Understanding testing for real-time payments

By Alex Hammond | 25 May 2017

Marie Costers, FIS Business Line Executive, Open Test Solutions Division, spoke exclusively to bobsguide about the importance of the testing period in real-time payments implementation.

Is the drive for implementing real-time payments coming from within the industry itself, or from consumer demand?

Both are factors. With the ubiquity of smartphones, connected tablets and e-commerce channels enabling purchases anywhere and anytime, this new digital has resulted in customer habits and expectations shifting. The market wants responsive services and fast moving money, similar to the ease and speed of other digital services, whilst today’s bank payments systems are ageing and all too often not flexible enough.

On the other hand, faster payment initiatives are likely to increase the pace at which money travels, so goods travel faster too, speeding up the economy. Today, the U.S. is the only market where real-time payment isn’t mandated by the government and instead driven by the banks only.

We see that the uptake of customer-centricity by the banking world is filling the gap between the rather slow bank payments and the always connected customer.

Do banks need to rethink their established testing strategies to sufficiently test real-time payments?

Banks cannot afford to take shortcuts. Incidents or fundamental errors have never been more visible. When a batch system goes down banks may have time to fix things, so end-users barely notice. When an online, real-time payments system is not operational or not working optimally, end customers will know immediately.

Real-time payments are a great opportunity to rethink testing strategies and optimize investments, avoid unnecessary costs and go to market faster. Clearly, each financial institution will have its own migration route, but timely and efficient testing is an important and essential milestone on the way to success. Testing needs to become an integral part of an instant payment process, from design through development and acceptance. A real-time payment initiative is the perfect opportunity for banks to implement a fitting test strategy, test automation and benefit from the efficiency that comes with it.

Many lessons can be learned from the card payment world. When looking at the characteristics of both real-time payments and card payments, there’s simply a lot of similarities. Good practices like proper certification of participants in respect to payment flows should be given strong consideration.

What are the different test approaches available for real-time payments and what are their key points of difference?

Taking into account the card payment world, where black box testing is the de facto approach, we see three basic test methods; manual testing, the use of generic IT test management tools, and dedicated payment test solutions. Black box testing verifies the functionality of an application without looking at its internal structures or workings.

Manual testing can be slow and is subject to human error. Test results can be inconsistent and lack standardization, making the testing a difficult basis for taking impacting decision on. Moreover, given the complexity and real-time nature of instant payment infrastructures, the negative impact can be severe.

Test management tools are used in a variety of sectors. This approach enables to easily store information, plan test runs and report activities and results. Generally, these test management tools are used to assist manual testing and can indeed achieve a moderate level of success.

However, the payment sector has its own characteristics including strict requirements, mandates, security rules, cryptography, and certification processes. Our experience in driving testing projects worldwide showed us that tooling up with specialised test technology is a vital part of a migration project.

Test automation will become very important as real-time payments takes the stage, along with DevOps and the rapid deployment of new features. Test strategies need to reflect the fast and modern nature of immediate payments and foresee an integrated approach to make sure the entire flow is covered, from the customer interaction to the file exchange with the counterparty.

Typically, how long does testing take for a real-time payments system?

This really depends on the size of the organization, the interfaces and functionalities. How does the new system integrate with core systems, what is the is anti-money laundering approach or how is fraud prevention done? These are major factors in integration projects involving a new product. Additionally, such payment product initiatives start with a minimum viable product and add features over time. This then requires regression testing to ensure that previous developed and tested software still performs as intended.

The nature of real-time payments still demands a thorough testing scope that makes sure there are no weak spots in both the system and its integration into the existing bank infrastructure. The fact that payment flows conclude within seconds rather than days has very little to no impact on the duration of a typical testing cycle. Automation is going to be key when it comes to saving time, and reducing, costs. 

What is the cost of testing for a real-time payments system? Will this cost increase or decrease over time?

Depending on which approach is taken with regards to upgrading or updating a payments hub, there may be a lot of complexity to cover in a testing scope. So while the initial effort - to test and verify the integrity with existing systems - as well as the cost, can be high, test automation reduces this significantly further down the line. Another factor is that being an early adopter often comes at a cost whilst followers usually benefit from the innovators’ efforts.

The test scope is impacted by adjacent systems, connected channels, networks and automated clearing houses (ACHs) and is different per implementation. On top of a solid regression test set, functional testing still needs to be tailored to the individual project- or the release requirements. And then there is still performance testing to be done. Whilst the test requirements and approach can vary, typically, we see that testing amounts to 25% of the project launch budget. The payments world sometimes works differently than generic IT projects and has limited data available. General studies indicate however that the importance of testing is growing, with estimated QA budgets of up to 40% for an IT project in 2019.

In general, is the testing process for a real-time payments system similar for each bank, or is testing for each system unique?

On a high level it is quite similar. Nonetheless, we anticipate regulators and clearers to set certain standards against which banks and processors need to test. On an individual level though there are certainly differences, depending largely on the existing infrastructure and approach taken by the bank when choosing how to add real-time payments.

How can the testing phase of a real-time payments system implementation make a difference to a bank’s offering in the long run?

Thorough testing enables banks to confirm quality and safeguards a financial institution’s brand image – a good reputation is priceless in banking. It also optimizes the investment in real-time payments by enabling a faster time-to-market and makes sure that a user has a positive experience with each interaction. Faster and better service are driving success.

Clearly, it will be an interesting challenge for many banks. There’s no other way than to adopt as fast and easy as possible because this will help gain a competitive edge. Let’s not forget that real-time payments are quite new to most markets, with rules far from set in stone. Timely and effective testing facilitates a smooth migration and helps to keep long term costs under control. This will help banks gain an advantage and maximize their returns in both short and long term.

The full FIS whitepaper Time To Test Real-Time Payments can be downloaded from bobsguide resources

bobsguide and FIS are hosting a joint webinar titled “Get ready for real-time payments” on June 7. To register for the event click here

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