rules-based payment processing

By Michael Meeks, CTO of BHMI

The payments industry is changing so rapidly that many payment processing companies are struggling to keep pace. It seems every time a company adapts to a new payment method, begins supporting the most current regulations, or updates its process workflows, there’s another new requirement just around the corner.

Legacy payment processing systems have been a stable infrastructure for years, but they don’t work well in today’s fast-paced environment. These systems burden employees with manual tasks, create organization-wide inefficiencies, and often require expensive and time-consuming code revisions.

Many companies are overcoming this challenge by implementing modern software solutions based on user-configurable business rules. Rules-based software solutions offer companies the speed, flexibility, and agility to keep pace with an ever-evolving payments landscape.  While legacy systems have served payment processing organizations well for decades, they tend to be slow, resistant to change and lack the flexibility to operate in today’s innovative market.

This lack of flexibility indirectly impacts many areas of the business. First, legacy systems prevent companies from quickly adapting to new payment channels. Every time an organization wants to accept new payment options or channels, they must modify or write new code, leaving their business users and customers lagging behind in payment innovation.

Additionally, many legacy systems are so deeply ingrained in operations the company is unable to take advantage of new advances in automation. This leaves staff with cumbersome, manual workflows that lead to inefficiencies, poor customer experience, and unnecessary work. In addition to becoming a drag on the organization, it deteriorates employee morale and retention. It is difficult to retain a payment specialist if they must field thousands of customer requests with antiquated, manual technologies when other companies have efficient systems to automate tasks and simplify their workloads.

code for rules-based payments 2

Rules-based systems defined

Rules-based systems have been around for years, but they are only now seeing increased interest within payment operations because of their ability to automate manual processes and meet rapidly changing processing requirements.

Rules-based systems use configurable business rules to make decisions. Users can configure rules that specify what action should be taken under what circumstances. Within these systems, users typically configure “if-then” statements in which certain conditions must be fulfilled before an action occurs. These rules allow the software to process complex information without extensive programming algorithms. Also, due to their architecture and extensible data, they are well-suited to complement a wide range of artificial intelligence use cases.

Business case for rules-based solutions

rules-based payments

Adopting a rules-based solution can help organizations overcome many of the challenges and restrictions of legacy back-office systems. Configuration-based rules systems are more flexible, allowing for easier updates and modifications that enable companies to meet ever-changing processing and workflow requirements. Companies can easily alter and implement new rules as needed without complex code changes and software outages. 

This helps companies that process payments to cut to the chase, eliminate the noise, and provide a solid path for decision-making. Rather than leaving policies, workflows, and information spread throughout multiple departments, systems, and spreadsheets, payment data is stored in a single location and can be fully leveraged for rule execution.

Two of the greatest benefits of a rules-based system are customization and flexibility. Users can tailor rules to their specific and unique business needs. Businesses can accommodate diverse payment processing workflows, adjust for regulatory requirements, and respond promptly to changing market conditions without extensive system modifications. 

The use cases for a rules-based system within a company’s payment operations are unlimited. To cite a few examples, a rules-based system can be leveraged in the payments back office to modify settlement rules and distributions based on changing business needs. It can also be configured with balance equivalency checks and tolerance levels for automated reconciliation. In addition, workflows can be configured and modified to manage chargebacks, disputes, and regulatory changes efficiently.

While legacy systems are slow and limited, the flexibility of a rules-based system enables companies that are processing payments to accommodate diverse payment options and quickly respond to changing market conditions.

A rules-based system also improves efficiency and cost savings by streamlining workflows and automating manual processes. It enables the system to quickly define exceptions, detect anomalies, and route transactions to simplify the payment process. This ultimately allows teams to focus more on strategic work than manual tasks.

A rules-based system improves accuracy and compliance by verifying transactions against predefined criteria, flagging discrepancies or potential compliance issues, and ensuring regulatory standards are met. It can also generate valuable insights by analyzing transaction data elements via rule execution, which helps payment processors make more informed decisions.

Finally, rules-based systems can enable organizations to grow more rapidly by processing large amounts of data quickly and accurately. These systems can accommodate higher transaction volumes and support additional payment types, business requirements, and channels. Unlike legacy systems, there are no limits to the volume and types of transactions rules-based systems can support.

Architecture for agility

code for rules-based payments 1

The interest in configurable rules-based systems within the payments processing environment is increasing because of the need for agile payment operations. A rules-based architecture supports user-defined business rules that can be easily configured and govern process flows. This allows organizations to create new rules to support new customer processing methods with little effort.  

There are several things to look for in a rules-based architecture. First, a rules-based solution should be easy to use and designed for business users, not software developers. Simplicity enables authorized end users throughout the organization to instantly make necessary changes. Second, it should offer high-performance processing to handle large volumes of complex electronic payments without reduced runtime performance. The system can move quickly by compiling configured business rules into executable libraries.

A rules-based system enables payment processing organizations to overcome many of the hurdles in the payments back office. With speed, flexibility, and simplicity, companies can optimize their payment operations and quickly adapt to today’s market demands, as well as those yet to come.

About the Author

Michael Meeks , CTO, BHMI

Michael Meeks is the Chief Technology Officer (CTO) for BHMI and is responsible for strategic technical development directions, software development standards, and software management procedures and tools for BHMI’s cross-platform development environment. Michael has been a partner with BHMI since 1987. Before joining the company, he was a senior systems engineer at a large financial software firm. Mike has a BS in Computer Science from the University of Nebraska at Omaha. Michael’s background includes database design, object-oriented design, system performance and sizing, telecommunications protocol development, and the design and development of large distributed systems.

Recent PaymentsNEXT news:

Four ways AI is transforming payments


Leave a Reply

Your email address will not be published. Required fields are marked *