Open source turned 20 this year, which is a major milestone for the developer community and millions of software users around the world. While it’s been widely adopted by numerous companies across a variety of industries, one area deserves our particular attention — payment processing.
People regularly use credit cards, mobile devices, and online checkouts to pay for goods and services, but few think or know about everything that happens on the back-end of payment processing. This year’s open source anniversary presents a great opportunity to discuss the major role played by the software development model in helping make transactions faster and safer. To fully understand the scale of its impact, specifically pertaining to payment APIs, let’s first look at its backstory.
The History of Open Source
Although the idea of open source has been around since the pre-internet days of the early 20th century, its modern meaning dates back to early 1998. In these days, free software was a much more prevalent term that promoted the idea of “users have the freedom to run, copy, distribute, study, change and improve the software.” This concept is still around today, with many of its devotees, including Richard Stallman, the creator of the Free Software Movement (FSM), claiming it to be more accurate than what we now call open source software.
Disagreements over the interpretation, actual and perceived, are what pushed the creators of the Open Source Initiative (OSI) to challenge the status quo. Since the idea of free software is more figurative than literal (think of “free speech,” not “free beer,” as Stallman puts it), open source software was meant to clarify the meaning behind the term and encourage companies to get on board with it.
This worked, as first IBM and later Microsoft, among other big names, recognized the benefits of sharing code publically. Today, open source is the preferred method in software development, with 85 percent of enterprises already relying on it.
Why Payment Processing Needs Open Source
There are plenty of reasons for developers to rely on open source software. After all, it’s much cheaper and more efficient to fix bugs and improve the quality of code with the help of the community, rather than trying to do it alone in a closed source format. This approach is particularly important in payment processing, where poor software can cause integration issues, putting its users and their money at risk.
In fact, this is exactly the position many found themselves in at the end of 2015, the year of the EMV liability shift in the United States. Although the same type of shift occurred in Europe and other parts of the world years before, it still caught many developers by surprise.
Considering that all merchants who weren’t EMV-ready were suddenly liable for fraudulent transactions performed via chip cards (issuing banks bore that responsibility previously), the demand for integration with the new standard was at an all-time high. But it was easier said than done: many APIs came with verbose and proprietary documentation that made the integration process far from a walk in the park.
Considering that EMV was just one of a number of changes happening within the payments industry, there was never a more critical time for open source to take the center stage. Now, we’re finally seeing open source payment APIs with both card-present and card-not-present EMV integration capabilities.
The Role of Open Source Payment APIs
Speed. Simplicity. Security. These three S’s represent what both merchants and their customers seek, as well as what payment processors should strive to provide. This may seem like a rather straightforward goal, yet the sheer amount of different platforms used by various industries often impose limitations from the integration perspective.
Open source APIs offer a solution to this issue by being able to work with diverse solutions. To get a better idea of what it means for developers, let’s look at the example of a payment API released earlier this year.
Developed by TransNational Payments, Pi (“Perfect integration”) is a processor-agnostic JSON-based payment API focused on not only making the aforementioned EMV integration simpler and faster, but also preparing businesses for working with advanced payment methods, including NFC-based and biometric transactions.
In addition, it features an AI and machine-learning fraud prevention platform, which is bound to come in handy at the time when concerns surrounding data breaches force merchants to seek innovative security solutions. Staying true to the open source philosophy, the payment API documentation is readily available to the public.
What’s Next for Open Source?
When it comes to working with open source software, the journey is more important than the destination. It seems that whenever one integration bug gets solved, another one appears somewhere else. Such is the nature of software development, which could actually be a good thing. As long as there are problems to solve, open source will continue to provide the environment for finding answers and making the world of payments a better place.
Republished with author’s permission from original post.
