Legacy banking infrastructures were taken by surprise in mid-2010 by the arrival of new and fast-growing technology corporations such as Uber, Square, Instacar and Marcus. These companies implemented new payment solutions and ways of issuing cards through open APIs (Application Programming Interfaces) that make it easy to create customized payment card products with real-time funding for users.
Banking has had to face continuous transformation, that has directly impacted highly established products and services such as payment cards. The report A Guide to Understanding Modern Card Issuing, published by Marqeta, delves into the new uses of credit cards, which allow companies to create payment solutions with rapid implementation, flexibility and customization.
The present-day and future of payment cards
Disruptive and emerging companies are seeking to lead the market with ongoing development of payment solutions that adapt to the changing needs of their customers. This frenetic pace of innovating and launching new products is very difficult for banks to keep up with, as they are burdened with cumbersome legacy infrastructures, and also find it difficult to seal alliances with third parties that could provide greater agility in the management of this type of transaction based on payment flows.
But despite these difficulties, banks must respond to consumers, who demand integrated and personalized services. In this sense, they are clearly betting on APIs, as are their Fintech competitors, to play an increasingly important role in the financial ecosystem with the aim of creating new, much more efficient payment experiences that provide access to a greater number of more integrated, and even invisible, services and transactions.
As the report published by Marqeta explains, “the financial and non-financial institutions that use open payment APIs think differently about their payment strategies. They are adopting more granular functionality in place of traditional monolithic, silo-based payment systems, where individual tasks, such as the transaction clearing, reversals, refunds, and voids flowed through an opaque, closed process.”
In line with this idea, Oriol Ros, Director of Corporate Development at Latinia, affirms that “the adoption of API interfaces is an opportunity to accelerate innovation in banks, enabling them to collaborate within broader service ecosystems, generating powerful results such as validating payment, location and cardholder identity in real time.”
Another highlight for consumers is the security of their payment transactions, no matter where they make them, whether from a physical store, on a mobile device, or a web page. In this respect, APIs allow financial institutions to encrypt sensitive card-issued information, such as a personal account number, with tokens that are stored securely online with merchants for recurring payments, at the click of a button.
“Consumers are asking for payment methods that adapt to their needs in an agile way and with maximum guarantees in terms of security. A very striking example is Amazon Go, which allows customers to purchase and leave the store without paying at the checkout,” points out Latinia’s Director of Corporate Development.
Advantages of issuing modern cards
So, what do these new payment cards offer their users, and why are they gaining ground so rapidly on a global scale? Here are some of their most noteworthy attributes:
- Speed and convenience: with an open API you can personalize each experience without involving the card issuer and stay up to date with ISO-8583 implementations around the world. The reach of the cards allows for mobile wallet and app integrations such as Apple Pay, Google Pay and card networks such as Visa and Mastercard.
- Flexibility: with their own processing engines, card issuing platforms analyze and interpret ISO-8583 messages to help support transaction and authorization decisions.
- Consumer trust: card issuing platforms remove the barriers of certifications that take 6 to 12 months, allowing you to set PINs in your online applications without the need for further action. With APIs you can create individual data visualization and analysis, helping to create risk algorithms and automatic learning to detect predictive risk behaviors as well as triggering event-based alerts and sending real-time updates.
- Global scalability: is guaranteed to be deployed anywhere without the need to integrate with each local card network. These platforms are located in a global cloud that automatically adapts to the volume of traffic and transactions.