Visa Next

Last week Visa introduced a set of APIs to facilitate issuing called Visa Next. At a high level, the library allows developers to open accounts and facilitate transactions to/from the account over the Visa network. While this seems rather simple, it provides huge utility as most issuing products are just some permutation of account type(s) and transaction type(s).

From the PYMNTS article on the new product:

“We are in an industry that has gone from having to distribute plastic (consider it our version of the DVD), and having a whole physical chain that goes along with that in order for the consumer to use the product,” to one that has embraced the cloud.

“What happened when you went into the cloud was that you had all these parties that showed up in the value chain that were doing things that the traditional parties had not been doing,” said Shrauger. On the merchant side of the payments ecosystem, there was the rise of gateways, merchant aggregators, superwallets, Square and PayPal, among others. On the issuer side of the equation, there was a similar shift in the value chain. “We used to have the network, the issuers, the issuer processors … and then the consumer,” he added.

The digital-first approach (i.e., plastics are not a pre-requisite) is not the interesting thing going on. To me, it is Visa’s approach to normalize the issuing tech stack.

Prior to Visa Next, the move to the cloud was led by the issuing processors, each of which offered different schema and API libraries. The spectrum of applications that could be built on top of them was a function of the flexibility in the issuing processors’ architectures — the better designed they were, the more types of issuing applications that could be built.

Visa Next begins to normalize the issuing stack, which makes it more difficult to differentiate on core processing. As this becomes the case, I expect issuers and processors to have to work harder to curate ancillary services. It will also reduce friction for entrepreneurs to launch new products. This is good for consumers as they get applications tailored to their needs and it is good for Visa as it should facilitate more transaction volume.