What are open payments?
To define open payments, we first looked at three dimensions of payment services: technology, business practices, and methods of trust generation. For these three dimensions to be open they need to be accessible, flexible, and transparent.
Open Payment Services
Payment providers that combine the three “payment dimensions” with the three “open attributes” offer open payments. These dimensions and attributes interact to produce the elements of open payments, which are described in the figure below, and comprise a roadmap to becoming open. For example, a RESTful API is an example of a technology that is accessible; an unbundled service that is multicultural and multilingual is a flexible business practice; and publicly available resources and documentation are examples of transparent methods of trust generation.
Clearly, payment providers will not become open by making one simple change; it will take effort across many aspects of an organization. Yet it is something payment providers are well advised to do, as the industry’s status quo is changing and those who do not embrace openness risk losing relevancy and cutting-edge services.
The delayed arrival of openness to payments
Despite its growing importance, openness is arriving late to the payments industry. As an industry with heavy financial aspects, security plays an important role in payments, and traditionally security and openness have been at odds with each other. Payment security, put simply, has typically been achieved by restricting data access to a select few. It has also been about standards, such as PCI DSS, to ensure any actor connected to the payment chain meets certain security qualifications. Restricted access and standards will always remain a part of how the payments industry ensures security, but now openness can now bolster security rather than hamper it. This is primarily possible through a public review and feedback loop for the APIs and code that form the building blocks of payments technology. By making any non-sensitive code publicly available, external users can uncover potential problems. As the Economist recently pointed out, “Writing completely secure code is almost impossible. As a consequence, openness is the best defence, because it helps spread fixes.”
The means to an end
Openness is a means, not an end, but promotes convenience, simplicity, increased security, and new options for shoppers. Through ‘openness’, major industry players are redefining what is possible in payments.