Web Payments Use Cases - Organized by Phases

Status: This draft document is for discussion as part of the development use case by the Web Payments Interest Group.

Please contact Ian Jacobs <ij@w3.org> or send feedback to the Interest Group at public-webpayments-comments@w3.org.

About This Document

This is a view of the Web Payments IG Use Cases, organized by Payment Phases.

Introduction

Electronic commerce is thriving and continues to expand. However, fragmentation of payment systems is limiting the potential, as are problems such as fraud and usability. Since the Web is ubiquitous, strengthening support for payments has the potential to create new opportunities for businesses and customers. Although we are seeing innovation in payment services, the lack of Web standards makes it more difficult to adapt to new payment approaches or integrate new payment providers. Fragmented regulatory environments further complicate the payments landscape.

The purpose of this document is to employ use cases to frame what a realistic vision looks like for payments on the Web Platform. The end result is not meant to replace existing payment systems, but augment and simplify the interface to each system via the Web. The purpose of this initiative is to enable as many of the current payment schemes in use today (such as electronic cheques, credit cards, direct debit, and cryptocurrencies) to be used more easily and securely on the Web while ensuring that future payment schemes could be added with little effort.

The Phases of a Payment

In order to categorize the use cases in this document into a manner that is easy to comprehend, they are separated into four primary phases. The phases are:

  1. Negotiation of Purchase Terms
  2. Negotiation of Payment Instruments
  3. Payment Processing
  4. Delivery of Product/Receipt

This particular model focus on he interactions between a person (or organization) and a merchant. This particular model does not intend to address the exchanges between bank, card associations, or other back-end parties in a Payment.

Each phase consists of a series of steps. The details of each step vary by payment scheme. Some steps may not be relevant at certain times (e.g., depending on Payment Scheme or transaction specifics). Some steps may happen in a slightly different order in some cases. For example, some, but not all, purchases involve a proof of funds or proof of hold. ACH and SEPA payment schemes generally do not support Verification of Available Funds, thus in these payment schemes the particular proof of funds step is skipped.

It is also important to note that these phases and steps may be be interrupted at various times (e.g., one party drops out, or exceptions occur like insufficient funds, refunds, or a regulatory block). While these phases are an approximation of the general flow of all payments, they are helpful in structuring the use cases such that it is easy to figure out to which part of the payment process a particular use case belongs.

These phases can be applied to a variety of different payment scenarios such as person-to-person, person-to-business, business-to-person, government-to-person, and so forth.

Negotiation of Payment Terms

The first phase of the payment process is where the payer and the payee negotiate the terms of the payment.

Negotiation of Payment Instruments

The second phase of the payment process is used to determine which payment instruments the payer will use to transfer funds to the payee.

Payment Processing

The third phase of the payment process is used to initiate the transfer of funds. Depending on the payment instrument, the transfer of funds may be verified immediately or may take several days to be verified.

Delivery of Product/Receipt

The fouth phase of the payment process is used to complete the transaction by providing the payer with a receipt and/or the product that was purchased.

Terminology

This document attempts to communicate the concepts outlined in the Web Payments space by using specific terms to discuss particular concepts. This terminology is included below and linked to throughout the document to aid the reader:

entity
A person, organization, or software agent that is capable of interacting with the world.
payer
An entity that provides a source of funds as required by a transaction.
payee
An entity that receives funds as required by a transaction.
merchant
An entity receiving payment for goods, services, or other things of value; abstractly known as a payee.
customer
An entity paying to receive goods, services, or other things of value; abstractly known as a payer.
transaction
An instance of an exchange of value such as buying or selling something.
payment scheme
Sets of rules and technical standards for the execution of payment transactions that have to be followed by adhering entities (payment processors, payers and payees).
payment instrument
A mechanism used to transfer value from a payer to a payee.
payment processor
Submits and processes payments using a particular payment instrument to a payment network.
credential
A qualification, achievement, personal quality, aspect of an entity's background, or verifiable statement by an entity about another entity.
payment agent
A piece of software operating on an entity's behalf that is capable of executing transactions.

Assumptions

The use cases below rely on a number of assumptions that are not detailed in the use cases but that will be explored in more detail in the architecture and requirements documents.

