Technology: Application programming interfaces (APIs) are making product integration and information exchange fast and easy. Creating APIs that are standardised, secure and easy to use is a challenge that the financial industry is addressing in collaboration with SWIFT.

Open banking: Open banking is set to transform the payments landscape, making it possible for fintechs and other innovators to offer new products and services to a wide market.

Consumer expectations: As consumers, investors, merchants and business people, we are starting to see payments as just one step of a transaction chain that must be fast, frictionless and embedded.

The Banks - Responding to Competitive Pressures
Global banking payment systems are evolving at an extremely rapid pace. Open banking coupled with global regulatory actions, continues to create more competition among banks and other service providers. Flexibility, agility, and customer-centricity are the new banking norms. New companies with a range of vendor profiles continue to position themselves along the banking payments value chain with potentially disruptive consequences. Electronic commerce new comers like Afterpay continue to drive towards frictionless buy now, pay later purchasing, whille API-native FinTech players are investing to take advantage of "open banking" access to previously closed interbank systems. Now more than ever banks need to consider open APIs as a means to regain market share.

The Merchants - Creating Added Value for Consumers
Merchants are seeking to add new consumer payments services and increase sales while reducing fraud and chargebacks at the point of purchase. Enabling consumer flexibility at the point of sale (POS) is therefore critical for merchants.

The Consumers - Purchase Power at the Point of Sale
In the banking payments market, consumer expectations are evolving rapidly. Consumers are demanding global access to more open and transparent, always-on, real-time financial services. Consumers are increasingly fond of having options, both with the products or services they wish to purchase and the payment methods they use for them specially when consumers are being more cautious with their spending, such as during a pandemic.

Participants include provider banks, merchants and technology providers, working together to create and publish standard Pay Later API specifications to be implemented consistently by all parties. The aim is to create the needed conditions for a broad ecosystem of merchants, banks and customers to grow and flourish.

Develop the Pay Later API - to create an industry standard API solution that banks and merchants can easily adopt to move into the ecommerce space.

Addressing fragmentation - fragmentation occurs across a variety of aspects within the API market. SWIFT is uniquely positioned in the ecosystem to deliver value to the community to help mediate this fragmentation.

Standardized technology approach - SWIFT provides for a consistent, robust, and secure global platform for designing, testing, exposing and accessing APIs. The strategy also provides for appropriate levels of security, reliability, governance, and business standardisation.

How it works - Pay Later allows an e-commerce customer to request instant approval for a installment loan from their own bank for an online purchase. The customer may go to a website to buy merchandise. Having selected the model and delivery plan, the customer is directed to the site's payment page. In addition to the usual payment options there is a Pay Later button. Clicking on it, the customer is directed to their bank, where, if the bank approves, a loan schedule is displayed. If the customer accepts the offer then the loan is initiated, funds are credited to the merchant, and the merchandise is dispatched.

• Who benefits - all players in this scenario stand to benefit:
• The consumer gets point of purchase funding from a regulated bank
• The merchant makes a sale
• The bank get a loan on its books from a recognized customer




• Standardized API specifications in full alignment with ISO20022 - using business definitions from the established ISO 20022 standard that it governs, SWIFT ensures that data specified is compatible with the messages used to clear and settle instant payments, simplifying data integration for both banks and merchants.




• By selecting Pay Later at the point of purchase, the consumers are provided with available 'micro-loans' from their banks to maximize buying power




• Merchants are provided with a new service offering with frictionless payments processing at the point of purchase, at a lower cost, and reduced fraud and chargebacks




• Pay Later represents a rapidly scalable standardised API solution that can be applied across a large number of banks and merchants globally




• With API scheme rules standardised, the incremental cost for a merchant to work with a new bank (or a bank to work with a new merchant) is greatly reduced