The World Wide Web Consortium (W3C) says it will begin a new initiative to integrate payments seamlessly into the Open Web Platform and help tackle fraud.
W3C calls upon all industry stakeholders – banks, credit card companies, governments,
mobile network operators, payment solution providers, technology companies, retailers and content creators – to join the new Web Payments Interest Group and leverage the unique ability of the Web to bridge ecosystem diversity and reach users everywhere, on any device.
The result will be new business opportunities, an improved user experience for online transactions, reduced fraud, and increased interoperability among traditional solutions and future payment innovations.
“The Federal Reserve is working with diverse participants and organizations to improve the payment system in ways that make it safer, faster, more efficient and accessible for everyone,” says Claudia Swendseid, Senior Vice president at the Federal Reserve Bank of Minneapolis. “We appreciate W3C’s efforts in this regard and look forward to participating in the new Web Payments Interest Group.”
Big Challenges, but Big Potential for Global E-Commerce
E-commerce is thriving and predicted to reach $1.471 trillion this year, an increase of nearly 20% from last year. According to Forrester research, one third of those transactions will take place on a mobile device. And yet, a number of obstacles stand in the way of even stronger growth on those devices.
The first is usability. People shopping online add to their shopping carts, but they rarely complete their purchases. Small screens and small keyboards, combined with the usual requirement to create an account and share personal information with unknown merchants are some of the reasons that theaverage shopping cart abandonment rate is 97% on mobile devices.
A second reason is fraud. High-profile stories of massive credit card number theft have demonstrated both the inadequacy of today’s approaches to sharing sensitive information and their high cost. The rate of fraud in “card not present” transactions (such as those common for transactions via Web sites) is 10 times higher than that when physical cards are used. These risks must be addressed if online commerce is to flourish.
“Today, payment details being stolen has outpaced all other consumer concerns worldwide to shop on-line,” comments Michel Leger, Ingenico Group. “Bringing together all stakeholders into this Interest Group is the opportunity to create open standards that will minimize online fraud, increase consumer confidence and improve shopping experience. Working all together will enable us to do it right.”
Because the Web is so widely available, strengthening support for payments has the potential not just to improve usability and reduce the risk of fraud, but also to create new opportunities for businesses and consumers in areas such as coupons and loyalty programs and crypto-currencies.
Through mobile applications, the Web can also make “brick and mortar” transactions more secure and convenient. Although we are seeing innovation in mobile payment systems, the lack of standards makes it more difficult to adapt to new payment approaches (e.g,. crypto-currencies) or new payment providers. Fragmented regulatory environments further complicate the payments landscape.
Integrating Payments into the Open Web Platform
To deepen our understanding of these challenges and integrate solutions into Open Web Platform, W3C has chartered a Web Payments Interest Group, chaired by Erik Anderson (Bloomberg) and David Ezell (Association for Convenience & Fuel Retailing).
Global stakeholders from all parts of the industry will enumerate use cases and scenarios, for topics such as online payments, off-line payments, “floor-limits,” the role of regulations on technology, international low-value remittances, general retail payments, bill payments, and utility payments. The group will study the current gaps in Web technology regarding usability, security, and privacy, and recommend new work to fill those gaps. Because a successful integration of payments into the Web requires extensive cooperation, the Interest Group will also liaise with other organizations in the payment industry that are using Web Technologies to foster alignment and interoperability on a global scale.
The Interest Group will first focus on digital wallets, which many in industry consider an effective way to reduce fraud and improve privacy by having users share sensitive information only with payment providers, rather than merchants. In addition, wallets can simplify transactions from mobile devices and make it easier to integrate new payment innovations. To be successful, all parties involved in a transaction must agree to use the wallet system, but systems to date have not demonstrated the level of interoperability required for broad adoption. Lack of standards for processing payments makes it difficult to implement wallets and gain the benefits of automation. While the Web Payments Interest Group is not chartered to develop new payment methods, it will create a framework to ensure that Web applications can interface in a standard ways with all current and future payment methods. Mobile use cases play an important role in this work, but the framework will encompass the full range of devices people use for online payments.
The new Interest Group will be the focal point for W3C’s work on Web payments, but discussions have happened and will continue to happen in many venues within W3C, including:
- Recent W3C Workshops on Cryptography, Authentication, and Hardware Tokens and the Web and Payments
- The Web Cryptography Working Group and the Near Field Communications (NFC) Working Group.
- The Web Payments Community Group, a community-led pre-standards discussion forum.
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