Web Payments Workshop - Introduction

Minutes for 2014-03-24

  1. Introduction by Jeff Jaffe of W3C
  2. Introduction from Alexander Gee, European Commission
  3. Format of Sessions
Daniel Appelquist
Manu Sporny
Daniel Appelquist, Manu Sporny, Jeff Jaffe, Prakash Hariramani, Wendy Seltzer, Alexander Gee, Virginie Galindo, Eric Tak, Dave Birch, Hannes Tschofenig, Charles McCathie Nevile, Stéphane Boyera, plus 91 others for a total of 103 people
Manu Sporny is scribing.

This page contains minutes for an official W3C workshop event that have been cleaned up and reformatted by the Web Payments Community Group. The W3C and the Web Payments Community Group are two separate organizations. Readers should understand that while the workshop was an official W3C event, the operation of the Web Payments Community Group is not officially sanctioned by W3C's membership. More information on joining W3C (membership fees) and/or the Web Payments Community Group (free) can be found on the respective websites.

Packed room of 100+ people waiting for Web Payments Workshop to start: https://pbs.twimg.com/media/Bjek-PyIEAAiwzr.jpg:large
Welcomes from Stephane Boyera (W3C), Virgine Galindo (Gemalto) and Ingenico

Topic: Introduction by Jeff Jaffe of W3C

Jeff Jaffe: The W3C was founded by the inventor of the WWW, Tim Berners-Lee.
Jeff Jaffe: Earlier this month, we celebrated the 25th anniversary of the WWW.
Jeff Jaffe: We have a very simple, mission statement - lead the web to it's full potential.
Jeff Jaffe: We have a pretty good track record of that. We're a member-based organization. We have govts, startups, technology companies, non profits, close to 400 members.
Jeff Jaffe: Large commercial companies. The community that we have are the entire users of the WWW, we're shooting for entire planet.
Jeff Jaffe: For technical standards, we're larger than most technical standards - 70 people spread around the world, we want architectural coherance for the Web.
Jeff Jaffe: Outputs we produce are available to everyone.
Jeff Jaffe: UbiWeb - ubiquitous Web, We work on Web accessibility.
Jeff Jaffe: No one with disabilities should be prevented from using the Web.
Jeff Jaffe: Information and Knowledge focuses on data.
Jeff Jaffe: Each piece of technology gets created in a WG. Most of the work is done by engineers from member organizations, sometimes we have invited experts from outside.
Jeff Jaffe: We work w/ Internet Engineering Task Force, we interface w/ who we need to.
Jeff Jaffe: We have a royalty-free patent policy. When Tim invented the Web, he made it available to the world. If you have an invention that belongs in the core of the Web, and you have a patent, that should be available on a royalty-free basis.
Jeff Jaffe: Some of you may be familiar w/ de jure standards. We have a fast-track for de jure international standards.
Jeff Jaffe: As the Web has become more important, large companies have been joining.
Jeff Jaffe: We also have been trying to get smaller companies in. There is a new track of work - once community decides that something needs to be a Web Standard, we did a good job.
Jeff Jaffe: However, we didn't do well in pre-standardization work.
Jeff Jaffe: So, innovators would get together to do pre-standardization work. So, we created a new track called Community Groups. It made pre-standardization work easier. Sometimes CGs are discussion groups.
Jeff Jaffe: We have around 170 CGs, close to 4,000 engineers working in these groups.
Jeff Jaffe: We are working on the "Open Web Platform", lots of people doing work, but at the end of the day it all has to come together. We use "open web platform" to differentiate the open web from the web of 25 years ago.
Jeff Jaffe: In 25 years, the Web has become much more. Increasingly, the Web is not the end result, it's a platform for other applications to build on top of it.
Jeff Jaffe: The platform for building distributed applications - it's very interactive. It's characterized by Rich Interactive Media. The content was exciting, but it was fairly static. Now web pages are exciting (lots of great fonts, media, images, etc.)
Jeff Jaffe: We're working on HTML5 and CSS3 now, two hallmarks of W3C standardization work.
Jeff Jaffe: The span of devices implementing the Web has been expanding. In last 10 years, we've successfuly moved the Web to the smartphone, it's a design point for the Web.
Jeff Jaffe: Web and automotive is new work we're doing. So is mobile.
Jeff Jaffe: Web technology runs most everywhere,
