The Green Sheet Online Edition
April 4, 2025 • 25:04:01
The shift toward unified payment processing
Emerging payment methods are rapidly propelling payment processors into the era of real-time payments. Unlike traditional systems where processing took days, today’s payment authorizations, fund transfers and settlements are often happening instantly.
However, batch processing remains a critical part of the payments landscape, requiring payment services companies to manage both real-time and batch transaction data sources simultaneously. As a result, they must adopt payment back-office systems capable of efficiently handling both traditional card-based transactions and emerging real-time account-to-account payment methods.
Importance of supporting legacy and instant payments
Legacy or batch payment processing has long been the standard for card-based transactions, aggregating authorized transactions over a set period—typically a few hours or at the end of the business day—before consolidating and processing them in bulk.
But the adoption of instant payments is growing at a rapid pace. According to the Global Instant Payments Market Report 2024 (see bit.ly/41W4uOv), the total value of instant payments is projected to increase from $22 trillion in 2024 to $58 trillion by 2028, representing a growth of approximately 161 percent over the four-year period.
To meet this demand, banks, retailers, and payment processors are investing in technologies that support real-time payment processing.
However, despite the growth of instant payments, legacy transaction services must still be supported. According to Statista (see bit.ly/4cePPBe), real-time payments accounted for approximately 1 percent of overall payment transactions in the United States in 2024, and is predicted to grow to 5 percent by 2028.
This underscores the continued importance of supporting legacy payment methods even as real-time payments gain traction.
Front-end authorization systems have largely evolved to accommodate both card-based and account-to-account real-time payments.
However, legacy payment back-office systems—responsible for functions such as reconciliation, fees assessment, settlement and dispute management—remain largely batch-oriented and are not designed to support the rapidly evolving payments ecosystem.
Moving toward unified payment processing
Many payment processors face challenges due to legacy back-office systems that cannot support real-time payments. Managing multiple systems for legacy and real-time transactions leads to inefficiencies, higher costs and operational complexity.
The solution lies in adopting a unified payment processing platform that seamlessly supports both legacy and real-time transactions.
Below are three key components to consider for a unified payment processing environment:
- Continuous loading and processing of data: A unified processing environment should automatically ingest and continuously process both legacy and real-time payments data. This enables immediate processing upon data arrival, ensuring efficient back-office operations while providing a comprehensive enterprise-wide view of all payment activities.
Companies that adopt continuous processing systems will also benefit from 24/7 availability and a scalable infrastructure.
- Support for ISO 8583 and ISO 20022: A unified system should support both ISO 8583 and ISO 20022 message formats. ISO 8583 has long been the foundation for card-based payments, offering speed and reliability. Meanwhile, real-time and cross-border payments increasingly rely on ISO 20022, which provides enhanced data capabilities.
Supporting both standards ensures operational efficiency, regulatory compliance and resiliency to support evolving payment methods.
- Flexibility via configurable rules: A flexible, rules-based architecture is also essential for modern payment processors. By allowing for configurable rule modifications, companies can adapt to evolving regulatory requirements, streamline workflows, and automate manual processes.
A rules-based system enhances efficiency, reduces costs and improves decision-making in payment processing operations.
Navigating the future of payment processing
Despite the rapid growth of real-time payments, legacy payment methods will remain a cornerstone in the payments industry. This evolving landscape presents increasing complexity for payment processors, making it essential to consolidate disparate back-office systems.
By adopting a unified payment processing platform, companies can enhance operational efficiency, reduce risk and liability, and improve cost-effectiveness. More importantly, an integrated approach enables seamless support for both legacy and real-time payment types, ensuring a resilient and future-ready payment processing environment. 
Cheryl Fitzgarrald is a Senior Program Director at BHMI, a leading provider of software solutions focused on the back office processing of electronic payments. She has been in the payments industry for more than 30 years and is currently leading back office modernization projects for large financial services companies. Cheryl can be reached at cheryl.fitzgarrald@bhmi.com or 402-333-3300.
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