Embedded Payments

Use of APIs in Banking and Embedded Payments

fsstsprod — Fri, 30 Dec 2022 04:33:54 +0000

Use of APIs in Banking and Embedded Payments fsstsprod Fri, 12/30/2022 - 10:03

With the advent of the internet and the increasing popularity of online banking, banks have had to adapt to provide customers with secure and efficient online services. In recent years, the banking industry has seen a major shift in the way that consumers interact with their banks. Banks are becoming digital-first, branchless, mobile and 24*7 active. These shifts This shift has been driven by the growth and prevalence of APIs, which allow banks to create a more seamless and efficient customer experience.

APIs, or Application Programming Interfaces, are pieces of code that allow two different software applications to communicate with each other.

In the banking industry, this communication is typically between the customer’s banking app and the bank’s back-end systems. For enabling commerce, APIs earlier were used to securely transfer data between banks and merchant payment processors for online payment processing. Today, APIs have been used to securely link bank accounts to third-party financial services, such as budgeting and investment apps. Banks are now also using APIs to improve customer service and experience by integrating with customer relationship management (CRM) systems and providing customers with a more customized banking experience.

By using APIs, banks can create a more intuitive, streamlined customer experience that allows customers to access their accounts, transfer money, and manage their finances with ease. In a nutshell, APIs provide enabling banks with 3 key features:

Interoperability
One of the most common ways that banks are using APIs is to enable customers to access their accounts from anywhere. By using APIs, customers can securely log in to their accounts from their laptops, phones, or tablets, and view and manage their accounts. This makes it easier for customers to access their accounts no matter where they are, enabling them to monitor their finances and make timely payments.

Security
Another way that banks are using APIs is to make money transfers simpler and more secure. APIs allow banks to securely connect customers’ accounts to those of other banks, allowing customers to transfer money quickly and securely between accounts at different banks. This not only makes it easier for customers to transfer money, but it also helps to reduce the risk of fraud and other security issues.

Personalization
Finally, banks are using APIs to offer customers more personalized services. By using APIs, banks can access customer data and use it to offer personalized services, such as tailored financial advice or tailored product recommendations. This not only helps to improve customer satisfaction, but it also helps banks to better understand their customers and improve their services.

Overall, the use of APIs in modern banking is helping to create a more seamless and efficient customer experience and improve customer satisfaction.

There are multiple types of API integrations that together enable such a seamless experience for the consumer.

Payment APIs: Payment APIs are one of the most popular uses of APIs in eCommerce and banking. Payment APIs allow customers to make payments from any device to any merchant. Payment APIs are widely used in eCommerce and banking to provide customers with a secure, and efficient way to make payments and transfer funds. Payment APIs are also used to enable companies to accept payments from customers in multiple currencies and payment methods, without having to develop their own payment systems.

Identity Verification APIs: Identity verification APIs are widely used by banking and finance apps to ensure that customers are who they say they are. This type of API helps to protect companies from fraud and identity theft. Identity verification APIs are used to verify the identity of customers by gathering information such as name, address, and other personal information.

Risk Management APIs: Risk management APIs are used by banks and other financial institutions to help protect them from fraud and other issues. Risk management APIs are used to monitor customer transactions and detect any suspicious activity. They can also be used to analyse customer behavior and identify potential risk factors. Risk management APIs can also be used to help banks detect and prevent money laundering and other financial crimes.

Together these APIs help create a highly efficient ecosystem that enables a well-integrated embedded payments experience. The ability to buy products or services, verify the consumer and make online payments without switching apps and to be able to create a seamless customer experience has been a boon for players across industries and a massive enabler of digital commerce and improve customer retention for businesses. For individual customer, the assurance of secure payments and faster transaction has been a driving factor towards this shift. A combination of APIs for payment, identification, risk verification within the environment of a single app has enabled consumers and businesses to complete the entire journey through a single interface.

The banking industry is in a period of dramatic change, with the advent of new technologies, new customer expectations and a more competitive landscape. In order to keep up with up with new mandates like open banking, where customers can share their financial data with third-party providers, use of technologies like blockchain, and shift towards more automated agile form of customer journeys, banks must continue to innovate and adopt new technologies in order to stay relevant and keep up with customer needs and APIs was just the beginning of that change.

Embedded Finance – What makes it special?

fsstsprod — Mon, 10 Oct 2022 05:45:56 +0000

Embedded Finance – What makes it special? fsstsprod Mon, 10/10/2022 - 11:15

Recently we wrote about how the future of payments is embedded, and how multiple segments, together making the digital commerce ecosystem, will soon have the ability to provide a seamless payment journey to its customers.

Today we go a little deeper to understand what makes embedded finance special, or different and why all digital businesses should be willing to offer this feature as part of their overall offering.

Personalization

All businesses today focus heavily on hyper-personalization, be it in the products, the offers, or the communication. Now, along with customized offerings, if the customers get the added benefit of tailored payment options and schemes as well, it will not only help the merchant or the business retain the customer but will also motivate the customer to increase their shopping basket value, ultimately leading to additional revenue for the business.

Unifying the Purchase Cycle

Leveraging the power of open banking – getting access to customer’s financial data from the bank via APIs after getting the customer’s consent - the business can create and offer tailor-made financing options to the customer or can provide the best-suited insurance plan for the product bought, or in an ideal scenario – do both!

This not only helps the customer complete the entire purchase cycle – from identifying - to financing and payment - to post-purchase formalities like insurance all in one go but also simplifies the post-purchase management by reducing the number of stakeholders involved in the transaction to just one.

Creating Strong MOATs

Embedded finance creates strong moats for businesses as it helps hold the customer from all ends (hence saving any churn) while creating additional recurring revenue streams for itself. A customer journey closed from all ends – if executed properly – is able to create long-lasting business loyalties which make the service switching cost for any customer very high.