Jeff Jaffe: Secure Web Platform - it's important that we keep innovating.
Jeff Jaffe: New industries that are affected - mobile, entertainment, gaming, healthcare, digital publishing, all are increasingly getting affected.
Jeff Jaffe: Digital publishing is interesting, we've been publishing for a while now. Mass distribution on a global scale, everyone is an author. Very different from highly selective publishing houses.
Jeff Jaffe: Web lacked quality of publishing for a long time. Font selection, styling, you couldn't do any of that. However, today we're in a situation we know how to achieve all of that technically.
Jeff Jaffe: As publishing was changed after Web, so do other industries.
Jeff Jaffe: With the Web Payments workshop, we're launching what could be a more fundamental transformation. It'll be impactful, not sure how it'll turn out.
Jeff Jaffe: Lots of stuff is bought on the Web :)
Jeff Jaffe: Payments for mobile devices are increasing, searching for new ways of providing payments on the Web.
Jeff Jaffe: If the Open Web Platform has been successful, to be the reference standard for what gets done in those industries, let's explore how the Web affects payments.
Jeff Jaffe: We wouldn't be exploring this if payments were simple.
Jeff Jaffe: For most people, it's bewildering to do payments on the Web (to pay for things).
Jeff Jaffe: To set something up the first time, it's difficult.
Jeff Jaffe: We have cryptocurrencies coming up, it's part of the whole picture. The complexity of the ecosystem is something we're going to be focusing on.
Jeff Jaffe: Merchants are a part of the picture. When you want to set yourself up on the Web, you have to figure out how you're going to get payments accessible to your customers.
Jeff Jaffe: With Web Applications, the number of people that are trying to monetize things on the Web is growing exponentially.
Prakash Hariramani: With web applications, number of people who are trying to navigate the web has increased substantially
Jeff Jaffe: I want to do a one-off purchase, it's not easy.
Jeff Jaffe: A regular Amazon user has no problem, but we want a frictionless approach where anyone can buy from anyone in an easy fashion. The user experience should be simple. Not tons of passwords for each site that I frequent.
Jeff Jaffe: High levels of fraud, the overall security of the system - it's not great. We all worry that one day it's going to get worse.
Prakash Hariramani: Lack of standardization = Poor and variable user experience across sites and across payment systems
Jeff Jaffe: Is it really secure enough?
Jeff Jaffe: Payments should be easy
Jeff Jaffe: People should be able to pay how they want to. If I have a smartphone, or tablet - I'd like a single "wallet" and do things consistently among devices.
Jeff Jaffe: Transparency is important -transaction fees should be clear.
Jeff Jaffe: How does this get done technically? Unsure, that's why we're having this workshop.
Jeff Jaffe: We're going to figure out where to do standardization. Maybe this happens at W3C, maybe somewhere else.
Jeff Jaffe: What to standardize is a very delicate choice.
Jeff Jaffe: We have the open web platform, having a clean way of getting a request for payments, proof of payments is standardization candidate.
Jeff Jaffe: Having a standard interface between browser/wallet is a good standardization candidate.
Jeff Jaffe: Interfacing w/ external payment providers is important.
Jeff Jaffe: Being able to select payment mechanism is important... we need to manage this complexity.
Jeff Jaffe: Users should have greater choices, more choices, more consistency. There is enough automation/verification that merchants should be able to trust customers.
Jeff Jaffe: W3C is a consensus organization, we bring stakeholders together. We bring them together to try and figure out the best way to address some of these issues.
Jeff Jaffe: The Web is a global mechanism, we need things to work across borders. We want an open and level playing field.
Jeff Jaffe: When we start to look at a complex problem, we fail if we try to solve the entire problem at once.
Jeff Jaffe: So, what's the lowest hanging fruit.
Jeff Jaffe: What makes a workshop successful - enter it w/ a spirit of openness.
Jeff Jaffe: There are many things related to technology and payments - we're focused on technology issues and enablement. Standards are a human activity.
Jeff Jaffe: Let's start talking and seeking consensus.
Wendy Seltzer: Piggy bank swag from event: http://wendy.seltzer.org/media/webpay.jpg

