Moneris Solutions Corp., the company that handles the bulk of Canada’s transaction processing traffic for merchants, is moving away from a legacy pipeline to a private IP network platform.

The company handled about 1.9 billion

credit and debit card transactions last year and predicts that half of those will move to its IP network by 2006.

The IP network, based on Multi Protocol Label Switching (MPLS) architecture, is cheaper to operate and faster than its legacy predecessor, x.25, said Moneris vice-president of product development Amer Matar.

“”The legacy networks are becoming more and more expensive. They’re also getting outdated and the skills of supporting these networks are basically dwindling. Most of the skills in the sector today are geared towards IP,”” he said.

Some of Moneris’s larger clients, like FutureShop and Staples, are already IP-enabled and have a direct link to Moneris using their own corporate networks as a pipeline. “”All of these guys have IP into their stores,”” said Matar.

“”For the smaller merchant, we have deployed a solution that goes all the way into the store,”” he added. “”It’s business to DSL, but it’s a lot more . . . in the sense that it’s a private offering, so these transactions do not ride over the public Internet.””

The advantage of using private IP that is dedicated to transaction processing is that it does not compete with any other traffic for bandwidth, he said.

IP networks of this nature are beginning to eat away at x.25’s market share, according to Gartner Group analyst Elroy Jopling. The research firm indicates that x.25 was a $113-million market in 2003, but it is predicted to lose about 11 per cent annually.

“”It’s pretty long in the tooth,”” Jopling said. “”It’s a market that is being replaced, primarily by DSL. I think what you see with Moneris is they’re riding the technology wave and going to IP makes a lot of sense.””

Bell Canada‘s enterprise division, which provisioned Moneris’s network, began offering private IP networks several years ago and the payments industry in Canada is gravitating towards it, said director of new business development Herb Underhill.

“”We are on the cusp of a mass migration from an old architecture for payments in this country . . . to a new one,”” said Underhill. He added however, “”This will very much be an evolutionary thing. These systems are not going away tomorrow.””

Moneris will continue to support x.25 for as long as its clients are using it, said Matar. The firm still supports dial-up technology, which some smaller merchants log onto every time they conduct a customer card transaction. Moneris’s IP network, by contrast, is an always-on network.


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