DigFin recently covered the return of global banks to Asia’s merchant acquirer space, most recently by J.P. Morgan.
We positioned this as a determination to retake the commanding heights in merchant payments from fintechs. But that’s not the whole story.
In J.P. Morgan’s case, it is relying on a fintech to enable it to do digital acquirer services at scale. It turned to India to find the right partner.
“India is among the leading markets in Asia Pacific in key segments of digital innovation,” said Madhav Kalyan, managing director and head of payments for Asia Pacific at J.P. Morgan.
The bank aspires to build a suite of real-time payments services for customers in expanding number of regional markets, and incorporate that into its broader treasury services, making merchant acquiring a path to providing working-capital solutions.
“Clients are going digital and using non-traditional payment systems,” Kalyan said, citing mobile wallets and new infrastructure such as India’s Unified Payments Interface. “Real-time reconciliations are all-important to digital marketplaces.”
It has many of the necessary systems and tools in-house – the bank has already moved its payments business onto the cloud, for example – but it needs to find partners for critical elements that let it bring a complete solution – quickly.
The bank ended up working with In-Solutions Global (ISG), a Mumbai-based payments fintech that provides cloud-based services to banks and processors, both in India and in Australia and the Middle East.
But partnering with J.P. Morgan was of a different scale for ISG: “It’s one bank operating in multiple markets,” noted Sachin Castelino, the fintech’s chief strategy and transformation officer (pictured).
That is a change from working with clients operating in a single market, and for Castelino, a validation of the company’s grit. “This shows our true capability and the scale of what we’ve built,” he said.
From local to regional
ISG was founded in 2004 as a reconciliation service for card payments and ATM networks in India. It has two licenses: Payment Aggregation and Payment Gateway (PAPG) and Pre-Paid Instrument (PPI).
Together these have enabled it to expand into many areas of payments, as its bank and processor clients sought to digitize flows from end to end. ISG lets them onboard merchants, service those businesses, and settle payments on traditional schemes such as Visa, Mastercard and India’s RuPay.
- Read more:
- What J.P. Morgan’s acquiring push says about Asia payments
- Digital banking is built on the cloud
- What is fintech’s fate in S.E. Asia if e-commerce fails?
It then branched into servicing merchant acceptance of pre-paid cards and credit cards, and then with the rise of e-commerce, to help them process online payments in real time.
Each extension was made possible by adopting cloud-first compute, modular (“microservice”) architecture so each product could serve merchants in real time (such as with customer onboarding), all stitched together via APIs.
This setup made it possible for ISG to extend these services to J.P. Morgan in India and other Asia-Pacific markets. The relationship means ISG can now also service other clients in these new markets without having to reinvent any wheels – while also allowing J.P. Morgan to reach local merchants, or service multinationals operating in multiple places.
The partnership is still evolving. J.P. Morgan has seconded a handful of staff to ISG’s office to help it navigate the bank’s systems and processes. This is sometimes about tech, but often about ensuring ISG conforms to data- and payment-related regulations in new markets.
“We’re still learning how the bank’s legacy technology and new tech work together – where the balance lies,” Castelino said. “We try to understand the local regulatory requirements and automate as much as possible.”
Kalyan says he expects to work with ISG to enter more markets. “Asia has the largest digital ecosystem and the largest consumer base,” he said.