How APIs can help merchants meet payment needs


Supporting customer preferences is an integral part of running a successful business. Doing it in a fast and transparent way for end customers becomes essential as a wider range of typical shopping and payment experiences
move online.

The growing popularity of online payments means that convenient and fast payments are a must for merchants, putting pressure on their banks to help them deliver such experiences, according to Imran Haider, head of open banking at Wells fargo. This highlights the importance of open banking technologies like APIs, which are essential in delivering the instant payment experiences that customers now expect, he said in a recent interview with PYMNTS.

“The market’s expectations are the customers, be [they] consumers or business customers, they want real-time payments, ”Haider said. “[It is] the world in 2021, if you can place an order with a retailer and have that product shipped and brought to your door the same day, then you should definitely be able to send a payment [in] in real time, … and to effectively allow payments in real time, [your technology] must be API-based, because APIs are your kind of real-time interface between systems. “

This makes examining the roles of open banking and APIs essential for both merchants and their FIs to enable the full customer experience now necessary for businesses to thrive.

Track changes in digital payment preferences

Maintaining consumer loyalty has never been an easy task for businesses, especially as the shift to e-commerce has removed the opportunities for face-to-face interactions between brand associates and customers that can foster a greater sense of personalization. Building that personalization online requires merchants to have access to the right data and be able to flexibly respond to current buyers’ desires, such as their requests for instant payments. APIs can help share the customer data that merchants need to support these experiences, and they’re not as new to the ecommerce world as some might think, Haider explained.

“E-commerce is one of the few areas where the market is already using APIs to offer integrated finance,” he said. “If you think about integrated finance and all the talk in the market today, there are a lot of potential use cases and a lot of great options and opportunities, but ecommerce is actually a real use case. that exists in the market. for many years. Imagine if you hadn’t integrated banking into e-commerce. You would load your baskets with different products and then go to checkout and instead of being able to checkout [inside] your experience, you will need to go to your bank’s website and login, enter [your] information, send a payment and then return to your eCommerce feed, which [means] obviously we would have nowhere near the traction we have in e-commerce if that was the structure.

Meeting growing consumer expectations for real-time payments means that banks must work with their merchant customers to expand this pre-existing use. This puts more emphasis on corporate banking relationships, as they need to seek out FIs that can offer such capabilities. Most traders don’t want or know how to build the frontend
solutions on these APIs that will confront the consumer and allow a more transparent payment, according to Haider. Wells Fargo has developed a software development kit or widget that merchants can plug into their APIs, allowing them to remove friction points from their payment experiences. This would help customers sign up for lines of
credit with more ease, he explained, using the experience of buying an engagement ring at a jewelry store as an example.

“You would literally go around the corner of the store… [and] you would basically enter your information and apply for a line of credit, get the line of credit, “he said,” then the salesperson would enter the information and a new line at that point would open, and you could take out the store with the ring, which is quite a heavy experience. In 2021, consumers pull out their phones and expect to be able to open a line on their phone very quickly and seamlessly. So in this market, we are offering APIs to these businesses for their eCommerce feeds and really for their store feeds as well. “

Such experiences are quickly becoming the norm in the United States as more and more consumers begin to rely on digital channels and devices both in physical stores and when shopping online. Fostering close relationships with merchants is therefore essential for banks as these trends evolve, and financial industry players must also respond to several
other challenges for open banking experiences of this type to continue to develop.

The challenge of open banking standardization

U.S. FIs and FinTechs work closely together to foster the connectivity merchants need to keep their customers happy. The next major step in the continued growth of open banking is to develop API standards that can make those connections more scalable, Haider said.

“The main challenge, I would say, is that you need standards,” he said. “Here in the United States, you have thousands of different FIs, then thousands of different partners and businesses that want to leverage and potentially use financial services products for common clients. So if you don’t have standards, it becomes kind of a Wild West where every merchant has to fit in with every bank in a different way, and it’s just not something scalable. To really make these use cases viable and expand, you need standards. “

Drafting these standards and providing a means for open banking connectivity to continue to evolve should be one of the main objectives of FIs in the years to come. It’s clear that merchants and consumers alike are demanding the more personalized interactions and faster payments open banking can offer, and U.S. banks need to prepare to meet those expectations.


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