Visa, Sun, Cisco team up on universal commerce

Visa USA, in partnership with Sun Microsystems and Cisco Systems, Wednesday unveiled a new payment processing system -- Visa DirectExchange. The US financial services company claims the system will be the largest private financial payment network in the world with access to Internet technologies.

The network will facilitate universal commerce or "u-commerce," according to Scott Thompson, Visa USA's chief technology officer, enabling the company to handle a whole range of payment, not just credit-card processing. DirectExchange is Thompson's brainchild.

"We're taking the best of our current operating environment with its secured payment mechanism and integrating into it the open technologies of Sun and Cisco to provide much better plug-and-play capabilities in the future," Thompson said. "We're setting the infrastructure threshold for others to innovate on top of."

The three key concepts for the system were that it be able to handle the scale of Visa USA's current operations, be scalable for the long term, and be able to handle plug-and-play operations, he added.

Using Sun's computers and Cisco's routing technology, DirectExchange will be able to process all Visa credit and debit cards issued in the US, as well as other electronic payments such as payment via mobile phones, PDAs (personal digital assistants) and smart cards, Thompson said.

The network will be able to process $US60 million payments per hour, equivalent to more than $1 trillion per year. DirectExchange will be able to deal with more than 100 billion transactions per year, more than twice the volume handled currently. "Those numbers are likely to double, triple and quadruple even in two to three years time," given the likely huge growth in all forms of electronic transactions, Thompson said.

Together with its 14,000 US member financial institutions, Visa USA has more than 330 million Visa credit, commercial and check cards in circulation, generating more than $720 billion in yearly transactions.

Visa is not making public any statistics on either the money it has spent on DirectExchange or the number of people allocated to the project, Thompson said.

So far, Visa has rolled DirectExchange out to "a limited number of bank endpoints who are pilot testing" the system, Thompson said. The tests have already proved that the system does support Visa's operations, he added. Visa expects to begin mass DirectExchange deployment in the U.S. soon, with the U.S. rollout likely to continue throughout the whole of next year and into 2002, according to Thompson.

Visa and its partners have been working on DirectExchange for almost two years. The network builds upon, expands and opens up the company's current proprietary VisaNet system to take account of Internet technologies, Thompson said. The new network will run in tandem with VisaNet and will use the older system's payment processing engine to handle the company's core debit and credit processing, he added.

DirectExchange draws heavily on Sun technology including the company's Enterprise servers, its StorEdge arrays, its Solaris Unix operating system and its Java 2 Enterprise Edition (J2EE) platform. Other companies supplying technology to DirectExchange include BEA Systems Inc. with its Tuxedo middleware, some of Oracle's software and EMC's storage products, Thompson said.

Inovant, Visa International Inc.'s IT and processing services subsidiary, will manage and operate DirectExchange -- the unit currently runs VisaNet. The Visa subsidiary will also roll out the system to other parts of the world, according to Thompson. Already, two other Visa regional units have said they intend to pilot DirectExchange later this year, he added, although he wouldn't reveal the identities of the Visa units.

"It depends on how quickly other regions can integrate IP (Internet Protocol)-based technology into their environments," Thompson said. He expects DirectExchange deployment outside the US some time after the full US rollout is complete in 2002.

Sun's involvement in DirectExchange dates back about 18 months to a breakfast conversation between Sun Chief Executive Officer Scott McNealy and Visa USA CEO and President Carl Pascarella, according to Jim Bressler, Sun's director of strategic initiatives-worldwide financial services.

"Karl sought Sun's help in rearchitecting VisaNet in a next-generation system that could handle all forms of payment," Bressler said. "Visa's taking the robustness it's developed over the last 20 years with VisaNet and Web enabling it."

He paid tribute to Visa CTO Thompson and his vision for DirectExchange, saying, "It's rare executives get the Net economy and he's really aggressive about pushing it forward. He's talking about what can be, not what is."

Although Bressler wouldn't put an exact figure on the cost of Sun's technology involved in DirectExchange, he said it was in the order of "tens of millions of dollars." In terms of hardware, Visa is using the gamut of Sun machines from its midrange E450 servers to the company's high-end Enterprise 10000 servers, Bressler said. As well as Sun's hardware and software, the company's professional services unit has taken a key role in the architecture of the system, he added.

Sun designed the security stack for DirectExchange leveraging knowledge it gained from helping move Swiss banks to the dot-com world a few years ago, Bressler said.

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