Most enterprise payment stacks weren’t designed.

Countries chose different providers. Acquisitions brought inherited technology. New channels, loyalty programmes, EV charging and alternative payment methods were added over time. 

Eventually, retailers found themselves trying to deliver one customer experience across an infrastructure that was never built to work as one.

In Episode 1 of The Payment Complex, Under The Stack host Victor Padee sits down with Yuriy Kostenko of Flagship Advisory Partners to explore how payment fragmentation happens, what it costs retailers and what the future payment stack could look like.

Yuriy shares examples from major retailers, including a $16bn sporting goods company where a seemingly simple refund became a manual reconciliation nightmare, and a Nordic retailer attempting to recognise the same customer across fuel, convenience, self-checkout and EV charging.

The conversation moves from the problems retailers are dealing with today to the infrastructure they’re beginning to build for tomorrow: customer payment identity, resilience, centralised reporting and payment orchestration.

In this episode

01:00: Why payment fragmentation happens
 
How multinational decision-making, M&A and new retail use cases create increasingly fragmented payment environments.

02:49: What fragmentation puts at risk

Why customer experience, payment resilience and reconciliation are among the biggest casualties of fragmented infrastructure.

04:22: The $16bn refund nightmare

How combining loyalty points, gift cards and card payments turned one customer’s return into a manual reconciliation problem.

05:46: Recognising your customer with every payment
 
How customer tokens and payment identity could connect loyalty across stores, fuel, self-checkout, EV charging and other customer journeys.

07:28: Does it take an outage to build resilience?

Why downtime is often the event that finally forces retailers to rethink their payment infrastructure.

08:00: The North Star for payments visibility

Why retailers increasingly want one place to control and monitor payments across channels and understand how their customers are paying.

08:33: Will an orchestration layer work for you?

Why orchestration is emerging as a potential future state for complex retailers — and why there still isn’t a perfect answer.

About the guest

Yuriy Kostenko - Flagship Advisory Partners

Flagship Advisory Partners is a consultancy and M&A advisory firm specialising exclusively in payments and fintech, working across merchants, payment providers and card networks.

About The Payment Complex

The Payment Complex is an Under The Stack series exploring the systems, decisions and infrastructure sitting behind modern retail payments - and what retailers can learn from the complexity underneath them.

The biggest mistake organisations make is treating payment testing as “did the card go through?”

David argues that’s far too narrow.

A real checkout includes:

• POS software
• Barcode scanners
• Receipt printers
• Payment terminal
• Cash handling (where applicable)
• Customer interaction

If you only test one component in isolation, you can successfully process a payment while still delivering a broken customer experience. The objective is to validate the entire customer journey, because that’s what customers actually experience.

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2. Simulated terminals are useful - but they’re not reality

“When was the last time you paid on a simulated terminal when you went to Tesco?”

His point is simple:

Retailers deploy physical devices, not simulations.

Simulators are faster and easier, but they cannot accurately reproduce:

• firmware changes
• hardware behaviour
• PIN entry
• card insertion
• receipt printing
• real-world device interactions

For anything being deployed into stores - or for certification - testing should happen on the actual hardware.

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3. Lack of test coverage is one of the industry’s biggest hidden risks

Many retailers believe they’re testing thoroughly because they have dozens of automated tests.

David argues the opposite.

Often they’re missing:

• international cards
• foreign issuers
• DCC scenarios
• different payment methods
• edge cases

A solution that works perfectly with UK Visa cards might fail for an overseas Mastercard customer.

Automation allows organisations to expand coverage from tens of scenarios into hundreds without multiplying manual effort.

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4. Start simple, then expand

You don’t automate every possible payment journey on day one.

David recommends:

1. Purchase transactions
2. Refunds
3. Most common payment methods
4. Highest-volume hardware
5. Edge cases afterwards

In other words:

Automate the journeys that matter most first, then continuously widen the safety net.

This makes automation practical instead of overwhelming.

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5. Every technology change introduces payment risk

Modern payment environments are constantly evolving.

New:

• firmware
• payment applications
• payment terminals
• wallets
• wearables
• contactless technologies

Each seemingly small change can alter how a transaction behaves.

David’s message is that testing shouldn’t be viewed as something you do before launch - it should become an ongoing capability that evolves alongside your payment estate.