Rise of the API and Pismo Buy Help Visa Craft Banking Network Effect

For the payment networks, the reach and scale is there to create new digital platforms for financial institutions — natural extensions of the relationships that are already in place.

And along the way, with technological infrastructure and application programming interfaces (APIs) in the mix, a network effect can take shape, globally, as more banking clients use more digitally enabled  products and services.

Connectivity is the key, of course.

To that end, and as reported Wednesday (June 28), Visa has struck a dela to buy Pismo for $1 billion. Pismo, we’d note, is an asset that would hold appeal for the card networks. The Brazilian FinTech operates as  a cloud-native issuer processing and core banking platform, with its own reach already established in Latin America, Asia-Pacific and Europe.

Broadening Issuance Without the Technical Heavy Lift

As for the solutions on offer via API through the combined companies, banking clients will broaden their issuing and processing capabilities, which then translates into broader and more issuance of debit, prepaid and commercial cards. And importantly, banks gain easier onramps to emerging payment rails.

By connecting with Visa/Pismo and the APIs, banks and FinTechs can sidestep the investments in their infrastructure — in terms of time and money — and more fully (and quickly) embrace the opportunities that lie within new geographies, with open banking and with real-time payments.

Pismo’s site gives indication of what might be a roadmap toward banks’ expanding their product and service portfolios across core functions embedded within the payment networks. Pismo’s banking and cards platform enables the issuance of plastic cards, virtual cards and one-time cards with the ability for some granular fine tuning: Those cards can be issued for specific merchants and transactions. There’s also the ability for banks to “manage both sellers and buyers on any device or platform” as they improve their own users’ back-end flows for transactions and reconciliation.

For the payment giants — Visa with Pismo, and as others get more deeply into banking — the model moves beyond transactions and toward distribution.

The card networks — where Visa, Mastercard and others have spent decades laying groundwork — have built their own payment “brands” stretching across credit and debit. With millions of merchants and enterprises on one side of the network (and millions of consumers transacting with those entities) and the security and regulatory compliance already in place, extending the network to include new capabilities might have positive ripple effects. For the banks, there’s a single point of connection on the platform to cards, to accounts and to digital conduits to build out ecosystems of their own as more endpoints and more form factors are connected in interoperable fashion.