New Zealand contactless transaction provider Snapper has completed a transition to the cloud for its payment hub, shifting from its own physical infrastructure to Amazon Web Services' Sydney Region.
It's the latest step away from managing its own hardware for the Wellington-based company, which provides a contactless, Near Field Communication-based payment system, including rechargeable value cards and integration with some Android handsets.
In Wellington, company is the main contactless payment provider, and it has around half the market. The company's services cover public transport, retail, taxis, and a recently launched parking product.
The company has operated for around half a decade, expanding to cover services in Auckland as well as Wellington. CEO Miki Szikszai said Snapper is also eyeing opportunities for local and international expansion.
The business involves significant infrastructure to provide payment points and distribute cards, but Szikszai believes the shift to cloud services for backend infrastructure will smooth any future offshore expansion. Combined with this is the growth of mobile handset-based payments.
"If we can take the mobile product we've developed and take that off shore that just means we'd never have to sell another card again, which fundamentally changes the game," Szikszai said.
The mobile app allows Snapper cardholders to read and top-up the balance of their cards. In NZ Snapper has also partnered with 2degrees, with the telco loading software from the payment provider directly onto SIM cards, allowing handsets to be used to tag-on and tag-off when using public transport and for other forms of contactless payments.
The company's transition to cloud began in late 2009, Szikszai said. "We started off with a very straightforward problem to solve. We started to look at our data warehouse and we thought, 'Actually, there's a better way to manage the infrastructure for that data warehouse'." In particular, Snapper saw the capacity needs of its data warehouse varying over time.
"We didn't want to own our own infrastructure in that area so AWS seemed like a really good fit for us in terms of that data warehouse problem we were trying to solve," Szikszai said.
That experience of shifting the data warehouse to Amazon Web Services led Snapper to a general rethink of its approach to infrastructure; in particular, it reassessed its approach to disaster recovery and business continuity.
"When you think what are all the services that you're offering your customers and how could you restore those services in the case of some sort of external event – whether it be a natural disaster such as an earthquake or some form of IT failure – it became pretty clear to us that while we had access to a lot of infrastructure, the time it would have taken us to recover from an event was going to be very, very long."
"In terms of being able to get access to a server room, stand up a different version of software and get that up of running, it could have taken us days," Szikszai said.
That combined with the 'pay for what you eat' pricing structure lured the company into taking a larger leap into cloud.
"It became pretty clear that not only could we end up being more resilient, but the business could run a hell of a lot more efficiently as well, Szikszai said.
"We ended up looking at our core infrastructure and taking out some pieces that we'd put in place ourselves."
Snapper's payment hub services cost close to $1.5 million to establish a few years ago, and getting it running after a disaster would have taken a lot of effort for the 20-person company.
The payment hub now operates in AWS's Sydney Region, but Snapper is prepared to stand it up in one of Amazon's North American zones if the link to Australia is lost.
"We're basically able to access almost a global level of disaster recovery," Szikszai said.
"We've literally just completed all of the work to move that payment hub over, including running through disaster exercises."
The company was initially uncertain about performance with the shift, but has achieved lower latency and better throughput in the cloud.
The transition has also paid off in terms of speed to market, Szikszai said.
"We just launched our on-street parking service the other day – we needed to spin up some development instances to test how some of the applications work on that. It's literally a 10 minute job for our team to do that. They keep it running for the course of the test, and then they wind it back down.
"So from a straight business perspective, I know we've got a fully tested system for this parking product we're about to launch. It's cost me a few dollars in terms of AWS infrastructure cost and maybe, at the most, an hour of my team's time to spin up, manage and then run down that test environment...
"From a CEO's perspective, I'm delighted because I can get to market faster but I know I've got a fully tested and proven product and the team's not feeling like they have to compete for things like a test environment. The level of calmness that is now in the team as they are able to just respond to these types of requests is great. They feel in control."
Other than its fibre broadband connection, the primary piece of physical infrastructure Snapper has retained houses its security keys, but the company also intends to shift that to Amazon's CloudHSM service.
"Our system is basically based on secure smartcards. If that was ever compromised people could literally electronically print money onto cards and our business would be pretty much compromised overnight," Szikszai said. All of the company's data stored in the cloud is encrypted.
"We can manage that – we're fairly conversant with the use of encrypted data, given our encrypted payments technology," the CEO said.
Szikszai said the lessons Snapper learned during the transition to cloud have been "less cloud-based and more business practice things"
"One of the things we recognised we needed to do was to be very, very clear about the services we're offering to customers and the assets and resources we needed to deliver those services," Szikszai said.
"I think quite often some people go 'cloud's awesome and you must do it and here are all the reasons why.' Kind of 'cloud first, business second'. We would always encourage 'business first' and then work out what the best solution is for you. We've been very mindful of not getting too much religion, for wont of a better word."
"You also do need to be mindful of the business change that occurs for your team," he added.
Snapper has a small, tech-heavy team, but in a larger organisation a transition to cloud can involve a significant culture change "for people who are very much used to having their arms wrapped around their own servers and infrastructure, [they] would have to really let go of that and embrace a different way of doing things."