Bryan Johnson is trying to teach electronic payments processors and gateways the power of sharing.
Two years ago, Johnson, who is CEO of an online payments and data security software startup called Braintree, got a poor reception when he asked established payment providers to cooperate with each other in allowing card data transfers. Such a move would give his young company a fighting chance for new customers.
Providers were holding card data "hostage" from merchants that would need that data made available to ease the transition to another processor, he argues.
Since Johnson raised the issue, his Chicago-based Braintree has completed a credit card data transfer from nearly every major provider in the industry, which was "inconceivable just a year ago," he tells PaymentsSource.
In looking at the situation in the same light as phone companies holding customer phone numbers hostage until the 1996 Telecommunications Act, Johnson's company established a Credit Card Data Portability Standard (see site), to help promote a free market and competition.
"We didn't get a lot of cooperation at first, so we decided we could do it ourselves," Johnson says. The standard could also satisfy any government regulators that might eventually look at the issue, he says.
Payment providers don't want to publicize the issue of data portability, so they eventually cooperate for fear that a merchant could make it known quickly that it felt mistreated, he adds.
"Merchants should be asking, before signing a contract with a provider, if they can get their data back," Johnson says.
But they're not, experts say — merchants may not even be aware enough of the issue to be upset about it.
"I believe that most retailers would find no reason to move card data away from PayPal," Gil Luria, an analyst with Los Angeles-based Wedbush Securities, tells PaymentsSource.
Even if merchants did express concern about their data being held hostage, regulators are generally hesitant to step into areas that don't appear broken, Scott Strumello, an analyst with New York- and London-based Auriemma Consulting Group, tells PaymentsSource.
"It sounds compelling to suggest that [regulation] could happen, but I am not sure the substance is there to back it up," he adds.
More likely, some merchants may view card data portability as "kind of a messy situation" because of concerns about "who was holding what data," and if data would remain secure in transfers, Strumello suggests.
Johnson says he has had a particularly difficult time convincing eBay's PayPal and Visa's Authorize.net to share data. Neither PayPal nor Visa provided a response when contacted by PaymentsSource about the data portability issue.
Credit card data portability could become an even bigger issue as data continues to play an even bigger role in payments, Johnson says.
"As payments evolve with loyalty programs, rewards, personalization, and social and mobile networking, making payments will become a richer experience," he says.
Even though Johnson says Visa and MasterCard informed him two years ago they had no interest in establishing a card data portability standard, he said he'd prefer to see the issue addressed by industry players instead of outsiders.
"You don't want government involvement because that can get messy," Johnson says.
"We have to remember that" the Payment Card Industry Data Security Standard "was established because the industry wanted to police itself on data security," he says.