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 just months after MasterCard Worldwide launched a beta version of its own software kit and is following in the footsteps of PayPal Inc., a subsidiary of eBay Inc., whose own PayPal X Developer Network attracted the support of major financial-technology providers before it even launched.
Fifth Third’s approach more closely resembles that of Apple Inc. or online-banking vendor Yodlee Inc., which provide a digital storefront to distribute applications that connect to their systems.
“We are establishing a marketplace,” says 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 says his company’s sales staff initially will market the software directly, and Fifth Third Processing eventually may establish a digital storefront to give third-party applications an even wider reach.
Fifth Third Processing, a joint venture of Fifth Third Bancorp and the private-equity firm Advent International Corp., last week announced it is working with IP Commerce to offer programmers a series of kits they may use with their own applications. Developers 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 a merchant may use to authorize repeated transactions.
Developers also may 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,” says Pat Moran, Fifth Third Processing senior vice president of product innovation. “That’s the key aspect with us, 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 also will be able to lessen the complexity of connecting to Fifth Third Processing’s network, executives say.
Without these new tools, the development of custom applications would require a programmer that was already familiar with Fifth Third Processing’s network.
“You probably had a certain kind of developer that knew the specs,” says Moran. ”Now the [application programming interfaces] that are being offered now are in the common Web languages.”
Software companies will be vetted before being allowed a key, Moran says.
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, says 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,” he says. “I think that’s a positive, but they have to be particularly sensitive,” he says.
Weingart 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,” Weingart says. “This will grow dramatically because it opens us up to hundreds of developers, and other platforms out there.”
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