Visa Joins the Parade of Networks Adopting Open Platforms

Third-party software applications linked to payment processors’ and networks’ systems are becoming the name of the game for attracting merchants, and No. 1 network Visa Inc. is now a player thanks to upgrades to the Authorize.Net unit of its new CyberSource Corp. subsidiary. The new features on Authorize.Net’s Developer Center enable third-party software developers and integrators to create applications for merchants that facilitate payment transactions on PCs, laptops, kiosks, smart phones, or even the physical point of sale. The Developer Center links the new apps to Visa’s VisaNet processing network.

Earlier this year, MasterCard Inc. announced plans to make its payments platforms accessible to third-party developers through open application programming interfaces, or APIs (Digital Transactions News, May 25). But PayPal Inc.’s third-party initiative has the highest profile in the payments industry. This week, PayPal plays host in San Francisco to its second annual conference for developers; the payments unit of eBay Inc. expects 2,000 attendees.

Linking its developer initiative to Authorize.Net gives Visa a jumpstart as it enters the third-party app market. Approximately 300,000 merchants already use CyberSource and Authorize.Net, the latter being one of the payment industry’s major gateway providers. Authorize.Net created its Developer Center in 2005, and it has been popular with third-party developers for building new mobile-payment applications that enable merchants to accept credit and debit cards using Apple Inc.’s iPhone and other smart phones.

Last week, Authorize.Net announced to the developer community that the center had a number of new features. “It’s building on a foundation,” Authorize.Net vice president John Bodine tells Digital Transactions News. “This is just another step. Visa put this on steroids, on a fast track.”

The new features include a workflow system that enables developers and integrators to create an Authorize.Net test account, download software development kits (SDKs) in the major programming languages, and test transactions once they’re done with the major part of their coding. The testing aspect reportedly can be implemented in as little as 15 minutes. “One of the biggest things is being able to test your code,” says Bodine, adding that developers will “be able to check the round-trip nature of the transaction.”

The center also includes sample applications with templates for faster development of payment products. Another new feature, called Direct Post, allows developers to place sensitive payment card data on Authorize.Net servers, something that could simplify merchants’ tasks in meeting the Payment Card Industry data-security standard (PCI), according to Bodine. “None of that information is stored locally on the [online] shopping cart” or other merchant-controlled areas, he says. On a related note, Visa says that despite the opening of its network to third-party developers, the core of VisaNet is protected and the initiative won’t compromise its transaction security.

Apps created through Authorize.Net can connect not just to VisaNet, but also to other payment networks. Also, merchants using such third-party apps don’t necessarily need an Authorize.Net account, according to Bodine. Usage of the developer facilities, however, undoubtedly puts Authorize.Net and CyberSource in a strong position to book new business from existing and prospective merchants. Usage of the SDKs is free; Authorize.Net gets its revenues based on transactions.

“Everybody’s trying to provide payment dial tone to application software,” says George Peabody, director of the emerging technologies unit at Maynard, Mass.-based Mercator Advisory Group Inc. “The needs of third-party developers are pretty straightforward—give them the tools and the community and the support.”

Visa says it began opening its network more than a decade ago when it reconfigured VisaNet from proprietary technology to a network architecture based on open protocols. That led to programs such as Merchant Direct Exchange, which establishes point-to-point links between VisaNet and high-volume merchants.

Visa announced last spring that it would buy CyberSource for $2 billion in cash (Digital Transactions News, April 21). The deal closed in July.