Use Cases

Negotiation of Payment Terms

Discovery of Offer

Platform Context
  • Penny uses the HobbyCo website to select a model train for purchase.
  • Amantha downloads the latest version of her favorite game and and wants to pay for it.
  • While playing a game that is a native app, Ricki wants to purchase some extra features.
  • A PayCo customer receives a payment request by email to send funds to RetailCo.
Device Context
  • Daniel wants to pay a taxi fare with his credit card.
  • Jeff buys a lot of heavy metal music through the "Buy this track" function on his car radio.
  • Renne checks into a hotel and is asked for a deposit for any damages to the room.
  • Cory shops for groceries at his local ChowMart then wants to check out at the automated kiosk.
  • George pulls up to a pump at a petrol station. His in-vehicle application recognizes the station location and the pump, and asks if he wants to approve a fill up.

Agreement on Terms

Degrees of Knowledge about Customer Identity
  • Tibor orders assorted chocolates from an online candy store. The store only needs Tibor's verified shipping address and a proof of payment to send him the chocolates.
  • Marge wishes to renew her passport online which requires a fee and information about her real-world identity.
  • Roberto has an account at an online bookseller. He provides his name and a shipping address to the site, but prefers not to provide information about his credit card.
  • Barry wishes to purchase electronic publications of a political nature and so wants to provide the merchant with no identifying information.
  • PayCo is required to keep a certain amount of information on their customers for anti-money laundering / know your customer regulatory purposes. When a customer performs a transaction with a merchant, they would like to reduce the amount of information that's transmitted to the merchant while ensuring that they stay compliant with regulations.
Frequency Variation
  • Jamie wishes to pay for a single article from a market analyst.
  • Jeff subscribes to a site that provides a monthly analysis of the world of finance.
Machine-Readability
  • Bookloads wants to use a standard format for representing information about its wholesale books, including ISBN numbers, price, and available quantity. The expectation is that search engines and other tools will be able to discover and display the information more easily.
General
  • FarmCo performs a few database lookups to determine the current market price of grass seed and generates an offer for the final amount of the selected product.

Application of Marketing Elements

Coupons and Loyalty Schemes
  • JustPopcorn sends Marco a special discount offer given Marco's past purchases. The offer takes the form of a coupon that may be applied during payment.

Negotiation of Payment Instruments

Discovery of Accepted Schemes

General
  • A game store Web site accepts payment via credit card and operator billing.
  • CrowdFundCo supports Bitcoin, Google Checkout, PayPal.

Selection of Payment Instruments

Manual Selection of Instruments
  • Marie has credit cards from three different institutions: one for work (from BankA), one personal card (from BankB), and one retail card from PayCo. She wants to choose the right one depending on the context of her purchase.
  • Claire has multiple credit cards from the same bank as well as one debit card.
  • Veronique wants to use a cryptocurrency in some cases (e.g., peer-to-peer payments).
  • Seth participates in a loyalty program with his local grocery store and can apply a variety of digital coupons when he visits the story.
  • David wants to be able to manually order available payment instruments when they are presented to him.
  • David is shopping on a tablet in the backseat while his friend drives. He wants to purchase some hiking boots but is out of range. Nonetheless, some payment instruments may be usable offline and payment will continue (automatically) when connectivity resumes.
Assisted Selection of Instruments
  • PayCo wants Elizabeth to know that if she pays with the debit card preferred by PayCo (because of a lower transaction fee for PayCo), she will get a discount.
  • Whenever Mary shops at BigFreshGrocery she wants to use the same credit card, so payment should happen with that card automatically when she puts her phone near the checkout terminal or when purchasing groceries online.
  • Lalana wants to see the instruments she most often uses earlier in the list of available instruments.
  • Dave visits BooksWithFriends which offers a debit card that includes a discount for all books purchased by 2 or more friends from the site. Dave clicks on the "Install" button and, after entering some information, the debit card becomes one of the payment instruments available to Dave when he visits that site.
Selection Context
  • Lucio sends information about instruments he is willing to use to TrustedMerchant, who provides a discount for access to his information.
  • Carla does not want to share information about the payment instruments she uses with any merchants, so that information is not shared with any online merchants.

Authentication to Access Instruments

General
  • Frederic taps his phone at the grocery store to pay, and BankA sends him a one-time password (OTP) on his mobile phone that he enters in a keypad at the checkout counter.
  • Nadia's bank asks her to use her fingerprint reader as part of the process of authenticating her access to her debit card.
  • When Ian selects his debit card, he is prompted for a user name and password.
  • Mitchell buys coffee at CoffeeFreaks and because the purchase is small, there is no authentication required to use his CoffeeFreaks debit card.

Payment Processing

Which Party Initiates Processing

  • Because of Richard's choice to use a credit card, FlowerFriends initiates payment processing by contacting the acquiring bank that handles credit card payments for FlowerFriends. ("Pull payments")
  • Once Sally has signed into PayPal to pay, PayPal initiates payment processing ("Push payments")

Note: Initiation of processing is Payment scheme dependent.

