The digital transformation in payments, once hailed as a revolutionary leap forward, is now creating its own set of legacy issues, according to Jeff Parker, CEO of Paymentology. In a recent discussion with PYMNTS CEO Karen Webster, Parker articulated a growing concern within the industry: the rapid obsolescence of the very infrastructure designed to replace older systems.
The Accelerating Cycle of Obsolescence
While banks have focused on developing digital front ends and FinTechs have launched slick mobile applications, the core issuer-processing layer—the critical component that handles transactions when a card is tapped or a phone is swiped—has not kept pace. This disparity is creating a significant bottleneck, affecting both traditional financial institutions and newer digital players.
Parker highlighted that many firms once considered cutting-edge disruptors are themselves aging into legacy status. “The infrastructure cycles are compressing. The gap between ‘new’ and ‘old’ has never been narrower,” he stated. The traditional issuer-processing market, he explained, is still largely dominated by platforms built decades ago, which are inherently “monolithic” and “quite inflexible in terms of what it can provide.”
The Demand for Standardized Flexibility
Modern digital banks, Parker elaborated, are not seeking customization through bespoke builds, which often lead to technical debt. Instead, they require flexibility delivered through standardized infrastructure. This means real-time mobile-based controls, virtual card issuance, and wallet provisioning that function seamlessly across multiple markets without the need for constant custom integrations.
Paymentology’s strategy, according to Parker, is to avoid the bespoke path. “If a client wants something done, we build it for everyone,” he said. “We try and adapt for it through configuration rather than building code.” This approach has contributed to significant growth, with Paymentology supporting clients in nearly 70 countries and reporting a 65% jump in transaction volumes in fiscal year 2025.
The Stickiness of Issuer Processing and Drivers for Change
Issuer processing is inherently a “sticky business” characterized by high switching costs and multiyear contracts. When systems function adequately, there is little incentive for institutions to change. “It’s a very strong sticky recurring revenue type business,” Parker noted.
However, institutions do migrate, typically for two primary reasons. The first is geographic expansion. Financial institutions looking to operate across borders prefer a single provider, a unified integration, and a consistent operating model rather than stitching together disparate processors in each new market. The second driver is a more gradual recognition of limitations within their existing technology stacks.
“What we’ve seen in the last few years across the industry is a lot of work on the mobile app,” Parker observed. “But at some point, the underlying flexibility and innovation is really driven by the infrastructure that sits behind it.” This gap between customer-facing enhancements and the capabilities of the underlying infrastructure is where Paymentology sees its greatest opportunity.
Parker identified a lack of a clear global leader in next-generation issuer processing. Digital banks, which he considers Paymentology’s “hero segment,” are particularly in need of processors that can facilitate rapid expansion while also accommodating local requirements, such as domestic switch integrations and data-hosting mandates.
The Simplicity Paradox in Consumer Demand
The conversation also touched upon the growing chasm between consumer expectations for simplicity and the complex options they are increasingly presented with. Parker cited the example of flexible credentials, which allow consumers to switch between debit, prepaid, credit, or buy now, pay later options with a single card. While elegant in concept, these require sophisticated underlying infrastructure.
Parker anticipates growing demand for such features, driven by the fundamental tension that “customers increasingly want things to be simple. But the options available to those customers is increasingly complex.” This complexity extends beyond cards, with Paymentology planning to expand support for alternative payment methods, including stablecoin-linked activities and account-to-account capabilities, over the next few years.
The company is already involved in stablecoin card programs and sees potential at both the cardholder and settlement levels. The increasing integration of stablecoins, real-time payments, and account-to-account transfers alongside traditional card rails in cross-border payments necessitates that processors support a wider array of methods without introducing friction.
Strategic Funding for Future Growth
Parker, who joined Paymentology two years ago, spent a significant portion of that time validating the business case and product-market fit before seeking external capital. The company recently announced a $175 million funding round from investors including Apis Partners and Aspirity Partners.
When asked about the potential impact on an initial public offering (IPO) timeline, Parker indicated that execution remains the priority over immediate exits. “We still believe that while our growth is good and we’re happy with that, I think we’re still very early in the journey,” he stated. The new capital will be allocated towards expansion, product development, and hiring.
For Parker, the funding round serves as a signal of Paymentology’s ambition. “Raising this sort of money helps put our name on the map,” he said. “But really for us it’s very much around highlighting our ambition for growth, our ambition around innovation, and wanting to continue to accelerate our path in terms of product development.” Paymentology aims not only to secure new business but also to build the foundational infrastructure that will support the next generation of payments for years to come.
