Case studyIndustry sector: financial services

Shaping new markets in the digitalnetworked economy

Executive summaryVisa International is a service associationowned by and comprised of 21,000member banks. Well over a billion Visacards have been issued worldwide onwhich some US$3 trillion is transactedevery year in over 150 countries.

In 2003, Visa’s CEMEA (Central andEastern Europe, the Middle East andAfrica) business recognised that thelegacy networks it relied on to processcard transactions on behalf of memberswere failing to keep pace with businessgrowth and desired response times. Inaddition their management was incurringlarge overheads. The company came toBT for a solution.

BT’s solution comprises terrestrial andsatellite technologies across over 265sites in 51 countries. It has radicallyreduced network management costs andcomplexity and delivered an impressive40 per cent reduction in transactiontimes, as well as guaranteeingavailability – currently running at animpressive 99.98 per cent – and securitythrough rigid service level agreements. A spirit of partnership and shared riskand responsibility between the twocompanies underpins the solution.

BT has transformed Visa’s CEMEA networkinfrastructure with a judicious celestial and terrestrialmix, providing unprecedented levels of speed andavailability

“The new BT infrastructure

offers the scalability and

flexibility required to meet the

challenge of Visa’s growth in

emerging markets, as well as

providing a platform for Visa

to develop and deliver

innovative products in the

CEMEA region.”

Brian HuckettCFO & CIOVisa CEMEA

Case study Shaping new markets in the digital networked economy

MarketplaceVisa International is a service associationowned by and comprised of 21,000member banks for which it providespayment solutions, enabling them toissue cards and process merchants’ cardtransactions. Well over a billion Visacards have been issued worldwide onwhich some US$3 trillion is transactedevery year in over 150 countries.

In Visa’s CEMEA (Central and EasternEurope, the Middle East and Africa)region most economies are based oncash, but this is changing as the socialand economic benefits of cashlesspayment become more widelyunderstood and as consumers andretailers increasingly appreciate thesafety and convenience of paymentcards. Visa products help bring people inCEMEA into the banking system, soincreasing available funds – the lifebloodof a growing economy. Cashlesspayment methods provide a clear audittrail and broaden economicparticipation, which brings tax revenueand overall financial benefit to thecountries of this vast and diverse region.

But the CEMEA marketplace also hassome unique geographicalcharacteristics. Remote areas provideserious logistical and environmentalchallenges for Visa in maintainingnetwork service levels.

Business opportunityIn CEMEA, driving the cultural shifttoward cashless payment began withVisa Electron debit cards and today thesecards represent 85 per cent of all Visacards in the area. Many of these cardshave been issued as ‘salary cards’ wherean employer works with a bank to issuecards to all its employees enabling it toswitch from paying salaries in cash toelectronic payment.

Brian Huckett, CFO & CIO for VisaCEMEA, says: “Over the last ten yearsVisa’s member banks have begun tooffer cashless payment facilities targetedand designed for ever-wideningsegments of society. We’ve also broughtelectronic payment to big businesses andgovernment – including purchasing cardsand other facilities fit for purpose in each market.”

But to offer these types of service to thewidest possible audience in CEMEArequired the right infrastructure. WithVisa’s rapid business growth – there werethree million cards when Visa CEMEA wasformed in 1995 and there are over 60million today – the network thatconnected the banks to VisaNet (Visa’s

processing system that enables

transactions to be authorised and moniestransferred from cardholder to merchant)had expanded organically. Individualsolutions – the best at that time for eachindividual market – had beenimplemented country by country.

By 2002 Visa CEMEA found itself with anever-increasing number of contracts tomanage. As a result it was often difficultto identify which supplier owned a specificconnectivity issue. Visa’s solid butinflexible network was introduced 27 yearsearlier and the costs of running it wereincreasing steadily.

Visa recognised that a switch to aconsolidated network, combined withrationalising its supplier contracts, was the best solution.

Visa began negotiations with 250different suppliers with a view toprocuring a new network for the CEMEAregion. From initial responses from 200service providers Visa came down to ashort list of three, including BT. Thesethree potential networked IT servicespartners were benchmarked against acomprehensive statement of business-driven needs containing desired servicelevel agreements (SLAs), performancepenalties and latency requirements.