Topic: Introduction from Alexander Gee, European Commission

Slides for presentation by Alexander Gee, Deputy Head of the Payments Unit for the European Commission's DG Competition: http://www.w3.org/2013/10/payments/slides/gee.pdf
Alexander Gee: I've been doing payments since 2008.
Alexander Gee: We welcome what's being done here. Anything that makes payment on the Web work better, based on open non-discriminatory standards, we'd welcome as we would expect it to strengthen the single market.
Alexander Gee: What I'd like to do now is simply go through my slides and explain what we're doing.
Alexander Gee: My slides are detailed, so I'll skip through slides relatively quickly.
Alexander Gee: Payments in EU - epayments are largely card based. As far as EU is concerned, payments is 1% of GDP
Alexander Gee: It's 25% of bank revenues.
Alexander Gee: Card transactions have grown from 7.4% to 17.4% of GDP since 2000 but the price for accepting card payments is not reflecting scale and increased efficiency.
Alexander Gee: DG Competition has focused on interchange fees. This is one of the biggest barriers to competition in payments market.
Alexander Gee: We have been embroiled in a legal debate for years. MasterCard has said they'd move interchange fees down to 0.2% (debit cards) and 0.3% (credit cards) for cross-border transactions. They're around 1% right now for domestic transactions.
Alexander Gee: Visa says they'll match Mastercard's fees for all transactions in the EU where they set the fees.
Alexander Gee: Lower fees will address concerns about markets segmented into national markets.
Alexander Gee: We are now continuing w/ cases against MasterCard and Visa - regarding international payments.
Alexander Gee: With interchange fees at this agreed level, aim is for merchant to be indifferent on getting paid w/ cash vs. card. We don't have enough info on what a good comparator is for epayments.
Alexander Gee: Direct debits or credit transfers would be possible. Others may be cash payment on delivery.
Alexander Gee: We've carried out a detailed study - 0.2% or 0.3% seems reasonable.
Alexander Gee: Normally standardization is pro-competitive, but we were concerned in an investigation on epayments by the European Payments Council (EPC) that major players may have banded together to create an exclusionary effect on non-bank epayment mechanisms.
Alexander Gee: In Netherlands, more internet-based payments are made than card-based ones.
Alexander Gee: Non-bank players were excluded - the way standardization was being done - it was exclusionary.
Alexander Gee: Interchange fees are a way to pass fees onto customers in a way that they can't see them.
Alexander Gee: New entrants to innovation - atms / internet banking, paypal, payfair, monnet, ideal and Mybank, sofort.
Alexander Gee: Paypal is more expensive than card payments [scribe assist by Prakash Hariramani]
Alexander Gee: From our point of view, Paypal is expensive - more expensive than card payments. It's a closed system. You have to establish a new account w them.
Virginie Galindo: Payfair : http://www.payfair.eu/
Alexander Gee: Monnet wanted to replace national schemes, but it failed, they were willing to offer 0.2%-0.3% for cross-border payments but they wanted to match domestic fees in EU
Alexander Gee: If they didn't do these higher fees they could not find banks to issue their cards, but if they did raise their fees they were taking much more risk of competition enforcement against them.
Alexander Gee: MyBank – widespread in Italy - click directly on bank via credit transfer.
Alexander Gee: Recently proposed regulation - we want to create a level playing field - it can't be done by competition enforcement.
Alexander Gee: It cannot act very fast - mastercard case took 7 years.
Alexander Gee: Competition enforcement cannot act fast/last mover advantage [scribe assist by Prakash Hariramani]
Alexander Gee: So, we want to create a legal base for non-banks - third party providers.
Alexander Gee: So, here's the proposal:
Alexander Gee: Promote consumer welfare - reduce excessive fees.
Alexander Gee: Increase choice
Alexander Gee: Promote competition, efficiences should be passed on to consumers.
Alexander Gee: We want to increase competition by increasing transparency and reducing barriers to entry.
Alexander Gee: Reducing interchange fees - Monnet and PayFair - they cannot enter the market because banks are expecting a similar revenue.
Alexander Gee: Banks are keen to have more expensive card payments schemes, so we need to work on that.
Alexander Gee: The commission proposes - regulate the fees of "Must take" cards - 4 party schemes, consumer visa/mastercard card.
Alexander Gee: Immediately cap the fees for cross-border transactions.
Alexander Gee: Promote the idea of a single market - 2 years delay on national/domestic transactions.
