2011 has been a busy year for Clear2Pay. It has made a number of acquisitions and launched services to further complete its portfolio offering for the whole payments value chain. Warren Gardiner, chief product and strategy officer, speaks to Duygu Tavan about the company’s evolving strategy

Clear2Pay has been around since 2001, but as Warren Gardiner, chief product & strategy officer puts it, “spent the first few years quietly in the background” until it launched its Open Payment Framework in 2004/2005. Then its growth accelerated.

One of its latest acquisitions included that of the UK-based ATM testing business Level Four Software Holdings to further boost its position in the payments testing services market. Level Four, whose clients include JPMorgan Chase, Bank of America, Royal Bank of Scotland, Lloyds and Barclays, provides test automation solutions for ATM networks. Its software is capable of automatically executing thousands of test cases at a time across different card schemes, languages and devices. The business will be integrated in Clear2Pay’s Open Test Solutions unit and will continue to operate from its existing offices in Scotland, the United Arab Emirates and the United States.

The acquisition is the latest in a number of strategic moves that have seen the Belgium-based payments processor boost its position in testing services. At the time of the announcement in November, chairman and CEO of Clear2Pay, Michel Akkermans said that testing was a “crucial part of a successful implementation, which to this date tends to be a highly time-, cost- and capital-consuming activity, prone to human error.”

Acquisition and strategic growth

GlobalData Strategic Intelligence

US Tariffs are shifting - will you react or anticipate?

Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.

By GlobalData

Learn more about Strategic Intelligence

In November, it acquired US-based company ISTS, which provides retail payment services for card transactions and test automation. The acquisition followed a growing interest in new payments technology within the card divisions among Clear2Pay’s clients.

“The acquisition positions us in a geographical area where we didn’t have a strong presence in,” says Gardiner. Three years ago, we made the strategic decision to invest in China and now we have three offices there, and over 150 employees and in excess of 50 banks as customers. We still have a few gaps in terms of presence and offices, but we will fill those gaps over the coming period.

“We are not well presented in Brazil and that is one of the fastest growing economies in terms of transaction volumes. We have customers in Chile through a number of implementations over the last few years. The next step is into Brazil, and we are looking to do that in the course of the next financial year.”

And Clear2Pay is a company that tends to act fast. As Gardiner says the business goes “where the action is”. And as such already has footholds in Latin America, and Africa and the UAE to a lesser extent. And in Africa, it has 6-7 implementations at banks, he says.

For Clear2Pay card processing has become a strategic priority. This decision is a timely one as the cards industry is at an infliction point, Gardiner argues. ““We are now head to head with other vendors that sell card switching to banks and card processers who acquire and authorise and issue cards.

“There is also large growth in transaction volumes particularly around debit/credit cards over the next couple years, particularly in Asia, where some countries are forecasting an 100-150% increase.

“This transaction growth, accompanied with the fact that there is a lot of product uncertainty in the market, is forcing a lot of banks to amend their strategy because their existing systems are groaning under the pressure of the increase in transaction volumes, plus the uncertain future. So we looked at that infliction point and believe that we have the products and people to be able to capitalise on it and bring a new paradigm to the market.

“We enable banks to merge those payments into a single payment structure, which gives them visibility across their payment silos, a common view of their customers, what channels they use and when. We believe this solution, proposition around a payment service for cards is quite unique and will allow us to forge a strong presence within the cards space.

New products

Besides acquisitions, Clear2Pay has launched a new Mobile Payments Application (MPA) testing solution, designed to enable vendors and issuers to test mobile payments products against interoperability and security standards, also in November.

The launch of the MPA Test Tool follows Clear2Pay’s acquisition of Lexcel Solutions in June, and its announced intention to boost investment in testing products and services. Clear2Pay said the new product alleviates the process of certification required by card schemes, and replaces the time-consuming process of sending mobile phones back and forth to certification laboratories. 

“A payment is a payment. This strategy has been the backbone of our company from day one and about 18 months ago, we brought turned this vision into a strategy and roadmap for the card space as well and are now promoting it to the market strongly,” Gardiner explains.

“That is also one the reasons we are investing in payment testing tools – if you want to make the cost of migration simpler and fast, then you need to be able to offer customers something to do that with. So we looked at a portfolio of payment test solutions that address the full card payment cycles – from the time a card is used at an AMT or POS right through to the card scheme clearing systems through to the back-office accounting systems to be able to test quickly, easily, cheaply all integration points within the payments processing value chain.

“By providing the new solutions, the new generation platform, plus the testing tools to go with that, then we believe we are offering to banks not only a new generation solution, but also cheaper and quicker experience to implement that.”

Clear growth

In 2007, Clear2Pay expanded into South East Asia and China. In China, it established an office in Shenzhen with a staff of 35, almost 15% of its total staff complement at the time. Its early successes in China included the connection of French bank BNP Paribas’s Chinese unit to the national China Advanced Payment System for high-value payments and bulk payments processing.

BNP Paribas selected Clear2Pay’s Open Payment Framework to implement a single payments management ‘Payment Hub’ in Asia. The regional ‘Payment Hub’ operates from Singapore and is deployed in 13 Asian countries, with its first phase handling all payment requirements for Thailand, Taiwan, Korea and Vietnam.

Its South-East Asian headquarters are based in Kuala Lumpur, Malaysia. At the time of the launch of the office, Clear2Pay’s chairman and CEO, Michel Akkermans had said that the volume of payment transactions between 2004 and 2007 in South East Asia was expected to be about 20% CAGR, compared with 12% on average worldwide.

In April last year, Clear2Pay acquired Jware Technologies to enhance its e-commerce and mobile payment solutions portfolio. Jware’s solutions, which had a distribution reach in Europe, the Middle East and Africa, were integrated with Clear2Pay’s existing Open Payment Framework.

In July 2010, Clear2Pay signed a deal in South Korea to provide the Korean Electric Testing Institute (KETI) with three of its mobile payment test suite solutions. KETI supplies key testing technologies and certification services for companies in South Korea and targets an introduction of cutting-edge mobile payment infrastructures based on NFC technology.