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Minutes for Web Payments Workshop - Introduction

From: Manu Sporny <msporny@digitalbazaar.com>
Date: Fri, 28 Mar 2014 15:26:43 -0400
Message-ID: <5335CCF3.90903@digitalbazaar.com>
To: Web Payments CG <public-webpayments@w3.org>
The first set of minutes from the Web Payments Workshop are now
available. These minutes cover the first hour of the workshop, which was
mostly introductory:

https://web-payments.org/minutes/2014-03-24-intro/

Full text of the discussion follows for W3C archival purposes.
Audio from the meeting is available as well (link provided below).

----------------------------------------------------------------
Web Payments Workshop - Introduction Minutes for 2014-03-24

Agenda:
  http://www.w3.org/2013/10/payments/agenda.html
Topics:
  1. Introduction by Jeff Jaffe of W3C
  2. Introduction from Alexander Gee, European Commission
  3. Format of Sessions
Chair:
  Daniel Appelquist
Scribe:
  Manu Sporny
Present:
  Daniel Appelquist, Manu Sporny, Jeff Jaffe, Prakash Hariramani,
  Wendy Seltzer, Alexander Gee, Virginie Galindo, Eric Tak, Dave
  Birch, Hannes Tschofenig, Charles McCathie Nevile, Stéphane
  Boyera, plus 91 others for a total of 103 people

Manu Sporny is scribing.
Manu Sporny: Packed room of 100+ people waiting for Web Payments
  Workshop to start:
  https://pbs.twimg.com/media/Bjek-PyIEAAiwzr.jpg:large
Manu Sporny: Welcomes from Stephane Boyera (W3C), Virgine Galindo
  (Gemalto) and Ingenico