Verification of Available Funds

General
  • Whe Mario wishes to purchase a Formula 1 racecar online, the company that makes the car requires a proof of funds from Mario's bank in order for the transaction to proceed.
  • Renne checks into a hotel and is asked for a deposit for any damages to the room. She uses her phone to provide a proof-of-hold until she checks out of the hotel, at which time the hold on her funds will be released.

Authorization of Transfer

Proofs
  • To protect Tibor's privacy when he purchases candy online, the store asks only for Tibors verified shipping address and a proof of payment to send him the chocolates.
  • Rockinradio, smoothSounds, and classicClassic are independent specialised music retailers. They accept proof-of-purchase from each other to provide a track that is in their online catalogue even if it was originally bought from another provider.
  • To add: Proof of Funds in Escrow
  • To add: Proof of Funds Transfer by Payment Processor

Completion of Transfer

Variation in Delay
  • Felicity has chosen a cryptocurrency to pay for glasses online, so the store that sells the glasses has near immediate access to funds.
  • Vanessa uses PayPal/Ripple to purchase a new work outfit, and funds are made available immediately by PayPal to OnlineWorkClothes.
  • Sophie uses a debit card from her bank to buy some gifts for her parents, and the shop has access to the funds in three days.

Delivery of Product/Receipt

Delivery of Product

General
  • When Lilith buys music from a band's site, no account is required, just a proof of purchase that is sent to the site, after which the site gives Lilith a link to download the music.

Delivery of Receipt

General
  • George pulls up to a pump at a petrol station. He pays electronically using a credit card (via his phone). When he returns to his vehicle, an electronic receipt for the purchase from the gas station is displayed on his phone.
  • Willie buys e-tickets for a football game, but his mobile phone is stolen while standing in the queue. Since he has a receipt and identifies himself, he can still get in to watch the match.

Appendix A: Narratives

The above use cases cover a wide range of scenarios for each step in a payment flow. The scenarios are (by design) very different. In this section we provide some narratives that illustrate some payment scenarios from beginning to end. This is meant to illustrate the phases of a payment through uniform stories.

Please note that these narratives do not define the scope of this group's work; that is determined by the group's charter and the use cases earlier in this document. We provide several narratives below (the first is intentionally more detailed) to help make clear that these are only subsets of the use cases.

Online Purchase

Jill seeks a new outfit for a party. She selects items from PayToParty, which is a brick-and-mortar store with an online presence as well. She chooses how to pay, and the items are delivered the next day to her home. The steps are described now in more detail.

Discovery of Offer: Jill begins her purchase at home on her laptop, where she browses the items on the PayToParty Web site. On the way to work the next morning she explores the catalog further from a native app on her smart phone. Jill can't decide whether the dress displayed online is blue with black stripes or white with gold stripes, so during her lunch break, she drops into the PayToParty store near her office. When she enters the store, PayToParty lets her know with a message that causes her phone to buzz that there's a special offer (next day delivery) if she pays with the debit card preferred by PayToParty.

Agreement on Terms: That same evening at home, Jill logs into her account on the PayToParty Web site, adding her preferred items to her shopping cart. Before checking out, Jill succombs to temptation and subscribes to the site's monthly tea selection. She will pay automatically each month —she calls this her Tea-Bill— and PayToParty will deliver tea to her home. Because of her tea subscription, PayToParty removes 5% from the price of her clothing items.

Application of Marketing Elements: As Jill prepares to check out, PayToParty offers her a discount of 10% if she uses the debit card preferred by PayToParty.

Discovery of Accepted Schemes: Given where Jill lives, PayToParty offers her payment by credit card, debit card, and PayPal, but not Jill's favorite cryptocurrency (which she uses on other sites).

Selection of Payment Instruments: Jill pushes the "pay now" button and is presented with a number of options to pay, including a credit card, a debit card (which is highlighted to remind her of the special delivery offer), and a PayPal account. Jill's credit card is issued by BankLove and her debit card is from BankNow, the preferred bank of PaytoParty. There is also a gift card from PayToParty that she received for her birthday, but she chooses not to use it for this purchase.

Authentication to Access Instruments: Jill selects the debit card from BankNow to pay and is prompted to enter a secret that the bank sends to her mobile phone. Jill notes that the bank's authentication method has improved in the past year, improving her online experience without requiring any action from her.

To be continued...

Additional Narratives

Appendix B: Open Questions

Please send feedback to the Web Payments Interest Group at public-webpayments-comments@w3.org.