As Mastercard looks to increase the payments volume it handles, driving increased utilization of the services that stem from its network, such as the Mastercard Digital Enablement Service (MDES), will be vital to achieving its goal. To that end, the company has doubled down on its API strategy with a rebuild of its developer portal in an effort to increase accessibility and ease of implementation of its growing portfolio of services. Developers are an increasingly important channel to market for payments providers and Mastercard must collaborate with them to ensure that its network is at the heart of their innovations. The launch of Mastercard Developers and commitment to designing new products with API accessibility indicates that the company both recognizes the criticality of developers to its go-forward strategy and intends to embrace them.
Mastercard is a global payments network vendor with over 1.5 billion credit, debit and prepaid cards bearing its brand across the 210 countries it operates in. In 2015, it saw gross dollar volume grow 13% to $4.56 trillion. In the same year, net revenue reached $9.67bn, with 39% of that total derived from the US. As of December 31, 2015, Mastercard had 11,300 employees, with approximately 6,200 employed outside of the US.
- Payments: Includes APIs for digital wallet Masterpass, P2P and funds-transfer service Mastercard Send and tokenization platform MDES.
- Data services: Includes APIs for sales trends tool Market Insights, real estate performance tool Retail Location Insights and advertising targeting service Audiences.
- Security: Includes APIs for authentication service Assurance IQ, merchant risk assessment service MATCH and fraud tool Fraud Scoring for Merchants.
Through its eight global R&D Labs, Mastercard has also created a handful of 'experimental' APIs for next-generation commerce use cases. In this category is Mastercard's Bot Commerce platform, which allows for the integration of bots into commerce platforms to process and complete payments on the consumers' behalf; and Mastercard Vending, which enables developers to integrate with vending machines to enable payments from within an app.
Mastercard Developers is led by SVP for APIs Oran Cummins, who joined the company through its $100m acquisition of Orbiscom in 2009. Cummins is responsible for its global R&D efforts through Mastercard Labs and drove the effort to redesign and rebrand Developer Zone. His dual role was understandably a factor that led to the inclusion of several of Mastercard Labs' Experimental APIs in its new developer program – something the network plans to build out moving forward.
The platform is an acknowledgement that developers will become an increasingly important distribution channel for Mastercard, which has traditionally relied on partners like issuing banks and merchant acquirers to drive its network and services into the market. Mastercard Developers will generate direct revenue from API utilization (pricing varies by API, ranging from monthly fees to volume-based usage), but the programs' ultimate business objective is to drive increased utilization of the company's network while embedding its network services into new – and ideally high-growth – commerce applications. Cummins says the development of a more robust API strategy has buy-in from the C-suite and will fundamentally change how Mastercard develops products moving forward.
The company claims to have tens of thousands of developers currently working with its APIs, which presumably includes many of its issuing banks. It says utilization of its APIs has increased dramatically over the past 12-18 months, with interest mounting from non-payments organizations. Groupon, for instance, deploys Mastercard's MATCH API to manage risk when generating new merchant accounts and FreshDirect employs Masterpass for online and in-app checkout. Understandably, certain APIs will require underwriting by a financial institution or merchant acquirer and vetting by Mastercard before reaching production. The company has relied on mobile app development partners such as AnyPresence to drive implementation of its APIs in the past, but considers them less pertinent now given the rebuild of its developer portal. The majority of the API activity has been generated by US companies, but Mastercard notes that the program has been designed for global access and is seeing increased utilization in other markets like the UK and Japan.
While Mastercard was the first network vendor to make advances in fostering a developer community, Visa's recent activity was undoubtedly a factor of consideration in its platform relaunch. Visa unveiled its formal developer program dubbed Visa Developer in February, spearheaded by Ranjat Taneja, who joined the company after serving as Microsoft's corporate VP of R&D and Electronic Arts's EVP and CTO. At launch, Visa opened access to more than 150 APIs, with a total of more than 400 set to be released at some point. Visa is significantly larger than Mastercard, and has over 2.5 payment cards distributed globally. Mastercard has a few advantages, however, including a nearly four-year head start in running a developer program, and its consultancy arm Mastercard Advisors, which continues to spearhead the network's data strategy.
American Express offers API and SDK access, although its platform is somewhat elementary, and certainly nowhere near as extensive as those of Visa and MasterCard. However, American Express has demonstrated an ability to court high-profile partners, as evidenced by its Amex Sync initiative with Twitter and Membership Rewards collaboration with Uber. Not to be left out, Discover is working with developers on a onetime basis and is in the exploratory phase of building a developer initiative.
Jordan McKee is a Principal Analyst leading 451 Research’s coverage of the payments ecosystem. He focuses on digital transformation across the commerce value chain, with an emphasis on the major trends impacting payment networks, issuing and acquiring banks, payment processors and point-of-sale providers. His research helps vendors and enterprises assess the key implications of emerging technologies driving the digitization of the end-to-end shopping journey.
Research Director Sheryl Kingstone focuses on improving the customer experience across all interaction channels for customer acquisition and loyalty. She helps operator and enterprise clients make decisions regarding the use of technology, business processes and data to boost revenue and optimize business performance. She also assists vendors with custom research projects, messaging and positioning, as well as product road map evaluations. Kingstone researches and writes on the top trends in mobile marketing and commerce along with cross-channel customer experience technologies.
Keith Dawson is a principal analyst in 451 Research's Customer Experience & Commerce practice, primarily covering marketing technology. Keith has been covering the intersection of communications and enterprise software for 25 years, mainly looking at how to influence and optimize the customer experience.