BT solutionVisa chose BT because both partiesrecognise the value in partnership, andput into action steps to ensure that atrue and open relationship was formed.The network would need to be highlyavailable and fully resilient, and Visa wasconfident that BT acting as primesupplier would guarantee it thoseattributes. Visa was also confident thatBT would support the development ofnew products and share its own bestpractice local and technical knowledge.

Raj Haider, Head of VisaNet ServiceManagement, says: “We created astrategic partnership with a cleardirection. The concept of ‘in-sourcing’was agreed between the two parties,with BT people working inside the Visaorganisation. This has helped BT gain adeep understanding of the business andmade for an efficient partnership.”

A five-year $66 million contract wasoffered to BT encompassing a 265-site,51-country migration path. The networkarchitecture developed by BT is highlycomplex, with 27 varieties of accesstechnology used within the overall

“As a direct result of the BT

implementation, Visa CEMEA

has measured a 40 per cent

improvement in response

times for card processing,

providing a better experience

for members and their

cardholders across 25 per cent

of the world’s land mass.”

Raj HaiderHead of VisaNet Service ManagementVisa CEMEA

network topology. Risk was sharedequitably between the two parties, withthe service level agreement for VisaNetsecured effectively between BT andVisa’s members. Executive sponsorshipin both companies ensured governanceand maintained momentum.

“The partnership model is highly valued,bringing shared risk and responsibility aswell as the assurance that if things evergo wrong there is the will to put it rightimmediately. This spirit of collaborationextends to the development of newsolutions and services looking forward,”adds Raj Haider.

Ninety per cent of all 265 terrestrial andsatellite sites were live by July 2004 andthe last site was migrated in February2005. During the implementation, BTjoined Visa and local members innegotiating with each government, aswell as participating in joint marketing todrive new Visa member take up. Therewere numerous challenges in deliveringthe project on time: from obtainingpower supplies to shipping theequipment, as well as cultural andpolitical obstacles.

“Many challenges were unique to theareas and countries in which the projectswere being carried out,” says Raj Haider.“BT had to ensure its solutions workedfrom the sands of the Sahara Desert tothe tundra of Siberia.”

The terrestrial network is built upon acombination of BT’s International FrameRelay network and International PrivateLeased Circuits (IPLCs), but in areaswhere terrestrial networks were hard todeploy, Visa decided upon a Very SmallAperture (VSAT) satellite communicationssystem provided by BT’s Media andBroadcast team. The challenge for BTwas to provide high and consistent levelsof service in countries such as Azerbaijan,Cameroon, Estonia, Ivory Coast,Mauritius and Palestine where ordinaryterrestrial solutions were not possible.

Raj Haider comments: “The satellitesolution is an integral part of the newnetwork, provided by BT to 63 sites in 28 countries utilising on-site satelliteantennas. It is based on the innovativeiDirect solution, a two-waycommunications platform designed tooptimise IP traffic delivery over satellite.”

The solution also needed to be futureproofed. Not only had it to support

several protocols and standards but italso needed to be scaleable, allowingVisa to introduce new applications andservices. Security also had to beembedded into its DNA, thus ensuringthe safe handling of confidentialtransaction data. The BT VSAT solutionwas created to be inherently secure – the data runs on virtual private circuitsbut is also sent at randomly selectedfrequencies making it almost impossibleto intercept.

ResultsThe new solution comfortably exceedsVisa’s promise to its member banks of99.5 per cent availability. Averagetransaction times have dropped by overhalf a second. Visa is also benefitingfrom the reduced headache of a singleservice provider with a managedservices contract. And critically, Visa ispaying less in network managementcosts than before.

Raj Haider scopes the hard businessbenefits: “It is imperative that the newnetwork is totally dependable. We haverecorded 99.98 per cent availability inour first few months of using the newnetwork, which has surpassed ourexpectations. As a direct result of the BT implementation, Visa CEMEA hasmeasured a 40 per cent improvement inresponse times for card processing,providing a better experience formembers and their cardholders across 25 per cent of the world’s land mass.”

