Business could not survive without payments, and the convenience/petroleum business could not survive without electronic payments. Customers will shop elsewhere if their favored payment instrument is not accepted, while merchants bear the costs of hardware and software, delays and certifications, liability shifts and costs arising from the time it takes to collect the money.
But help is at hand. The World Wide Web has become a formidable force for commerce worldwide. The World Wide
Web Consortium (W3C) has standardized data formats and protocols, making it possible for you to view pages across a variety of devices. New Web standards will transform payments in the same way, making them available on any device.
At the W3C, the Web Payments Interest Group is working to make Web payments a reality. The group brings together a cross section of banks and processors, technology companies and merchants, all helping to lead the way to a better, more flexible payment ecosystem. Conexxus and Verifone are helping NACS support this important activity.
Having a Vision
While Web payments will improve the cost/benefit proposition for payments, the Web stands ready to extend access to financial services on an unprecedented scale. The proposition is staggering: There are 3 billion people on the Web today, with an additional 3 billion people expected before 2020! In the United States alone, access to financial services could hit an additional 30 million.
By 2020, the Web will reach 90% of all people over age 6. Many of them will use their mobile phones as their only means of accessing the Web. In that same time frame, it is expected that more than 25 billion devices, such as cars, gas pumps and registers, will be connected to the Web as well.
Imagine this scenario: A customer drives up to a c-store gas pump and waves her mobile phone in front of the pump to provide loyalty info, preauthorize payment and activate the pump. She fills her tank and walks inside to buy lunch. Checking out at the counter involves the same mobile-phone process she used at the pump.
The transaction is finalized as she drives away. A digital receipt is sent to her digital wallet in her mobile phone via the Web over the cellular data network.
To fulfill this vision, some hurdles will have to be overcome:
- Standardized interfaces are needed that define how a payment is initiated and completed via a Web-enabled mobile device.
- A better security model that doesn’t require the merchant to handle a customer’s sensitive data is needed.
- Incentives for the merchant and customer must be provided to help with uptake of the new technology.
- Much of regulatory compliance will need to be automated.
- The solution designs will have to avoid long certification cycles to ensure rapid deployment.
Standards of the Future
What is needed to address these hurdles is the same thing that made the Web so successful: a set of patent- and royalty-free standards that anyone can use to deploy the technology. To that end, the payment standards that will be created at the W3C will:
- Reduce or eliminate sensitive info the merchant has to hold, such as swipe data, preferring tokenized payment instruments or push payments that take the merchant out of PCI scope.
- Increase customer and merchant choice of payment instruments.
- Improve the customer experience so he or she can use a mobile phone and personal applications to pay.
- Enable the digitization of existing payment instruments, such as bank and fleet cards, while enabling new merchant-launched schemes featuring alternative low-fee payment systems.
- Encourage efficient settlement via advanced settlement systems, such as same-day ACH and cryptographic currencies.
The initiative requires early adopters on both sides of the transaction. With the help of technology vendors, the retail industry must commit to implement Web payments at the pump and register. Similarly, customer-facing payment service companies must support the technology so Web payment applications will be written for mobile phones that interface with the pump and register.
If successful, the result of the W3C Web Payments eff ort will result in greater security, increased flexibility, better long-term cost/benefit propositions and more universal access to financial services at the pump and in the store. The World Wide Web will once more be a game changer.
David Ezell of Verifone Inc. contributed to this column.
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