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DT, December 2016

Open Platforms And the IoT
December 1, 2016

Our cover story this month describes the security issues surrounding the so-called Internet of Things. That’s the increasingly intricate network of devices using the Internet to control everything from garage doors to thermostat settings. In many cases, payments flow over this IoT, and therein lies the problem. As our story says, no one is quite sure yet how to protect these payments from the swarming, malevolent traffic that periodically floods the IoT, disrupting data flows and sniffing out weak spots for later attacks.

As more devices are connected and more digital money pours through these links, someone, some day, will no doubt figure this out. But as the payments industry’s experience with ordinary e-commerce intrusions has shown, this can be a long and expensive process, with many setbacks and data losses along the way.

One solution that just might speed things up is to leverage the best brains available by encouraging development on an open platform. In other words, instead of relying on a small coterie of developers, why not open things up to tap a wider range of developers and test a broader set of solutions in an effort to get something effective to market sooner?

As it happens, the payments business is already heading in this direction. Development platforms at both Visa Inc. and MasterCard Inc. opened up this year to give outsiders more access to the companies’ once tightly guarded skunk works. MasterCard in September opened a gateway that gives outside developers early access to application programming interfaces for more than 25 proprietary products and services, including the Masterpass digital wallet and MasterCard Digital Enablement Services, the network’s key tokenization engine.

Back in February, Visa unveiled Visa Developer, opening more than 150 proprietary APIs to outsiders. These include such services as Visa Checkout, Visa Alerts, and the Visa Direct person-to-person payments app. And it’s not just the big guns doing this. Last month Des Moines, Iowa-based Dwolla Inc. announced it is leaving the business of offering consumer-facing payments and will instead concentrate on supporting payments developers on its platform.

To be sure, this outbreak of openness is driven by competitive pressures. In few businesses these days is the mandate for speedy innovation stronger than in payments. What’s interesting is that these players have concluded the most efficient way to get that kind of innovation is by harnessing the talents of scores, maybe hundreds, of outsiders.

Better security mousetraps built sooner rather than later will be essential for payments coursing through the IoT. The examples of Dwolla, MasterCard, and Visa show that open platforms could just be the way to make that happen.

—John Stewart, Editor  |  john@digitaltransactions.net

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