also solve each of these issues, with fast implementation and without customer-specific coding.
What are the key benefits of such structures? (standardization of bank gateway or next level payment factory)
A payment factory is a centralized platform. But centralization can be pushed to varying degrees: for some corporate the payment factory is a central platform to which all entities connect while each keeping entire control of their payments, whereas in other groups the payment factory is based on a POBO model and an in-house bank (IHB); in between those 2 extremes, there are also mixed implementations where the POBO model is used for certain types of payments and the “shared platform” model for others. But whatever the degree of centralization, a payment factory will always reduce cost and minimize risk, while offering higher control and better visibility on payments and liquidity.
Interview in PDF
Link to the interview