It turns out that the era of “programmable currency” has already arrived.
Conventional wisdom holds that blockchains and smart contracts are the official precursors and enablers of transactions that use code rather than human interaction to determine how money acts and how it can be used, according to a set of predetermined rules. .
In an interview with Karen Webster, Fidel API CEO Dev Subrata said that all money is programmable – and these pre-determined rules can be programmed into existing payment rails and infrastructure.
In other words, while blockchain has its place and use cases in finance, there is no need to reinvent the wheel through new currencies and new protocols to usher in the next natural evolution of payments. .
This evolution, Subrata said, can solve various interactions in payments — for consumers and in the business realm — that are “broken” and plagued by inefficiencies.
Platform-based API and model
At a high level, the company operates as a payments infrastructure-focused FinTech that, through an application programming interface (API)-driven platform model, enables developers to build programmable experiences in the transactions.
These experiences happen at the same time as the transaction – where businesses leverage modern, restful APIs to harness data to deliver a range of experiences from real-time automation, digital receipts and loyalty to ticket management. expenses. The increased flexibility allows businesses and consumers to manage spending in real time and can improve business spending practices and budgeting across a range of payment cards.
Subrata noted that the key to forging a programmable monetary ecosystem – even ones that tie existing rails to the blockchain – to be part of real events requires “sewn” card purchases, account-to-account activity and generally enabling multiple different tracks and systems that are otherwise separated to “talk” to each other.
Related: APIs turn payment cards into programmable currency
Direct and in real time
Subrata said the direct, real-time interaction eliminates the need to spend time and money on the hassle of post-trip expense management, where receipts must be sorted and data entered into spreadsheets. calculation before expense reports can finally be submitted.
The company offers its Transaction Stream API, which can define (and ensure compliance with) protocols governing approved spending. The company also offers a reimbursement API, which can be used with Transaction Stream to reimburse employees on these cards in near real time.
“The goal,” Subrata told Webster, “and our role in the ecosystem is to enable developers to build new experiences on top of existing payment infrastructure and existing money flows.”
These experiences are created through three components: authenticate users and collect consent, “play” a transaction as it occurs on a specific payment identifier (online or offline), and then, finally, push back instructions on this payment ID.
In terms of mechanics, at the development level, this means applying programmable logic on top of a transaction to trigger various event-driven experiences. Fidel API’s Transaction Stream product provides real-time visibility into linked card transactions.
See also: APIs transform consumer financial management with real-time data
With a nod to increased security, he said the platform “knows” which bank the card belongs to and who is authorized to use the card. Before a card can be linked to a service, a one-time password (OTP) is sent to credentials verified by the issuer, such as associated phone number or email.
So when a cardholder makes a specific transaction – in certain dollar amounts, say – in a certain category or with a certain merchant, the money can be pushed back to that card, in near real time, as a refund .
Subrata said the model can work with a variety of use cases, like business expense management, where a traveling warrior taking a client out to dinner can see the funds “pushed up” instantly on a map. After the meal is finished, the check is cashed and the APIs perform programmatic “checks” on the validity of the purchase.
He added that without these programmable attributes, expense management is fraught with pitfalls: the employee, at the end of their trip, collects the receipts, submits them, and waits for their managers to approve the expenses – and the wait lasts until reward (if any). Real-time decision-making on policy compliance, he said, solves problems that exist at both the employee and employer level.
These same principles governing “programmable currency” can speed up and improve insurance claim reimbursements or loyalty and rewards – which can be applied to cards in real time, rather than waiting for statement credit.
As examples of how loyalty programs could evolve, Subrata offered the hypothetical example where Nike might choose to create a loyalty program, where if they buy a non-fungible token (NFT) from Air Jordans, they get 5% of every purchase made at a Nike Store.
In order to enable this experience, Nike would have to link to a user’s wallet and then connect that user’s wallet to their payment credentials, which can only be provided through APIs that enable programmability on systems distinct.
Looking ahead, Subrata said money can, due to its programmable nature, increasingly be integrated into a wide range of new experiences. There is a wealth of data flowing through existing rails in ways that transform everyday life. As Subrata told Webster, the programmable aspects of money are not limited to cards (and can even be extended to Web3 and open banking scenarios).
A common standard is emerging, which will be adopted by the payments industry as a whole, to govern the sharing of data and the collection of consent so as to make commerce a unified experience.
“This is where the magic will happen,” Subrata said, “and we can start transforming how we fix broken processes while creating new value for consumers.”