In offering to market third-party software to its customers, Fifth Third Processing Solutions LLC is going beyond what many payment companies do when they open their platform to developers.
The move comes months after MasterCard Inc. launched a beta version of its own software kit — and is following in the footsteps of PayPal Inc., a subsidiary of eBay Inc., whose PayPal X Developer Network attracted the support of major financial technology providers before its official launch.
Fifth Third's approach more closely resembles that of Apple Inc. or the online banking vendor Yodlee Inc., both of which provide a digital storefront to distribute developers' applications.
"We are establishing a marketplace," said Bill Weingart, Fifth Third Processing Solutions' chief product officer. "This is a play to allow [programmers] to connect us with the solutions that we will sell."
Weingart said his company's sales staff will initially market the software directly, and that it may eventually establish a digital storefront to give third-party applications an even wider reach.
Fifth Third Processing Solutions, a joint venture of Fifth Third Bancorp and the private-equity firm Advent International Corp., said last week that it was working with IP Commerce to offer programmers a series of kits that they can use with their own applications. Developers will gain access to Fifth Third's ability for tokenization, the process of replacing payment data with a secure value that is useless to fraudsters if stolen but can be used by a merchant to authorize repeated transactions.
Developers will also be able to code for both card-not-present and card-present transactions. Over time, Fifth Third plans to open up different aspects of its network to developers.
"We want to make it really easy for people to work with us," said Pat Moran, Fifth Third Processing Solutions' senior vice president of product and portfolio management. "That's the key aspect with us," he said. "As you open up your system, you want to be the preferred guys to go to."
The software companies behind those applications will be able to charge clients for their wares.
Developers will also be able to lessen the complexity of connecting to Fifth Third Processing Solutions' network, executives said.
Without these new tools, the development of custom applications would require a strong familiarity with Fifth Third Processing Solutions' network.
"You probably had a certain kind of developer that knew the specs," Moran said. "The APIs that are being offered now are in the common Web languages." Developers will be vetted before being allowed a key, he said.
Security is of particular concern to Fifth Third Bancorp, the acquirer for TJX Cos. Inc. and BJ's Wholesale Club Inc., both of which disclosed data breaches over the past decade.
Fifth Third's wounds may reopen if its new platform opens a door for fraudsters, said Brian Riley, research director in the bank cards practice at TowerGroup.
"There is a level of endorsement of the product that they are doing with the marketing," Riley said. "I think that's a positive, but they have to be particularly sensitive."
Weingart said he is optimistic about the developer platform's prospects. The company already plans to use the technology to help create software packages for some of its largest clients.
"The key is that we are allowing this innovation," he said. "This will grow dramatically, because it opens us up to hundreds of developers and other platforms out there."
