In a comprehensive exploration of digital transformation of legacy payments systems, Chaira Mekkaoui and Gabriel Lucas delve into critical considerations, covering security, risk management, compliance, architecture, organizational challenges, provider dynamics, and cost implications. Elevate your approach by incorporating their strategic recommendations, paving the way for a successful payment transformation.

The following article was originally published in the Cross-Border Payments and Ecommerce Report 2023–2024 by The Paypers. To access the full report, you can download it here.


In today’s fast-evolving digital environment, businesses face a significant challenge in addressing the gap between legacy technology and digital transformation. Owners are compelled to reassess their business models and respond promptly to meet their customers’ needs.

On the one hand, companies must maintain the reliability and functionality of their existing legacy systems, often the backbone of their operations. However, legacy payment systems are progressively losing their effectiveness in fulfilling their original purposes while they become expensive to maintain. On the other hand, companies must harness the transformative potential of digital technology to remain competitive and responsive to the evolving demands and expectations of modern consumers. Transformation can be very expensive, both from a system and an organisational standpoint.

Bridging the gap between legacy technology and digital transformation is a critical endeavour for merchants and service providers seeking to uphold their competitiveness and relevance in today’s changing business landscape. For payment providers, escaping from legacy systems is usually necessary to remain competitive and gain new customers. For merchants, making the switch will highly depend on how central innovation and payments are to their value proposition.

As there is no ‘one-size fits all solution’, companies must align their payment strategy with short, medium, and long-term objectives, and carefully assess the return on investment (ROI) of each type of project.

Assessment – acceptance and customer experience

In the ever-changing environment of the payment sector, the top priority is delivering an optimised, user-centric experience. As new payment methods and technologies emerge, customers engage in online transactions and mobile payments – and expect to have a seamless, effective, and user-friendly payment process. Legacy systems might struggle to adapt to these requirements causing friction and confusion for users. The aim is to make payments as streamlined as possible – and offer the most relevant payment options to maximise revenues.

Security, risk management, and compliance

Outdated technology systems present a significant security dilemma. These systems often lack the advanced security features that are standard in modern technology. They may no longer receive vital security patches or vendor support, rendering them susceptible to known vulnerabilities and potential exploits. Additionally, these obsolete systems might not align with the compliance prerequisites and standards dictated by the industry regulations and data protection laws – especially in sectors such as the Payment Card Industry Data Security Standard (PCI DSS) and the General Data Protection Regulation (GDPR). Non-compliance can result in severe violations and lead to legal and financial repercussions. At the same time, working with very innovative and young companies may be a risk per se, as they may not be as solid and robust – both from a technical and financial standpoint.

Architecture and internal organisation

The process of integrating older legacy systems with modern digital tools, platforms, or third-party services poses a substantial challenge. Legacy systems frequently lack the compatibility necessary to integrate with modern APIs and data formats. This mismatch not only complicates the technical aspects of integration but also heightens the risk of operational disruptions, complexities in data transformation, and potential security vulnerabilities.

To address these obstacles, a strategic approach is needed, which may involve the use of middleware, data transformation procedures, and security measures to bridge the divide between legacy and contemporary technology. For such transformation, it is imperative to have a team well-acquainted with both legacy system intricacies and modern technologies to formulate effective integration strategies. Moreover, promoting collaboration, offering training, and highlighting the long-term advantages of integration can create an environment in which employees are more willing to embrace and actively participate in the transformation process.

Providers and outsourcing technology

When it comes to providers in such a fast-paced environment, they can be both a challenge and the solution. While providers that struggle to keep innovating can very quickly become a burden for companies where innovation and go-to-market is at the core of their value proposition, established providers, although usually more legacy, can be the best fit for companies mature enough to manage most of their payment complexities internally. Moreover, internal legacy challenges can also be tackled by outsourcing certain activities to specialised providers.

Cost and opportunity loss – ROI

As already mentioned, maintaining a legacy system can be quite expensive. One the one hand, sometimes fixing minor issues will not solve the root cause – and worse, it may lead to an accumulation of bigger problems and risks. At the same time, legacy systems usually suffer from manual processes to deal with the lack of features and automation and drastically reduce the time to market with subsequent opportunity loss. On the other hand, upgrading your system will result in an efficiency gain, contrary to legacy accounts that reduce your operational efficiency – but it can also represent a very significant investment. Therefore, an ROI approach with a clear roadmap is required to define the right strategy and facilitate the decision-making process.


As payments tend to have more central roles across all organisations, staying ahead of the game has become a strategic objective for most companies and verticals. However, while new companies can rely on the newest technologies straight away despite a potentially higher cost, more established companies must embrace a more thorough and tactical approach to adopt such types of transformation projects.

While short-term initiatives may help find part of the necessary resources and arguments to obtain the necessary buy-in to move towards transformation, companies must prepare for the future and set medium and long-term objectives with a structured and agile roadmap.

Receive our publications

Select your location