Visa is also benefiting from double theavailable bandwidth capacity togetherwith backup technologies for all Visamembers. The VisaNet team has vastly

improved network visibility, managementand control capabilities. The newarchitecture is also meeting Visa’sstringent security requirements whichare of fundamental importance to thenetwork. In fact, BT is giving Visa thesame commitment that Visa gives to itsown customers – its member banks.

“The new BT infrastructure offers thescalability and flexibility required to meetthe challenge of Visa’s growth inemerging markets, as well as providing aplatform for Visa to develop and deliverinnovative products in the CEMEAregion. BT has enabled us to provide amuch better service to our memberswhile reducing costs and simplifyingsupplier and network management,”says Brian Huckett.

The partnership with BT providessignificantly higher SLA targets thanwere in place for the patchwork ofprevious suppliers, and BT is under strictcontracts which enforce penalties formissed SLAs. All of the BT ground staffat remote locations act continually tosupport BT’s commitment to Visa’sservice level agreements. Even inisolated areas of Africa, BT offers aremarkable four-hour break fix support.

Brian Huckett concludes: “Mostimportantly, the BT network gives thecardholder a much better experience inall 51 countries where VisaNet operates– elevating the individual’s experience ofVisa’s card payment services. Memberbanks are happier with the day-to-dayexperience of doing business with Visa.”

Why BT?• BT’s global reach meant that it was able to provide and support secure

and highly available connectivity in some of the most underdevelopedparts of the world

• BT was able to offer one accountable point of management for the wholeCEMEA region, while peer-to-peer commitment demonstrated goodgovernance and commitment to the relationship at executive level

• The BT team were flexible in their approach, and BT met Visa’s cost,technology and commercial needs together with a continuous focus on improving service to the Visa membership

• Visa valued the longevity of the relationship with BT. BT had already demonstrated excellence in technology implementation through its networked IT services to support Visa across Europe

Technology blueprintVisaNet connects all the banks that issueVisa cards, enabling transactions to beauthorised within seconds, and clearedand settled overnight. It comprises 25mainframe computers and more than230 mid-range systems, running some300 applications. Processing up to 5,000authorisation transactions per secondand settling as much as US$5 billion and100 million transactions in a single day,it is the world’s leading financialtransaction processing system. VisaNethas only experienced five minutes ofdowntime in the last 25 years.

Primary access is provided by BT’sInternational Frame Relay network whereit is available and BT partner Frame Relayservices or IPLCs where it is not. Wherethe terrestrial network is insufficientlywell developed or considered unreliable, a state-of-the-art BT IP-based satellitesolution has been deployed.

The BT satellite solution is an integralpart of the new network provided by BTand connecting to VisaNet. In a startopology, VSAT terminals connect backto key hubs that transmit data to BT’searth station in Goonhilly, Cornwall.Failsafe redundancy is provided throughmirrored data transmission to a secondBT earth station in Herefordshire, as wellas through terrestrial backups includingISDN and PSTN via BT sites in andaround South East England.

The VSAT solution is based on theinnovative iDirect platform, a two-waycommunications platform that has beendesigned to optimise IP traffic deliveryover satellite. At the remote memberlocations an iDirect NetModem II isemployed with a 5-10 Watt BUC and 2.4 – 3.8 M antennas. Dedicated Visasatellite hub stations provide far morerobust and less interference-prone ‘C’band satellite technology instead of ‘KU’band. Visa has rented its own satellitespace segment from BT Media andBroadcast which provides excellentcoverage across the CEMEA region.

Backup (secondary) access is providedthrough ISDN, PSTN or in somelocations where PSTN is consideredunreliable, through the INMARSAT 4Regional Broadband Area Network (R-BGAN) service.

Main BT products & services

• BT International Frame Relay network

• International Private Leased Circuits

• BT VSAT satellite communications system with iDirect two-way communications platform

Offices worldwide

The telecommunications services described in this publication are subject to availability and may be modified from time to time.Services and equipment are provided subject to BritishTelecommunications plc’s respective standard conditions of contract. Nothing in this publication forms any sort of any contract.

© British Telecommunications plc 2005 Registered Office: 81 Newgate Street, London EC1A 7AJ. Registered in England and Wales no. 1800000.

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Case study Shaping new markets in the digital networked economy