Alexander Gee: More effectively functioning cards market -
Alexander Gee: What we can do:
Alexander Gee: Allow merchants to refuse cards
Alexander Gee: Provide a legal base for 3rd party providers - supervise licensing, make sure their presence in the market is secure - supervised/licensed, identify themselves, limit access to minimum necessary.
The scribe missed the content of slide 13
Alexander Gee: Storing confidential data needs strong authentication.
State of play regarding proposal.
Alexander Gee: EU Parliment voted in 20 Feb 2014. MIF caps after 1 year, 7 cent max debit fee
Alexander Gee: Caps should also cover commercial cards.
Alexander Gee: Cross-border acquiring at rate of acquirer's country.
Alexander Gee: Ongoing work on Greek Presidency, under Italian presidency in second half of 2014.
Eric Tak: Considering that fees were identified are also being used online - does that mean it's a basis for services like MyBank to consider?
Alexander Gee: No, under competition rules, we have the obligation to say that there is a problem. They can always come forward w/ efficiency arguments. They'll find it difficult to do.
Alexander Gee: So, I don't see what efficiency arguments they could bring forward.
Dave Birch: I don't see what the principle of the regulation is?
Dave Birch: Since the DG Competition has been doing this for a decade - and there is no new competition. I don't get what you're doing?
Alexander Gee: I don't think it's fair to say nothing "new" has happened, there have been new things such as Ideal. .
Dave Birch: You can only use it in the Netherlands, it's not effective!
Alexander Gee: There is so much money floating around in this system, banks have not wanted to comply w/ competition law. Mastercard has made no attempt to do anything other than bare necessary changes.
Alexander Gee: Visa has always made changes at very last moment. We haven't seen lowering of interchange fees. It takes a very long time to force people to do it.
Alexander Gee: Regulatory approach is necessary. If we enforce lower interchange fees, we might be able to do something about it.
Hannes Tschofenig: In Jeff's talk - he said we should have more user choice. Been working on identity - there's an interesting pattern. Little choice w/ identity providers on internet.
Hannes Tschofenig: Identity providers layering payment on top. How do we provide more user choice? To prevent us from using 3 payment providers that are going to be US companies.
Alexander Gee: Regulators have a hard time leading the market.
Daniel Appelquist: Some side discussion going on here kicked off my comment on http 402 status code and also link rel=payment (see http://relpayment.com) : https://twitter.com/torgo/status/448016153869574145
Alexander Gee: Danish market - banks operating through banking association - NETSID - ID system used by Danish banks - used for online gaming.
Alexander Gee: Way of verifying that people are over 18.
Alexander Gee: This is the only recognized system - banks have used this power to kick out new entrants. This is a difficult area for regulators to get involved in.
Charles McCathie Nevile: Two questions - in 3rd party providers - they're not allowed to store confidential data? What kind and why? Isn't there a risk that if you silo off EU as a limited income space, won't they just jack up the other prices for consumers (eg annual card fees)? Isn't that what they do?
Alexander Gee: Second question first, this is an argument that we often hear from the banks / card schemes. What we see is that we're moving away from hidden fees to fees people can see.
Alexander Gee: System of transparent pricing - see what happened in US - Durbin amendment - banks said that they want to increase card payment fees, found that they couldn't do it - people didn't want it.
Alexander Gee: Banks would like to say - we want to raise fees - they will be constrained by market opportunities. If they could raise them, they'd have already done it.
Charles McCathie Nevile: There is a difference between transparency and caps on pricing.
Alexander Gee: In this case, we're capping the part that customers can't see and so promoting transparency.
Charles McCathie Nevile: Trusted Third Parties (TPP's) and why can't they hold data?
Alexander Gee: The concern is that payment providers can hold your data and get back into your bank account.
Alexander Gee: That should not be possible, there should be a transactional business model. You leave no trace w/ the TPP.
Alexander Gee: Minimize risks - they need to keep basic info on transaction.

Topic: Format of Sessions

Stéphane Boyera: Ok, so the rest of the sessions are 2 hours long. We're trying to keep presentations short - less than 1 hour. Chaals w/ be moderator for the first session.