You can't make everyone happy. This seems especially true for developing a Web payment standard to appease a vast number of stakeholders and interests.
There are consumers and merchants, retail and commercial card issuers, central banks, technology companies and network operators. Each player wants to make sure it can take a cut as the payment "moves" from payer to payee.
People representing all of these interests congregated in Paris last month for the World Wide Web Consortium's workshop. The one thing they agreed upon: the current standard for making online purchases won't last forever.
"The idea of some sort of basic standard for simple payments on the Web isn't a bad idea," says Dave Birch, a payments expert and global ambassador at Consult Hyperion. "Because I still don't feel that we've gotten to the red button…the red button that enables a simple click to pay" on the Web, he says.
A browser-based standard could be useful in creating this seamless payment experience on the Web. Mobile phones have long benefited from the app store concept, making purchases effortless, especially for small-ticket items like songs that consumers on a PC might prefer to download for free, Birch says.
People pay faster and more often when they have a straightforward method to handle the transaction, according to companies like Simplee, which offers technology to reduce the complexity of hospital and doctor bill payments.
In a browser-based model, the consumer would click on a pay button and the browser would securely send funds to the merchant, Birch says. The merchant would receive a digital receipt to alert the webpage that the payment has been completed, allowing the merchant to send the shopper to another page, he says.
This digital invoicing and receipt process could be a starting point in standardizing Web payments.
Security would be improved by a process that allows consumers to pay without providing payment credentials directly to the merchant, Birch says.
PayPal operates this way, as do the Visa V.me and MasterCard MasterPass digital wallets. Visa and MasterCard did not attend the Paris workshop although they were invited. PayPal was also not in attendance although a representative from the company was on the agenda.
There was a lot of talk about decreasing or even eliminating the 2% to 3% (on average) transaction fees merchants pay to accept credit and debit cards.
This is usually the call to arms for most Bitcoin and other cryptocurrency startups, which provide payment services for a smaller fee. Representatives from CoinApex, a cryptocurrency incubator which focuses mainly on Bitcoin endeavors, and Ripple Labs, which runs the Ripple payment protocol that finds gateways to route transactions through, spoke during the workshop.
Because decentralized protocols cut out the middle man, transfers happen in near real-time at nearly no cost. Merchants using third-party Bitcoin processing providers pay only a 1% fee on transactions.
Ricardo Varela, a London-based entrepreneur who spent several years in the payments industry, says that for Bitcoin to succeed, it needs more than low transaction fees.
Varela was head of BlueVia, the Telefonica network for mobile carrier billing, for about two and a half years and was part of the Wholesale Applications Community, an organization to create open, unified standards for developers to build apps that work across multiple devices.
As both federal and state governments continue to voice their positions on virtual currency regulation and demand high-level compliance programs and consumer protections, costs for business will increase, raising prices for consumers, he says.
But card schemes and banks aren't charging specifically to comply with regulations but instead offsetting risk with transaction fees.
In the traditional payments system there's a certain level of tolerance for fraud, says Gil Luria, an analyst with Wedbush Securities, in an interview. New Bitcoin technologies such as multi-signature transactions may stand to eliminate fraud altogether, he says.
While the W3C is being careful to avoid stepping on any payment players' toes, Manu Sporny, founder and CEO of DigitalBazaar, says all players don't have to agree. Sporny works on W3C's working and community groups, which were formed without the vote of member companies within the W3C.
A universal Web payment standard may require some businesses to change their models, similar to how the publishing industry has had to adapt to the rise of online publishing.
Sporny has long promoted the idea of building digital currency acceptance into Web browsers with a protocol called PaySwarm.
Ripple representatives at the conference said they could envision Visa and MasterCard using the Ripple platform as a gateway without having to give up fee income, and other payment gateways can lower fees by running transactions over a decentralized peer-to-peer network similar to Bitcoin.
The card networks are unlikely to fully embrace digital currency if it means giving up some fee income. "Established players don't want to make it easier for you to use an alternative payment method such as Bitcoin," Sporny says.
But the standard is more about creating one mechanism for running all payment methods, including card payments and alternatives such as PayPal and cryptocurrency. In this way consumers can choose which payment option they use for each transaction.
This open standard will also help the existing payments providers and vendors offer easier integration for merchants. "It would be a good thing…if there was a way for the browser to interact with payment providers," says Varela. "It would allow a bigger variety of payment options."
It's difficult for merchants to integrate new options because each provider has its own contract and offers its own application programming interfaces, Varela says.
While Google's autocomplete technology allows consumers to save time filling out online forms, Varela says this proposal is too closed because it is based on the process of paying with a credit card. It does not auto-fill credentials for options such as Bitcoin or mobile carrier billing.
Sporny and Birch see a future where merchants can choose which payment methods they accept and which they don't, but all payments will run over the same Web rail.
The merchant will merely receive a digital receipt confirming payment, which keeps consumer's private data from being shown to those who don't need to see it.
There's no reason why a merchant needs a consumer's cell phone number and address when buying a digital good online, just like there's no reason a bar, using a digital ID scanner, needs a consumer's weight and height to know that they're old enough to drink. But this information is collected by merchants and the technology they use today.
Identity, and securing this identity, was at the center of the conversation at the W3C workshop.
Tokenization could strengthen the security of Web payments. Payment information protected through tokenization and encryption is much safer than a plain-text credit card number, which is printed on the front of all cards for anyone to see.
Since tokenization can replace card data with a token specific to each transaction, they are of limited use to fraudsters. For example, a token set up for a payment to a magazine publisher could not be used to drain a consumer's bank account.
Another topic discussed at the workshop (specifically by Gregory Estrade, a developer at payments processor Lyra Network) for identity verification was the use of split authentication methods across devices. For example, with the LevelUp Pebble smartwatch app, consumers could pay with the QR code displayed on the watch and use the smartphone for viewing a receipt.
"We're not talking about one payment standard…we're talking about a bunch of technology standards that could be used for Web payments," says Sporny.