Considering these salient features, businesses are seriously considering embedding finance into their core offerings. But it’s not that simple! Embedding payments and other financial services into a business is exciting but tricky.

Most businesses already operate on complex business architectures and have their own core capabilities. Adding an additional layer of service, as complicated as payments, can sometimes do more harm than good to the already operational business. It is because of the complexity of these services that they are mostly offered by established and experienced FinTech players.

But with Payments-as-a-Service catching up within the industry, and with the benefit of having open-banking-enabled financial services, the complexity of execution gets reduced significantly. All one needs to do is find the right technology provider!

Finding the right technology partner
For such situations, what businesses need is the right partner, an experienced payments technology service provider, who can provide the necessary technical know-how around payments business and a set of easy-to-integrate APIs to help the businesses easily integrate these capabilities into their core offerings and ensure that the customer completes the purchase journey seamlessly. By doing this, businesses will be able to offer the services of a FinTech, without necessarily being one.

At FSS, we are building future-ready payment applications and technology that will enable such integrations as well as nurture an ecosystem of innovation.

To know more, write to us at products@fsstech.com

Embedded Payments & the Rise of Virtual Cards

fsssiteadmin — Tue, 16 Nov 2021 07:03:24 +0000

Embedded Payments & the Rise of Virtual Cards fsssiteadmin Tue, 11/16/2021 - 12:33

A wide range of non-banking service providers are beginning to embed payments into their suite of offerings making them an invaluable part of an elegant, customer-first digital experience. For example, popular social sharing sites are a great example of a digital platform where "billions of intents” - the need for a home, car, travel - are broadcast by customers. In a customer's buying cycle - the trigger, discovery, and consideration - happens here. These micro-moments provide opportunities to blend payment products with customers’ life needs and improve lifetime value.

For issuers, at a time of declining interchange fees, slimming market share due to increasing adoption of real-time payment rails — the demand for broader integrated services has paved the way to remain competitive by remodelling core card products and capturing new revenue streams. Instant virtual cards can help issuers build new value ecosystems, seek new markets, and address heightened customer expectations for immersive payment experiences. And the opportunity is significant. Juniper Research forecasts that the global value of virtual card transactions will reach US$6.8 trillion in 2026, from US$1.9 trillion in 2021. Payments industry consultancy Mercator Advisory Group anticipates that virtual card use will outpace physical business credit card use by 2024.

Virtual cards essentially function in the same manner as a physical prepaid or a debit card, minus the plastic. They are, emerging as the preferred form of payment because these cards can be provisioned and activated on-demand to facilitate secure online, in-app or mobile payments. The rules that govern virtual cards can be quickly programmed, giving issuers complete flexibility to customize products aligned to specific business needs. Virtual cards, for instance, can be generated to settle a specific vendor transaction -- locked down to a specified amount, and time limit -- or as a general-purpose card. Payments outside of these parameters are simply not authorised, seamlessly protecting buyers from fraudulent transactions without impacting the user experience.

An API-first framework provides issuers the flexibility to tap into adjacent ecosystems and embed payments into an almost unlimited number of consumer and corporate applications. To attract digital-first consumers, new age banks and companies are embedding virtual cards into smart devices to provide e-commerce, mobile and point-of-sale payments. YAP Middle East, the leading digital banking platform in the MEA region, for instance, combines virtual cards with added value capabilities such as intuitive card controls, bill payments and spend tracking. Singapore’s Grab, which began as a ride-hailing service like Uber, for instance, has embedded payment services and its own wallet into its app.

Another example is the pairing of lending options with virtual card issuance capabilities. India’s largest consumer finance company is leveraging FSS Unified Issuance Platform to offer virtual cards with a BNPL option to drive revenue and cement customer loyalty. Consumers can apply for these cards online or receive instant EMI cards at checkout (online and physical point of sale) to fund purchases.

Issuers can also explore new business segments that offer higher margins such as corporates. According to Juniper Research a typical company makes more than 2,000 domestic payments annually. Workforce spend management solutions could equip procurement teams with virtual cards with built-in transaction limits and spend tracking capabilities to prevent misuse. Likewise, in a gig economy, businesses can use virtual cards to provide earned wage access to its contract workers.

For issuers, opening issuance APIs to third party apps represents a step-change in their current business models. By industrializing capabilities and offering Cards-As-a-Service, issuers can model an expansive services marketplace. This is the case with ICICI, India’s leading private bank which provisions an instant virtual card with its wallet app to enable customers access a range of services. Likewise, Emrys France which issues multi-wallet virtual cards. Customers can use the open-loop wallet, resident on the card, to transact at merchant outlets affiliated to the Emrys network or at non-affiliated stores. For purchases made within the Emrys affiliate network, customers receive points that are credited to their loyalty wallet at a defined frequency.

Issuers can also participate in third party ecosystems and embed core payment card capabilities at the optimum point of acquisition, at a lower cost and a higher conversion rate. Vopy Payments, for instance, has partnered with FSS to launch embedded financial services to serve telecom providers, social network platforms, consumer tech and other business verticals across multiple markets in Europe.

Embedded payments demand that issuers modernise card platforms to develop new services and products with speed and flexibility. FSS Unified Issuance Platform -- an API-driven, cloud capable platform - provides critical issuance infrastructure to help customers quickly launch digital products from the ground up. The platform APIs allow issuers to orchestrate a complementary services ecosystem as well as embed card payments into third party ecosystems including Google Pay and Apple Pay. Additionally, the platform supports value-added capabilities such as real-time risk decisioning and insights into cardholder spend patterns.