Josh Peirez
MasterCard Worldwide last month announced plans to allow for the first time outside and third-party developers to use its payment and data services technologies to "create a new wave of e-commerce and mobile payment applications." The company said it would release Open Application Programming Interfaces to its payments gateway and more than 20 platforms and services by year-end as the first major initiative of the newly formed MasterCard Labs. The research and development arm was formed in April to bring "innovative payment solutions to market" faster. MasterCard Worldwide chief innovation officer Josh Peirez said the company plans to create a portal to provide developers with technical documentation, software development kits, sample source codes, reference guides, "virtual sandboxes" to test applications and a "forum designed to spur collaboration between MasterCard engineers and developers." The payment firm expects to generate revenue from the APIs, but Peirez said whether that would be from licensing fees, revenue share, per click or another model would be detailed when the APIs are released. Peirez talked to Management.travelabout how the release of the APIs could potentially benefit commercial card customers. An excerpt follows.
What prompted you to release APIs to your payments platform and other systems?
It's really just looking at the environment for innovation and how it's evolved over the last number of years. By moving away from being an application-centric company to an interface-centric company, we would be able to harness so many more people's creativity and allow them at their cost to be able to develop things that we could see the benefits of on our network. It provides an opportunity to see the kinds of innovation that more longstanding, traditional companies like us and banks really wouldn't come up with ourselves. We are excited about tapping into the ingenuity of software developers around the globe to help create the next generation of game-changing payment applications, especially in the burgeoning areas of e-commerce and mobile payments.
Within the commercial card market, can you blue sky some of the potential ways that corporations could benefit from the release of the APIs?
On our InControl platform originally designed for corporation, we've launched some specific purchase control applications. The tool allows for the creation of virtual numbers that can be changed real time and be based on anything contained in an authorization. We've introduced a few versions, but I could see creative developers take those and embed them in other product sets. If you had somebody traveling who needed to pay a hotel bill, taxis, etc., you could provide them with [virtual numbers,] different limits that could be changed dynamically. You wouldn't need to have an open-ended credit limit of $25,000 for people who don't travel that often. You wouldn't need to have your staff changing limits with the bank. You could empower a couple of people to do it on a mobile device or computer. And you'd get real-time information on what's going on via alerts. You could also have bill payment going through in a creative way. We built our MasterCard payment gateway to service those needs for large and midmarket corporates, but in opening up that platform as well as our bill pay platform that handles consumer payments, you could see developers finding a way to make payment much faster, more efficient and on a mobile device with receipts attached. You could see someone with a good bill presentment system leveraging our payment service, combining those things together.
Could developers also use the APIs to integrate travel or meetings management applications with payment?
We have services we provide and expect those to be baked into some of these larger services. Instead of actually having to have a p-card with a $100,000 limit for meeting planners, a company could have a [meetings management] system that when a meeting budget is approved, the planner could spend in certain categories up to those budget amounts on a virtual number created so you have no fraud risks. [These are] not things that we haven't thought of, it's just that there are too many of them for us to action and build out. We don't know what the niche opportunities might be; whereas people who are focusing on this from the meeting services perspective may find a great way to build our capabilities into that system. Now someone who is just a little developer and smart can program that and get it baked into really good services.
Security questions immediately come to mind. How will you protect the security of the data within your systems and that of cardholders?
We have a 45-year history of making that front and center of what we do, and this will be no different. We'll be registering the developers who develop on our systems, monitoring what they do and making sure we're not putting any customer data or transactional data at risk. It's pretty straightforward.
We've seen examples of mobile payment applications for consumers, especially outside the United States. What is the potential for mobile within commercial payment, either with the APIs or with what the Lab is doing in general?
You'll see lots of the same services, but the one distinction is lots of location-based services. For corporations that have physical distribution, they'll be able to reach consumer sets based on their location. Also, corporations can leverage the location-based services of the mobile phone, combined with a payment product to manage fraud and risk--to understand whether the employee is actually there with the card when the transaction occurs with information from the phone that the employee is carrying. We're looking primarily in Asia at the creation of virtual account numbers via text message or secure server poll on your mobile phone. If you have a traveling population, they could get a MasterCard number while traveling, particularly if they lose a card or run up against a limit. There are also a number of things in the employee benefit area where you could give them awards or a prepaid card via mobile.