Adopting Card Management APIs to Regulatory Compliance and Multi-Channel Activation


Kingsley Okure

Finding a Balance: Improving user engagement while ensuring compliance

Table of Contents

  • Introduction
  • What are APIs?
  • Pin/Card Management APIs and Compliance Standards
  • Credit Cards and Multi-channel Activation
  • Conclusion

The behind the scenes of the card payment process


In an era where concerns about data leaks prevail, authenticating a consumer's identity becomes paramount. By the end of this article, you will understand how card APIs have evolved to meet regulatory requirements and compliance standards while facilitating multi-channel card activation. This ensures data security while enabling customers to activate their cards on any platform, including mobile apps, ATMS, online banking, and other platforms. However, to get started, you must know what APIs are in case you need to become more familiar with their usefulness in today's modern financial industry.

What are card APIs?

API stands for Application Programming Interface. An API is a piece of software that communicates with another software. It allows companies that market APIs as a product to open their data and functionality to customers.

APIs save developers a lot of time; instead of building a whole new software from scratch, they can integrate existing solutions into their applications. Allawee offers a gateway for accepting payments and creating virtual and physical cards that will be issued to customers; these are done through credit card APIs. These card management APIs also ensure the security of the customer data by providing PIN management.

Pin/Card Management APIs and Compliance Standards

The need to protect individual data from theft by malicious actors led to the adoption of regulations by some international organizations. An example of such regulation is the General Data Protection Regulation (GDPR) by the European Parliament on April 14th, 2016.

The GDPR aims to enhance individual rights and control over personal information. Article 25 of the GDPR states clearly that data protection should work by "design and default." This means developers who build APIs dealing with sensitive data must implement measures to uphold the principles and rights stated in the regulation. Some of these rights include the right of access to obtain confirmation of personal data, the right to have an inaccuracy in personal data corrected, the right to have one's data restricted, etc.

The regulation also requires data processors and developers to implement technical measures. This means that developers and data processors must implement standards to prevent the risk of unlawful and unauthorized access to personal data, either in transmission or storage.

The challenges that beset card management APIs concerning compliance with regulations such as the GDPR include issues related to code and testing. Regarding the code– developers, and engineers responsible for building card management APIs and other similar APIs that deal with sensitive data must implement authentication and authorization. This is guaranteed as modern APIs implement authentication and authorization to ensure that only people who meet the requirements are open to the API's data and functionality. Another way developers of card management APIs can comply with regulatory requirements mandating data privacy is to ensure that sensitive data are anonymous. This is required to reduce the risk of exposure in the case of a hacker's attack on the database. This is usually done through hashing and encryption. It is typical for APIs dealing with customer–sensitive data to encrypt passwords and pins for security.

Testing the API service is one critical way to ensure that card/pin management APIs comply with evolving regulatory requirements and compliance standards. Testing encompasses checks and scans to identify and fix any security vulnerabilities in the API. It also means updating the API to improve security measures per changing circumstances. Compliance with regulatory requirements can facilitate significant card activation on the part of customers.

Other similar data privacy and security regulations include Payment Services Directives (PSD2). It is also a European regulation on payment services. The PSD2 regulation symbolizes the increasing importance of APIs in the financial industry.

The importance of compliance with these regulations, even though they are not Nigerian regulations, is that if customers are sure that a platform or financial institution ensures the privacy of their data, they will be incentivized to stay with such a platform, which is a massive win to both the company and the customer.

Credit Cards and Multi-Channel Activation

Given that the modern economy requires a great deal of flexibility, payment, and card APIs have been tailored for multi-channel activation. These payment APIs guarantee data security and privacy and enable customers to activate their cards through various platforms such as mobile apps, online banking, ATMs, Web, etc. This is very important as it ensures a seamless user experience for the customers. Companies can boost their credit card activation rates. Some credit card issuers have pivoted from acquiring customers to deepening their relationships with existing customers. This strategy has been quite successful. According to a report in the Nelson Report, the average card activation rate for top Visa and Mastercard issuers was just 57% in 2017. The customers' behavior about their cards within the first 60-90 days may set the relationship pattern with the card issuers for the lifetime of the relationship. There are ways card issuers, fintech companies, and payment processing vendors can boost card activation rates. One of these ways is for customers to activate their cards on various platforms.

Thus, customers can start their cards on mobile apps, ATMs, or the Web. Another way to boost card activation rates is for issuers to maintain regular communication with the customers even before the card has arrived in the customer's mail. Regular contact serves to remind the customer of why they ordered the card in the first place. Using mobile apps, card issuers can provide for features such as personalization of cards. Providing financial education to customers and potential customers can also boost activation rates. Financial education will enable customers to make intelligent decisions concerning their cards.

In conclusion, the integration of Card Management APIs into businesses is not just a technological leap; it's a strategic move to strike a harmonious balance between user engagement and regulatory compliance. By understanding the intricate dynamics discussed in this article, businesses can navigate the evolving landscape of financial technology with confidence and foresight.

Bank accounts are provided by Providus Bank PLC - licensed and regulated by the CBN & money is duly insured by NDIC.
Debit cards are issued by Providus Bank PLC pursuant to license from Verve & Mastercard International.
Credit lines are provided under state Money Lenders License.
Allawee is not a bank but provides a spend management technology platform.