Programmers being wooed by credit card companies

Are you one of those people who don`t like standing in queues? You can download the smart phone app called iConcessionStand. This allows sports fans to order chilled beer and hot dogs from their mobile phones and use PayPal to transfer money to the food vendor nearby. You get an alert as soon as the order is ready. PayPal is a unit of eBay, who earns almost 3% on each the transaction. However, it was not the engineers from PayPal who built this application. In fact, entrepreneurs who use PayPal X, which is a software tool that allows programmers to use the PayPal technology for payment processing in their own products, created it. There are almost 1000 such products. According to the company sources, these outside programmers are expected to earn about 1 billion dollars in terms of volume of transactions.

This model is being mimicked by even the big players in the credit card industry, which are trying to expand their presence in the mobile and online domains. Almost 3 billion dollars have been budgeted by the top 3 payment processing networks to purchase Net based payment processors. MasterCard purchasing DataCash group, a payment company back in August for 526 million dollars is the latest acquisition. In order to obtain more ideas from numerous sources, payment processing networks are opening up to outside programmers.

The aim is to make sure the role of these processors in the payment world is dominant, whether payments are made through cards, online or mobile phones. It is expected that PayPal will be processing between 12 to 14 percent of the ecommerce payments. There are other technology start-ups like Obopay and Zong, which are trying to take a share by making online and mobile payments easier. According to card networks, the new approaches are to ensure customers can make payments quickly and conveniently, without needing a card number or the billing address. The aim is to make things easier and accomplished by just one button click, so much so that payers can authorize transactions with a username followed by a password. Payment networks perceive a great opportunity here by opening up to the third party engineering. There is no surety that software makers will be crowding to the payment networks. There is a culture gap to start with. That is where payment networks are trying harder this time around.

Doug Nicholas

Doug Nicholas, a financial consultant by profession with a Masters degree in International Business from Brown University, is also an ardent writer. Though he has a full time job at one of the companies listed on Wall Street, he does manage to squeeze in time to follow his passion. He puts his ideas to words in his articles related to finance and business.