Payment as a Service platforms are rapidly reshaping the financial services industry as banks, card networks, and fintech providers embrace API-driven business models. As open banking initiatives continue to evolve, the demand for flexible, secure, and scalable payment infrastructure is growing across the global payments ecosystem. Research from Mercator Advisory Group highlights the core characteristics required for a comprehensive Payment as a Service platform, from strong customer authentication and consent management to developer tools and regulatory reporting capabilities that support the next generation of digital financial services.
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Data for today’s episode is provided by Mercator Advisory Group’s report – The Emergence of API Platforms: Open Banking and Payments Drive New Business Models.
10 characteristics of comprehensive Payment as a Service (PaaS) platform:
- Characteristics of PasS:
- Open APIs
- Data Security
- Core Integration
- Consent Management
- Anomaly Detection
- 3rd Party Onboarding
- Regulatory Reporting
- 3rd Party Lifecycle Mgmt
- Strong Customer Authentication
- Developer Portal
- In addition, card networks (for example) bundle numerous support services along with core services:
- Card networks integrate suppliers to APIs and billing systems then layer on their own value added services
- Lastly, card networks meter, bill, and support ID Intelligence at partner banks
- Other bundled services might include: centralized enquiry and dispute resolution & open banking
- Even point of payment credit origination is part of card network’s bundled services
About Report
Mercator Advisory Group has released a report describing the technical and regulatory challenges delaying the implementation of the European Union’s PSD2 Open Banking mandate and contrasts that with the rapid growth in new application programming interface (API) driven platforms that operate in the cloud. There has been a surge in platform-as-a-service (PaaS) solutions utilizing APIs.
The report, The Emergence of API Platforms: Open Banking Drives New Business Models, identifies the technical and regulatory issues that continue to be challenges to lift-off for the European Union’s open banking vision and contrasts that situation with the structures that have driven a surge in the availability of cloud platforms that utilize APIs to enable similar services, such as payments.
“In a past report we identified the game-changing value proposition associated with internet-based application programming interfaces. This report identifies why the implementation of APIs has failed to help the EU Open Banking initiative gain liftoff even as these APIs have created a surge in the number of cloud-based platforms recently announced,” commented the author of the report, Tim Sloane, VP, Payments Innovation, and Director, Emerging Technologies Advisory Service at Mercator Advisory Group.
This research report has 20 pages and 10 exhibits.
Companies and other organizations mentioned in this report include: Bank of America, The Berlin Group, Citibank, Citizens Bank, European Banking Authority, Fidor, Financial Conduct Authority, Mastercard, Railsbank, solarisBank, Visa, Vyze, and Wells Fargo.
