Meet the Programmable Money That Doesn’t Need the Blockchain to Be Smart

Turns out the age of “programmable money” is already upon us.

Conventional wisdom holds that blockchains and smart contracts are the official harbingers, 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 those predetermined rules can be programmed across existing payment rails and infrastructure.

In other words, though blockchain has its places and use cases within finance, one need not reinvent the wheel through new currencies and protocols to usher in the next, natural evolution of payments.

That evolution, Subrata said, can fix various interactions in payments — for consumers and in the corporate realm — that are “broken” and rife with inefficiencies.

APIs and a Platform-Driven Model

At a high level, the company operates as a FinTech focused on payments infrastructure that, through an application programming interface (API)-driven platform model, enables developers to build programmable experiences into transactions.

Those experiences occur at the same time the transaction does — where firms leverage modern, restful APIs to leverage data in order to deliver a range of real-time automation experiences, from digital receipts and loyalty to expense management. The increased flexibility allows businesses and consumers to manage expenses in real time, and can improve corporate spend practices and budgeting across a range of payment cards.

Subrata noted that the key to forging a programmable money ecosystem — even ones that tie existing rails to blockchain — to be part of real-life events requires “stitching” card purchases, account-to-account activities and generally making it possible for multiple different rails and systems that are otherwise segregated to “speak” to one another.

Related: APIs Turn Payment Cards Into Programmable Money

Direct and Real Time

Subrata said that direct, real-time interaction eliminates the need to spend time and money on the post-trip tedium of expense management, where receipts must be sorted and data entered into spreadsheets before expense reports can finally be submitted.

The company offers its Transaction Stream API, which can set (and make sure there is observation of) protocols governing approved expenses. The company also offers a Reimbursement API, which can be used with Transaction Stream to reimburse employees on those 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 payments infrastructure and existing money flows.”

Those experiences are created through three components: authenticating users and capturing consent, “reading” a transaction as it happens across a specific payment credential (online or offline) and then, finally, pushing instructions “back” onto that payment credential.

In terms of mechanics, at the development level, that means applying programmable logic on top of a transaction to trigger various event driven experiences. Fidel API’s Transaction Stream product offers 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 issuer-verified credentials, such as the associated phone number or email.

Thus, when a cardholder makes a specific transaction — within certain dollar amounts, let’s say — within a specific certain category or with a certain merchant, money can be pushed back onto that card, in near real time, as a reimbursement.

Subrata said the model can work with a variety of use cases, such as with corporate expense management, where a road warrior taking a client out to dinner can have funds pushed “back” onto a card instantly. Once the meal is over, the check is paid and the APIs make programmatic “checks” on the validity of the purchase.

He continued that without those programmable attributes, expense management is fraught with pain points: The employee would, at the end of their travels, collect receipts, submit them and then wait for their managers to approve the expenses — and the wait would be on for (eventual) recompense. Real-time policy adherence decisioning, he said, solves the pain points that exist at both the employee and the employer level.

Those same principles governing “programmable money” can speed up and improve insurance claim reimbursements or loyalty and rewards — which can be applied back to cards in real time, rather than waiting for statement credit.

As examples of how loyalty programs might evolve, Subrata offered the hypothetical example where Nike might opt to create a loyalty program, where if they buy a non-fungible token (NFT) of Air Jordans, they get 5% of every purchase made at a Nike store.

In order to enable that 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 delivered via APIs that allow for programmability across segregated systems.

Looking ahead, Subrata said money can, due to its programmable nature, be increasingly embedded into a broad range of new experiences. There’s a wealth of data that flows across existing rails in ways that transform day-to-day lives. 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 looms, to be adopted by the payments industry as a whole, to govern data sharing and capturing consent in ways that make commerce a unified experience.

“This is where the magic will happen,” Subrata said, “and we can start transforming the ways in which we fix broken processes while creating new value for consumers.”