When a Software Company or Developer references “open” they are often speaking to the availability of choice. Choice in tenders offered and choice in providers leveraged coupled with choice in their development tools. Regrettably, the concept of “open” is foreign to many traditional participants in the payments industry – whose proprietary services and platforms effectively restrict choice.
Why does choice matter to the development community?
Quite simply, it is all about customer acquisition and customer retention. The rapid advance of technology and electronic commerce is challenging customer loyalty by creating more convenient access to purchase options and payment services. “While Merchants [via their Software Company] can choose whether to accept a given form of payment, ultimate sovereignty rests with the consumer’s choice of which instrument to pull from his or her wallet.” [From- The Choice at Checkout: Quantifying Demand Across Payment Instruments. (click to launch PDF) The Federal Reserve Board].
Choice is about finding fresh routes to reach new customers and offering compelling reasons to keep existing ones. But choice in payment services and providers presents some unique challenges for Software Companies – who are experts in their application workflow, but do not want to become experts in payments.
Consider the lifecycle for a Software Company adding payments to their application. In the years of experience IP Commerce has assisting the development community, we have discovered that a payment integration, the vast majority of the time, starts with a customer request. There is a tangible need (of either tender or provider) with a tangible date that must be achieved by using payments APIs.
Additionally we also know that over time, as customers commerce needs change and grow the expectation is that the software will extend to meet these requirements. As the needs of the customer change…the Software Company must adjust to meet these needs or face the risk of losing a new opportunity, or worse, losing existing customer(s).
However, if they have chosen a restrictive API to begin with…the process begins again! The Software Company now has a customer retention issue which usually forces them to absorb the expense of a new integration & demonstration of compliance, just to save the business. Taking on this new expense assumes that the Software Company can deliver the new payment service within the timeframe their customer requires. If not, the Software Company customer is forced to look for other solutions to fit their needs.
To remain competitive, Software Companies must build solutions that assist them in acquiring new customers and retaining existing ones. When selecting a API, choice in payment services and providers is a must for the Software Company who wants to ensure they can address both the immediate and the future, unstated needs of their customers…positioning themselves for long-term success. This choice will only be found in an “Open Payments API.” This is not your standard ISO 8583 interface.
About the Author:
Peter Osberg is the Sr. Vice President, Business Development & Marketing for IP Commerce. With extensive senior-level experience in highly competitive, multi-sided markets, Peter is a well-established entrepreneur with a proven ability to plan, execute and administer successful sales and business development initiatives.
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