Re: Push Payments

Thanks for taking the time to read through.
Some very valid comments which I'll incorporate into the next version.

You point re subscriptions is spot-on. This is a more complex scenario
which needs to be considered and I think the PaySwarm approach is the right
one.

I will disagree on the card fraud point.
Having worked in a payment processor I can tell you that their number 1
fear is being taken to the cleaners by a syndicate with a shoebox full of
cloned cards before anyone realises what is happening.
The merchant has been settled and disappears before the fraud is detected
and the processor is left carrying the bill.

Also, bare in mind that the need to compensate for the risk of chargeback
fraud prevents many small businesses from even getting off the ground.
For many their business model is a function of their transaction fees and
risk and the current levels of both make the business unviable.
So maybe they don't go out of business, they simply never start doing
business.

The key things that push payments remove from the equation are the need to
hand over identity credentials and the elimination of chargeback risk.
Charge-backs are like that eerie music in horror movies to a small business
that accepts payments via cards and operates on tight margins.
One targeted attack by a card theft syndicate and it's game over.

The card associations are very protective of the consumer (great) but at
the expense of the merchant in many instances.
(If not directly by hanging them out to dry when they are the victims of
card fraud, indirectly by charging them massive fees to compensate for this
risk).

+1 on the "flip the industry on it's head", emotive language is probably
not a great idea :)

My opinion on the "big players", especially the card companies, is that
they can view this as a threat or an opportunity.
They own the most extensive and mature inter-bank networks which they could
easily leverage to offer push payments.
Alternatively they can fight this by using influence at commercial and
national bank levels to try and maintain the status quo.
I suspect this is what you have already seen to some extent?


On 24 June 2014 03:37, Manu Sporny <msporny@digitalbazaar.com> wrote:

> On 06/23/2014 05:54 PM, Adrian Hope-Bailie wrote:
> > The last thread prompted me to publish a document I have been
> > working on for sometime which provides some clearer background on my
> >  motivations for push payments.
> >
> > I have put it on the OpenPayee website at:
> >
> > http://openpayee.org/push-payments-manifesto/
> >
> > Comment and criticism encouraged :)
>
> Comments and criticism below :)
>
> > Payments made using any form of identity token which gives the payee
> > the ability to pull the payment out of the payer’s account are bad.
>
> Subscriptions are a good thing. You should clarify to state that "any
> token which gives the payee the ability to pull arbitrary payments out
> of the payer's account are bad".
>
> The PaySwarm demo has a capability that allows budgets to be assigned to
> a vendor, so you can do stuff like: "Allow this merchant to pull up to
> $5 from me per month at their discretion for the next 2 months".
>
> > Yes, that includes the majority of retail payments today and yet
> > there seems no co-ordinated plan to move away from this outdated
> > concept.
>
> There are many coordinated plans that have been put forward by
> governments, but the banks and card networks aren't biting.
>
> > fraud bankrupting small businesses
>
> This is a weak argument, I'd imagine the number of businesses that have
> gone out of business as a result of credit card fraud are quite low.
>
> > Push payments don’t require new payment networks, new regulations or
> > new technology just a standard way of closing this gap.
>
> All the banks and central banks that we have talked to view what we're
> doing here, and the use of the Web to transmit a payment as a new
> payment rail/network. I agree on the no new regulations bit. I disagree
> that new technology isn't needed (as any new standard constitutes a new
> technology).
>
> > flip the industry on its head
>
> We've made a conscious effort to re-iterate that what we're doing here
> is going to create standards that are non-disruptive to the existing
> players that adopt the technology. When you use phrases like "flip the
> industry on its head", it makes large companies very nervous and
> unwilling to work with you. :)
>
> The rest of the article is very good and almost completely aligned with
> what we're trying to accomplish here.
>
> Make sure you've read these articles to understand the similarities:
>
>
> https://hacks.mozilla.org/2013/04/web-payments-with-payswarm-identity-part-1-of-3/
>
> https://hacks.mozilla.org/2013/04/payswarm-part-2/
>
>
> https://hacks.mozilla.org/2013/04/web-payments-with-payswarm-purchasing-part-3-of-3/
>
> -- manu
>
> --
> Manu Sporny (skype: msporny, twitter: manusporny, G+: +Manu Sporny)
> Founder/CEO - Digital Bazaar, Inc.
> blog: The Marathonic Dawn of Web Payments
> http://manu.sporny.org/2014/dawn-of-web-payments/
>
>