Alpha Payments Cloud is aiming to make the deployment of payments technology more flexible, thus allowing companies to adopt new payments products at a faster pace.
"If you are in the payments space, you know how much friction there is with deploying and managing payments technology," says Oliver Rajic, CEO of Alpha Payments Cloud (APC), which just received a $12 million investment from an angel investor.
The New York-based APC is using an 'app store' model and an application programming interface (API) to allow financial institutions and other payment companies to choose and deploy technology. Its system allows payments products to manage fraud prevention, mobile wallet, prepaid cards, currency conversion and other tasks. Users can leverage the API to select from a variety of payment products in more than 35 categories.
"Banks and acquires care about merchants and getting as many products in the queue for merchants as possible," Rajic says.
APC uses a Software as a Service (SaaS) model, which is designed to lighten IT work for the issuer since APC remotely hosts and manages most of the technology. APC has pre-integrated dozens of products into a master platform, enabling payments companies to pick different products for different payment functions. Clients can also update or change technology on the fly. APC's clients pay either a transaction-based fee, or pay based on new revenue generation.
"Maybe the merchant has payment needs in different jurisdictions with different security needs," Rajic says. "By using this new tool, the institution can 'turn on' other fraud solutions where necessary."
APC's app store is also designed to shorten development cycles. APC did not name its clients, though Rajic says the service is being used by Asian banks, and the company is in discussion with U.S. banks.
APC's approach makes sense for card issuers and merchant acquirers, which are under pressure as new payment models are quickly entering the market, says Bernard Golden, a cloud computing consultant. "APIs are on fire right now. You need to be able to mix and match tech," he says.
APIs allow developers from different companies to share programming tools in a less proprietary environment. Another example of this approach in financial services is Fiserv's Open Solutions, which allows financial institutions to develop, share and sell payments and other financial services technology through its DNAappstore. VeriFone has also opened its mobile payment platform to developers.
There's still a learning curve before the model is widely used in the payments industry, says Arkady Fridman, a senior analyst for Aite Group, who earlier in his career worked on PayPal X, PayPal's open development system (now called X.commerce).
"Back in 2009 I believed the concept of the payments app and open API's would be much further along by now than they are today," Fridman says. "APIs have made progress, but payments apps for merchants have been slow in adoption."
The model is likely to expand in the payments industry over the next couple of years, Fridman says.
"People don't understand it well enough yet, but we will continue to see announcements [like APC's] because it allows companies to customize," he says. "I'm a big fan of this approach."