Payment processing company Worldpay isn’t consumed by a focus on security, and its purchase of SecureNet wasn’t a security play.
That may sound like a viewpoint divorced from logic, but it illustrates the evolution of the payment industry and Worldpay’s role within it. “It’s table stakes for us,” says Doug Sandberg, senior vice president and general counsel for Worldpay US. “If we don’t offer a high level of security to our business partners, we might as well not even come to the table. Providing security isn’t something we focus on; it’s part of who we are and who we need to be to do business. It’s in our DNA.”
That DNA, to borrow Sandberg’s phrase, is set to evolve. The magnetic strip we’re used to seeing on the backs of our credit cards has become a thing of the past in Europe, where card issuers began inserting small chips into cards about a decade ago. The chip replaces the static, easily hijacked modality of the strip with a dynamic, ever-changing style of protection that makes point-of-sale fraud unsuccessful by creating random and unique security codes for each transaction.
As with most good things, though, there’s a catch. Replacing strips with chips is expensive, and domestic card-issuers are only now getting on board. The change in security technology also raises liability questions about who covers the costs of fraudulent transactions—the banks or the merchants—when fraud happens at a business that hasn’t switched to chips.
Worldpay US is a key catalyst of this evolution. “We process the transaction [between the merchant and a consumer with a card],” says Sandberg, “so we have to make sure our platform accepts the new message format and can talk to the payment networks using this technology. And we need to make sure—to the extent that we can—that our merchants get onboard with this technology.”
Then & Now: The Big Move
Worldpay decided to move its US headquarters to Atlanta to accommodate growth and position itself in the payment industry epicenter. Here’s a breakdown of the old and new HQ.
Then (2002-15)
Where: Sandy Springs, GA (northern suburb of Atlanta)
Size: 110,000 sq ft
Why: The group that started working in this location was the original five employees of Lynk Systems, Inc. (the former name of Worldpay US, Inc.) They started in a 1,500-square-foot basement office, and it grew over the years until they occupied the entire building in 2002. The company has overgrown the space.
Now
Where: Atlanta
Size: 130,000 sq ft
Why: Atlanta is the epicenter of financial services technology with access to innovative talent, infrastructure, and creative business, which Worldpay US CEO Tony Catalfano says best positions the company for continued growth.
What Sandberg isn’t saying—because all of this talk about advanced security overlooks the bigger picture about the purpose it serves—is that, while the highest level of security is essential for doing business in his line of work, payment processing companies that tout robust cybersecurity architecture to their clients as their strongest value proposition are missing out. Worldpay, and agile operators like it, are shaping the future of payment processing by looking at all of the things that can happen when staying at the forefront of security is a prerequisite, not just an aspiration. That’s where SecureNet comes into play.
The Austin-based company, which Worldpay acquired in December 2014, isn’t just about payments security. The company pioneered the payment industry’s only cloud-based solution that seamlessly integrates point-of-sale, mobile, and e-commerce payment processing, inventory management, and data analytics for merchants. Adding those capabilities to Worldpay’s existing payment processing capacities will allow Worldpay to do more than process payments for its customers. They’ll become partners, leveraging SecureNet’s insights and analytics to help health-care providers, restaurants, and partners in almost every vertical learn more from their payments to better run their
businesses.
“Our SecureNet acquisition is about the changing landscape of payments technology,” says Sandberg. “There is a next generation of development for applications at the point of sale and integrated payments that didn’t exist in years past.” In the past, when nascent businesses opened a commercial account with a bank, the bank would process the new business’s credit and debit card payments through an external partner. That external partnership—and the referral channels that drove business to the partnership—constituted the traditional way that banks provided credit and debit card processing services.
“Over time, all kinds of software applications and systems for vertical markets have been developed,” says Sandberg, who cites the restaurant space as a great example of this type of evolution. Instead of buying a point-of-sale payment system that just takes payments, today restaurant payment systems are integrated into restaurant applications. “If I’m opening a restaurant, I’m not going to just buy a payments application as a standalone,” Sandberg adds. “I want software that helps me manage my business, tracks inventory, does automatic accounting when I make sales, helps me with reservations, and provides a whole host of other services.”
Payments companies have typically struggled to integrate their legacy payment technology with this new generation of platforms, and Worldpay had been looking to enter this market by both developing its own internal platform and evaluating what was already in the existing marketplace. “We realized that SecureNet had a next-generation platform with a fit for the new world,” says Sandberg. “It allows business partners to integrate and also allows us to share information with merchants that gives them business analytics that help them drive their business.”
The SecureNet purchase helps Worldpay accelerate its transformation from processing to integrating payments into the software and applications that merchants use to run their businesses. The combination benefits both Worldpay and its future partners in software development. “It’s good for both of us, because the developers can provide a solution to their customers that has payments and analytics, and we can be embedded in a business solution that serves the merchant more holistically,” says Sandberg.
The SecureNet acquisition is just one part of Worldpay’s current growth. Roughly 70 percent of all US payments are processed in Georgia, and Worldpay US is set to complete a $10 million relocation investment to move closer to the epicenter of the financial services area in midtown-Atlanta. The move will showcase Atlanta as a global payments capital, with Worldpay at its heart. The company’s new location will enable better partnership with institutions such as Georgia Institute of Technology and organizations such as the American Transaction Processors Coalition, which is chaired by Worldpay US CEO Tony Catalfano. “Atlanta is often called ‘Transaction Alley,’” says Sandberg, “and we want to attract developers of the next-generation mobile apps and point-of-sale solutions that integrate payments to help business customers complete transactions that generate business insights safely and securely.”
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