How FinTechs Tackle Interoperability With New Public Standards


Sometimes there are two approaches to the same problem in FinTech: EMVCo’s recently released EMV Secure Remote Commerce (SRC) Specification version 1.0 promises to enable many more seamless retail transactions, and the World Wide Web Consortium (W3C) Payment Request application programming interface (API) aims to reduce checkout friction. Modo CEO Bruce Parker told in an interview that they are both looking to solve the same problem, “which is simply and securely gathering payment details.” (That information can be card numbers or user IDs/passwords, for instance.)

These standards aim to reduce friction and fraud at checkout such as people typing in bad credit card numbers (as well as typing in general, which slows down the checkout process). And Parker said there have been many studies over time that indicate when you ask people for lots of information about payment, they start thinking about why they are spending money and merchants can lose out on a sale. However, despite the best intentions, the W3C and EMVco initiatives “are increasing complexity for everybody involved,” Parker said. He noted that part of the source of the complexity is the divergence of their approaches: They’ve gone about solving for reduced friction and fraud in different ways.

At the same time, there are elements such as digital wallets and payment methods. Not only is this reality making life difficult for merchants, it is also creating challenges for consumers because they have yet one more choice when it comes to storing sensitive and secure payment data — through a browser, through people who gave them their phones or other services. The net, Parker says, is “everything requires interoperability.”

Drawing a parallel to comedy, Parker said the most crucial element to understand about improv is the phrase “yes, and.” A merchant with a checkout, wants to be able to say, yes, and — as in, Yes, I accept Visa cards, and I’m doing a combined Visa card Mastercard buy button. Moreover, in the case of approaches to combating friction and fraud, they want to have SRC combined checkout and built-in capability for a payment request API from W3C and digital wallets and digital payment methods.

Parker says the opportunity is to look for a payment stack that has interoperability built-in, which Modo has and offers to the world. Interoperability is also important on the back end, and the company thinks that merchants want to build a checkout on a foundation that allows them to handle both the public standard — like everything going on from W3C and EMVCo — in addition to private solutions. Modo, for instance, plans to support SRC and the payment request API as well as interoperability on the private side.

In other words, FinTech firms are fans of supporting all and saying “yes, and” with the advent of solutions to take on payment friction and fraud.