Author(s): Peter Bryer
Earlier this week, the World Wide Web Consortium (W3C) announced an initiative to standardise e-commerce payments across the Web. The Web Payments Initiative project will be run by the newly formed Web Payments Interest Group, which will consist of public and private interested parties. W3C is looking to banks, credit card companies, content owners, governments, mobile network operators and others to join the working group. Initial supporting companies include Bloomberg, Gemalto, GRIN Technologies, Rabobank and Yandex.
W3C points to the need for a highly secure and user-friendly mobile wallet solution that could be implemented globally across the Web at low cost and on all devices. W3C is ultimately aiming to enable more online transactions with less fraud and improved interoperability.
The payments initiative comes as several proprietary solutions are capturing a great deal of attention and the possibility of an established de facto standard looms. eBay's recent decision to spin off PayPal, for example, should provide the unit with the increased flexibility needed to pursue online and mobile payment opportunities in developed and developing markets. However, PayPal is being challenged by Apple Pay, Square, Stripe and several other payment solutions.
Banking systems in several countries are building ecosystems to support online and mobile payments. In India, the government is establishing a national e-banking solution for low-cost money transfers. In Sweden, an inter-banking platform called Swish allows for the easy and free transfer of funds using a mobile app. Mobile-based money transfer service M-Pesa has an established audience in Kenya and Tanzania and is being expanded to other developing markets. Bitcoin has even been established as a global currency, though its long-term future is uncertain.
W3C's payment initiative is the result of several years of discussion and a special payments workshop held in March. The group had been collecting use cases for an open-standards approach to Web payment and APIs. The specifications are still to be defined, but enablers will are likely to include NFC and possibly biometrics, supporting more secure local mobile payments. Proposed usage scenarios include in-app purchases, remittances, micropayments and proof of purchase.
Several early critics of the W3C's payments project point to its late arrival given the plethora of competing solutions from companies such as Apple, Google, PayPal and Vodafone, but in reality the global e-commerce market still has a long way to grow. About $1.4 trillion is currently spent online per year. This is less than 2% of the world's total economy. There's a lot of room left for safe fixed and mobile-based financial transactions. The World Wide Web Consortium, currently celebrating its 25th anniversary, has changed the way the world works and plays. In the coming 25 years, it could change the way the world pays.