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An AMS-IX Story
March 14, 2019
There are many stories circulating around about the first online financial transaction. Some say it was a transaction involving illegal goods over the ARPANET between students in the 1970’s. Others argue that it was not until 1994, when a CD (compact disk with the fourth solo studio album from Sting, Ten Summoner’s Tales) got bought online with a credit card (fun fact, the value was: $12.48 plus shipping costs).
Fast-forwarding to the present, e-commerce activities for businesses is now a whole different ballgame. Customer analytics, fraud management and network optimization are a must. It is not surprising that online businesses demand better and reliable services from payment service providers and financial institutions as digital payments made over the internet for e-commerce activities need to be quick, robust and safe.
The underlying e-commerce infrastructure between platforms, payment service providers, financial institutions and end-consumers relies heavily on the internet. Adding mobile payments to the equation brings another dependency to the ecosystem.
Currently, financial transactions go over the public internet through various networks, adding unnecessary hops (a hop is a portion of the path internet traffic takes from A to B), which leads to additional latency and therefore a potential rise in the cart abandonment rate. The lack of control over the path that the transactions takes over the public internet also poses a potential fraud risk. In other words, less hops and more control over your transactions can improve your network performance, stability and security.
An internet exchange plays a pivotal role in the internet by improving network performance and security. It is a platform that connects multiple parties so that they can exchange internet traffic directly with each other. The exchange of internet traffic is direct, secure and happens in a controlled environment away from the public internet.
By utilizing an internet exchange to exchange financial transaction information, you gain control over the path of the information:
This leads to less hops between the consumer, the merchant, between the merchant and the PSP and between the PSP and the financial institution. The result of these reduced hops is that the latency is drastically improved. The less milliseconds that a transaction takes to travel from the consumer to the financial institution and back means an increase in successful payment transactions.
By taking part of the financial transactions off the public internet and re-routing the transaction over the secure and controlled environment of an internet exchange, two results are evident:
AMS-IX is a household name in the internet business. We operate globally from our headquarters in Amsterdam. AMS-IX has over 850 connected networks. All these networks exchange internet traffic with each other over our platform.
For payment service providers and other financial institutions,all elements of the equation are present on the AMS-IX platform. Network contenders such as: mobile network operators, Tier 1 telecommunications carriers, content delivery networks (CDNs), gaming companies, video streaming companies and online merchants have connected their networks and benefit directly from the secure, low-latency and direct data sharing capabilities.
For all businesses involved in financial transactions, a stable and reliable environment independent from the public internet where payments are fast and secure is key and the main reason for connecting to an internet exchange.