ARCHIVES: This is legacy content from before Industry Dive acquired Mobile Commerce Daily in early 2017. Some information, such as publication dates, may not have migrated over. Check out our topic page for the latest mobile commerce news.

Visa’s open APIs signal battle against Silicon Valley payment platforms

Visa’s new developer platform, which offers third-party companies the ability to sift through hundreds of commerce-related APIs, indicates the brand’s desire to one-up its competitors in the mobile payments space by creating a massive network of partnerships.

Visa Developer is meant to revamp the brand’s retail payments network into an open platform with the ability to fuel innovation in commerce, specifically by giving software application developers access to proprietary technology. As Visa Checkout experiences continuous adoption by top merchants, the payments company is planning to bring its net of 150 commerce-related APIs to third-party providers and developers, a strategy that could be a hit in Silicon Valley.

“The recent launch of Visa’s Developer platform marks a significant shift for the global payments network, and indeed the broader digital payments space,” said Gilles Ubaghs, senior analyst of financial services technology at Ovum. “With a host of APIs offering a full mix of payment functionality, all built on Visa’s underlying core network, Visa is opening up its full capabilities directly to the broader digital ecosystem while cementing its place in the future of payments.

“While many legacy bank players have been hesitant to see Visa as primarily a technology company, rather than a network provider, Visa Developer will significantly extend its reach to app developers of all varieties, from startups through to technology giants.”

Bridging payment gaps
Visa believes this rollout will help the company bridge the gap between digital and physical payments, especially since electronic payment usage is still on the rise, and not completely established among consumers and merchants alike. Visa Developer marks the first time the brand is making its mobile commerce technology available to non-affiliated third parties.

The platform currently contains more than 150 APIs related to mobile checkouts, fraud prevention and people-to-people payments. Any app developer or company can access these tools – provided they are willing to experiment with implementing Visa’s infrastructure into their own services.

The developers will be able to experiment with the APIs for free, although Visa will charge fees for those who introduce apps using its APIs. Financial institutions and merchants are also welcome to use the program’s features.

This is a significant departure from the company’s last massive foray into mobile commerce – Visa Checkout. The payments platform can only be used by Visa’s partners, such as retailers and accredited banks., Walgreens and NFL Shop are among the latest retailers implementing Visa Checkout to drive mobile conversions, with 45 percent of the solution’s users completing purchases on mobile devices (see story).

Individuals or companies that take advantage of Visa Developer will be able to leverage tools including secure in-store payment services, currency conversion, P2P payments and account holder identification. Additional capabilities will be launched over the course of the year.

Several financial institutions have participated in beta trials for the platform, some of which have already implemented prototype apps using Visa’s technology. Beta partners include Capital One, TD Bank, U.S. Bank and Emirates NBD.

Other Visa Developer features allow users to leverage a testing sandbox that provides a plug-and-play experience, access test data, navigate Visa’s suite of services via a portal and use the brand’s software development kits.

“Perceptions are slowly changing as Visa expands its technological services and offerings, but Visa Developer’s direct appeal to the developer community gives it scope to circumnavigate existing bank partners and significantly increase its role in the broader digital payments market,” Mr. Ubaghs said.

“By expanding its positioning, particularly in terms of live deployments and on the ground offerings, this will help to speed up its strategic realignment with its core bank partners.”

Taking on Silicon Valley
Introducing this platform will place Visa in immediate competition with Silicon Valley dynamites, such as PayPal. Although its payment service rivals have been active in the commerce space for a longer period of time, Visa may have the upper hand due to the sheer amount of brand partnerships it boasts.

The company already collaborates with Stripe, which enables transactions to take place on apps including Lyft, Twitter and Pinterest.

Visa’s move could prompt its competitors to rummage around in their own toolboxes for shareable APIs.

Additionally, the payments marketer has been making strides in tokenization.

In December, Visa collaborated with United Overseas Bank to roll out its first tokenization service in Asia Pacific, underscoring the need for enhanced digital security as mobile payments cement their top status in the world of commerce (see story).

“By providing the tools for developers in start-ups, and indeed amongst major enterprises, this ultimately helps protect Visa from the risk of disintermediation,” Mr. Ubaghs said. “The brand visibility of Visa will likely fall into the background in some deployments, but the company will nonetheless form the backbone of these services.

“This will help to ensure transaction volumes remain high in an increasingly cardless world, and keep Visa at the center of the digital payments ecosystem. This also means that newer Visa services, such as tokenization and P2P push payments, can spread more rapidly to a wider end user base than may have been possible on a traditional bank-by-bank approach.”