Dec 21, 2023
The complex world of financial transactions poses technological challenges and business opportunities. A critical issue often encountered is slow response times associated with payment processing, exacerbated by the involvement of APIs and multiple parties, including issuers, merchants, and payment processors. This intricate web of interactions often led to delays, heightening the risk of transaction failures.
This blog delves into navigating the labyrinth of cardholder purchase approvals, unpacking the obstacles encountered, and the innovative strategies employed to surmount them. This is a journey of how Kipp’s technological solution addresses a pressing tech problem and transforms the overall experience of financial transactions, ensuring high performance and real-time communication in a domain where every second counts.
Understanding that we needed to achieve real-time communication, Kipp’s service takes a maximum of 200ms and causes no significant impact on the authorization flow. How did our development team achieve this technological feat? The team tackled two primary challenges to ensure optimal performance:
Optimizing Network Time: By deploying an active-active technological architecture – where two or more identical systems run simultaneously and handle workloads independently – across multiple locations and utilizing cloud solutions, our R&D team significantly reduced network time. This proximity-based approach ensures that Kipp’s data center is as close as physically possible to the issuer’s data center, minimizing the networking time required to complete the process.
Enhancing Processing Time: By leveraging NodeJS for its single-threaded architecture, our team enhanced runtime performance. To facilitate parallel processing, real-time components were distributed across microservices. The system makes use of Redis in-memory solutions, enabling incredibly fast data access, measured in milliseconds. It differentiates between real-time and near-real-time operations, prioritizing critical processing tasks. Our R&D team also employed a combination of synchronized and unsynchronized messaging to streamline database communications. Additionally, rigorous performance testing and optimization were conducted for new features to ensure they uphold the high standard of processing speed.
While addressing the two performance challenges above, Kipp maintained its commitment to high-security standards, a critical aspect in the financial sector. Adherence to stringent security measures can potentially impact performance, but Kipp ensures both robust security required by issuers and efficient performance in under 200ms, thereby upholding the trust and data protection essential in the financial industry.
Kipp’s platform enables a dynamic, real-time collaboration between issuers and merchants. This synergy increases transaction approval rates, directly impacting revenue positively by reducing losses from declined transactions. Card issuers implement an algorithmic model on Kipp’s platform that defines a merchant’s rules and corresponding prices that a merchant would pay in exchange for the issuer approving transactions that it would typically decline. When an issuer is on the verge of declining a transaction, it sends out an authorization request to Kipp. The platform’s sophisticated algorithm then assesses whether to offer the merchant’s premium, following which the issuer makes the final authorization decision. Kipp’s platform enhances the issuer’s decision and enables the transaction to clear, ensuring a seamless and instantaneous process and a superior user experience.
The technology is implemented as an additional module within the issuer’s authorization system, enabling full compatibility and ease of implementation. The issuer’s system, which handles authorization requests from major payment networks like Mastercard, Visa, and Amex, must evaluate and approve/decline the request based on a combination of cardholder characteristics, bank policy, likelihood of fraud, and more. Kipp’s platform complements this system without causing any delays, which is crucial for maintaining real-time authorization responses for merchants and consumers.
Kipp’s technology represents a significant stride towards better transaction approval rates, efficient processing, and robust security. By addressing critical challenges with innovative solutions, Kipp’s platform is not just a tool but a strategic ally in the complex world of financial transactions. This blend of real-time collaboration, technological innovation, and security focus positions Kipp as an indispensable asset for forward-thinking issuers.