W3C Payments Activity

Ian Jacobs

W3C Payments Activity

Ian Jacobs

Disruption in Many Areas

Clippings of some challenges

Ecommerce Growth Decreasing

Global ecommerce growth decrease projected

Cost of Fraud Increasing

"According to the [Lexis Nexis] data, annual fraud costs reached $32 billion in 2014, a 38 percent increase over 2013"
— pymts.com, February 2015



2014 fraud costs

Fragmentation Slowing Potential of Mobile Payments

"Today’s mobile payment market is changing rapidly and is littered with incompatible choices and no clear winners, with diverse players locked in a high stakes battle for consumer relationships."
— McKinsey, Jan. 2014

Fragmentation data

Standards Landscape

  • Many industry standards (e.g., from ISO, EMV, X9, IEEE)
  • Interfaces between Web stack, applications, underlying payment systems not generally standardized
  • No standard APIs to user's payment methods from Web apps
  • Tokenization not part of the Web

Now is the Time for Web Payments Standards

Streamlined Checkout

Strong Authentication

Payments in Earliest W3C Mission

"W3's simplicity and power make it attractive to a growing number of uses, including group collaboration tools, electronic publishing, remote learning, electronic commerce, banking and the use of intelligent network agents. Underlying these applications is a developing infrastructure of access, security, payment, automatability, and knowledge and data representation and conversion."

1994 MIT Press Release about creation of W3C

Timeline of Work

Web Payments Interest Group

group photo
Alibaba Apple AT&T Bloomberg C-DAC
CIP Canton Consulting Nederlandsche Bank (DNB) Deutsche Telekom Digital Bazaar
ETA ETRI US Federal Reserve FSTC Gemalto
Huawei IBM Intel Knowbility MAG/Walmart
Microsoft Mozilla NACS Nbreds NIC.br - Brazil
Opera Software Oracle Orange Paciello Group PayGate
Rabobank Nederland Ripple SHIFTMobility Shimply SK Telecom
Standard Treasury Stripe Target Tencent Verisign
Viacom Visa Europe Worldpay Yandex

Web Payments Interest Group Deliverables at 1 Year

Web Payments Working Group Scope

Problem: friction; security

High Friction

  • Limited payment instrument selection
  • Manual payment instrument selection
  • Manual provision of payment information (even harder on mobile)
  • Account creation requirement (on merchant site)
  • Privacy concerns
  • High cost of education about new payment methods

Low Security

  • Vulnerabilities from in-the-clear data entry (e.g., man-in-the-middle attacks, keylogging)
  • Sharing payment information with many (untrusted) parties
  • New security approaches (e.g., tokenization, multi-factor) not well-integrated

Resulting Obstacles

  • Online fraud (notably around cards)
  • Difficult to deploy and scale new payment schemes (e.g., credit transfer, micropayments, peer-to-peer)
  • Limited success of siloed (but promising) digital wallets

We do see innovation, but "bolted on" rather than part of the platform

The Standardized Flow

  • User registers payment instruments with browser
  • Merchant announces accepted instruments from Web page/app
  • Browser helps user choose from applicable instruments
  • After user selection, proof or token returned to merchant page/app

Benefits of Standards

  • A better checkout experience for users, particularly on mobile devices
  • Easier payment automation to improve the user experience
  • Streamlined payment flow, to reduce abandoned shopping cart and lead to more completed transactions
  • Easier adoption of new payment instruments or payment instrument improvements (e.g., security patches)

What's Next?

Discussion in Sapporo last week:

  • E-Commerce (loyalty programs, coupons, location services, etc.)
  • Clearing and settlement via the Web (see interledger payments)
  • Strong authentication
  • Identity and credentials
  • Alignment with larger standards ecosystem (e.g., ISO 20022, etc.)

Thank you

  • What use cases are important in Japan?