Originally conceived through a University of Malta research project, Ixaris is now a leading innovator in the payments industry and has just secured EU funding to support its €4m open payments ecosystem project. CEO Alex Mifsud explains what this means for the industry and for Malta.

When was Ixaris Systems set up and with what aims?

Ixaris Systems was founded in 2002. Its original aim was to make it safer to transact online and its first product was the concept of a virtual prepaid Visa card. Virtual Visa cards can be created instantly, used at any Visa-accepting merchant worldwide – potentially for just a single transaction – and then discarded, making them the most widely accepted and safest way to pay online.

Ixaris Malta was set up early in 2003 to undertake all Ixaris research and development activity.

Alex Mifsud

You recently launched the open payments ecosystem project. What is the project and what does it aim to achieve?

The open payments ecosystem is a pioneering two-year project. It is financially backed by EU Horizon2020 under the Open Disruptive Innovation Scheme. The open payments ecosystem will allow any software developer to write payment applications and make them available to banks for deployment to their customers.

What benefits will the open payments ecosystem bring to the payments industry?

The open payments ecosystem will be of benefit to the whole payments value chain. Banks and financial institutions will be able to source a wealth of payment solutions from a broader number of developers, large and small, and therefore cater for a greater range of customers and needs.

Why is this happening now?

The open API approach is gathering momentum in the payments industry but most first generation solutions aren’t currently scaleable as each developer, and their code, has to be rigorously vetted through a laborious manual process. The open payments system addresses this limitation and will enable huge growth in the development of payment applications addressing the diversity of customer needs. The open payments system will enable banks to collaborate with the developer community in a truly open and safe way, delivering a richer supply of services in a way that banks alone cannot achieve with high proportions of their IT spend focused on compliance rather than innovation.

What real-world benefits do you foresee?

It’s best to illustrate with an example of what is happening already. We serve a number of online travel agents, including some based in Malta. By using our virtual prepaid cards, online travel agents can avoid the surcharges on low-cost airlines such as Ryanair and easyJet, as well as other payment-related costs such as foreign exchange charges and reconciliation labour costs.

We carried out a study on this sector and found that such payments-related costs amount to almost 25 per cent of the agents’ gross profit. By using our virtual prepaid cards they can entirely wipe out these costs, thereby making them significantly more profitable and competitive.

We are increasingly offering our business-oriented payment services to small businesses as well as to multinationals to enable them to take advantage of such solutions that larger companies already benefit from.

Any other client examples you would like to share?

Financial technology champion Ixaris has announced an open payments ecosystem and confirms Malta research and development centre to grow

Ixaris is, for instance, also addressing the corporate payments market, driving innovative uses of virtual cards by multinationals in travel, medical, pharma and insurance sectors. As an example, we are presently rolling out our virtual card-based corporate purchasing solution for AXA Global Assistance across their 34 subsidiaries worldwide. AXA plans to organise its purchasing processes – for instance to pay for clinics or even rescue teams – through virtual cards.

Malta has a key role to play in the open payments ecosystem project. Why did you choose Malta as a base for so many of your staff?

Ixaris was conceived in Malta, with the original ideas coming from a research project undertaken with students and staff at the University of Malta in 2000. Ixaris has its main research and development centre in Malta and employs more than 120 people on the island. That number is set to expand, thanks in part to the launch of the open payments ecosystem programme.

What role will the University of Malta play?

The university’s Department of Computer Sciences is an important partner in the delivery of the open payments system project. The department is a recognised expert centre for automated reasoning and computational logic and will play a pivotal role in the development of automated compliance checks.

Finally, what does the future of financial technology hold?

Financial technology is attracting unprecedented levels of investment. From $3bn in 2013, the level of investment is expected to go to up to $8bn by 2018. In the UK alone, in 2014 financial technology contributed $20bn to the UK economy. This growth is driven primarily by the effect of the internet on banking and finance.

For a long time these industries thought that they were immune to the changes that the internet brought to retail or travel.

However, in the past few years a number of internet start-ups have shown how services that were previously the core activity of banks – such as payments, lending and investment – are all being provided by technologically advanced non-banks, sometimes with the banks supporting them in a background role.

These start-ups have no legacy to hold them back or a huge cost base to maintain. Their superior user experience and efficient operating models are changing the game which for so long was dominated by the banks.

Banks are now having to respond by copying some of their methods or by partnering with such financial technology companies. The result will be greater choice and convenience as well as lower costs for consumers and businesses.

Ixaris’ technology and the open payments ecosystem project that it has just kicked-off with EU funding has a central role to play in this development by enabling banks to collaborate with developers and entrepreneurs safely for the benefit of all.