Topic: Introduction by Jeff Jaffe of W3C

Slides for presentation by Jeff Jaffe:
  http://www.w3.org/2013/10/payments/slides/intro_jeff_jaffe.pdf
Jeff Jaffe:  The W3C was founded by the inventor of the WWW, Tim
  Berners-Lee.
Jeff Jaffe:  Earlier this month, we celebrated the 25th
  anniversary of the WWW.
Jeff Jaffe:  We have a very simple, mission statement - lead the
  web to it's full potential.
Jeff Jaffe:  We have a pretty good track record of that. We're a
  member-based organization. We have govts, startups, technology
  companies, non profits, close to 400 members.
Jeff Jaffe:  Large commercial companies. The community that we
  have are the entire users of the WWW, we're shooting for entire
  planet.
Jeff Jaffe:  For technical standards, we're larger than most
  technical standards - 70 people spread around the world, we want
  architectural coherance for the Web.
Jeff Jaffe:  Outputs we produce are available to everyone.
Jeff Jaffe:  UbiWeb - ubiquitous Web, We work on Web
  accessibility.
Jeff Jaffe:  No one with disabilities should be prevented from
  using the Web.
Jeff Jaffe:  Information and Knowledge focuses on data.
Jeff Jaffe:  Each piece of technology gets created in a WG. Most
  of the work is done by engineers from member organizations,
  sometimes we have invited experts from outside.
Jeff Jaffe:  We work w/ Internet Engineering Task Force, we
  interface w/ who we need to.
Jeff Jaffe:  We have a royalty-free patent policy. When Tim
  invented the Web, he made it available to the world. If you have
  an invention that belongs in the core of the Web, and  you have a
  patent, that should be available on a royalty-free basis.
Jeff Jaffe:  Some of you may be familiar w/ de jure standards. We
  have a fast-track for de jure international standards.
Jeff Jaffe:  As the Web has become more important, large
  companies have been joining.
Jeff Jaffe:  We also have been trying to get smaller companies
  in. There is a new track of work - once community decides that
  something needs to be a Web Standard, we did a good job.
Jeff Jaffe:  However, we didn't do well in pre-standardization
  work.
Jeff Jaffe:  So, innovators would get together to do
  pre-standardization work. So, we created a new track called
  Community Groups. It made pre-standardization work easier.
  Sometimes CGs are discussion groups.
Jeff Jaffe:  We have around 170 CGs, close to 4,000 engineers
  working in these groups.
Jeff Jaffe:  We are working on the "Open Web Platform", lots of
  people doing work, but at the end of the day it all has to come
  together. We use "open web platform" to differentiate the open
  web from the web of 25 years ago.
Jeff Jaffe:  In 25 years, the Web has become much more.
  Increasingly, the Web is not the end result, it's a platform for
  other applications to build on top of it.
Jeff Jaffe:  The platform for building distributed applications -
  it's very interactive. It's characterized by Rich Interactive
  Media. The content was exciting, but it was fairly static. Now
  web pages are exciting (lots of great fonts, media, images, etc.)
Jeff Jaffe:  We're working on HTML5 and CSS3 now, two hallmarks
  of W3C standardization work.
Jeff Jaffe:  The span of devices implementing the Web has been
  expanding. In last 10 years, we've successfuly moved the Web to
  the smartphone, it's a design point for the Web.
Jeff Jaffe:  Web and automotive is new work we're doing. So is
  mobile.
Jeff Jaffe:  Web technology runs most everywhere,
Jeff Jaffe:  Secure Web Platform - it's important that we keep
  innovating.
Jeff Jaffe:  New industries that are affected - mobile,
  entertainment, gaming, healthcare, digital publishing, all are
  increasingly getting affected.
Jeff Jaffe:  Digital publishing is interesting, we've been
  publishing for a while now. Mass distribution on a global scale,
  everyone is an author. Very different from highly selective
  publishing houses.
Jeff Jaffe:  Web lacked quality of publishing for a long time.
  Font selection, styling, you couldn't do any of that. However,
  today we're in a situation we know how to achieve all of that
  technically.
Jeff Jaffe:  As publishing was changed after Web, so do other
  industries.
Jeff Jaffe:  With the Web Payments workshop, we're launching what
  could be a more fundamental transformation. It'll be impactful,
  not sure how it'll turn out.
Jeff Jaffe:  Lots of stuff is bought on the Web :)
Jeff Jaffe:  Payments for mobile devices are increasing,
  searching for new ways of providing  payments on the Web.
Jeff Jaffe:  If the Open Web Platform has been successful, to be
  the reference standard for what gets done in those industries,
  let's explore how the Web affects payments.
Jeff Jaffe:  We wouldn't be exploring this if payments were
  simple.
Jeff Jaffe:  For most people, it's bewildering to do payments on
  the Web (to pay for things).
Jeff Jaffe:  To set something up the first time, it's difficult.
Jeff Jaffe:  We have cryptocurrencies coming up, it's part of the
  whole picture. The complexity of the ecosystem is something we're
  going to be focusing on.
Jeff Jaffe:  Merchants are a part of the picture. When you want
  to set yourself up on the Web, you have to figure out how you're
  going to get payments accessible to your customers.
Jeff Jaffe:  With Web Applications, the number of people that are
  trying to monetize things on the Web is growing exponentially.
Prakash Hariramani: With web applications, number of people who
  are trying to navigate the web has increased substantially
Jeff Jaffe:  I want to do a one-off purchase, it's not easy.
Jeff Jaffe:  A regular Amazon user has no problem, but we want a
  frictionless approach where anyone can buy from anyone in an easy
  fashion. The user experience should be simple. Not tons of
  passwords for each site that I frequent.
Jeff Jaffe:  High levels of fraud, the overall security of the
  system - it's not great. We all worry that one day it's going to
  get worse.
Prakash Hariramani: Lack of standardization = Poor and variable
  user experience across sites and across payment systems
Jeff Jaffe:  Is it really secure enough?
Jeff Jaffe:  Payments should be easy
Jeff Jaffe:  People should be able to pay how they want to. If I
  have a smartphone, or tablet - I'd like a single "wallet" and do
  things consistently among devices.
Jeff Jaffe:  Transparency is important -transaction fees should
  be clear.
Jeff Jaffe:  How does this get done technically? Unsure, that's
  why we're having this workshop.
Jeff Jaffe:  We're going to figure out where to do
  standardization. Maybe this happens at W3C, maybe somewhere else.
Jeff Jaffe:  What to standardize is a very delicate choice.
Jeff Jaffe:  We have the open web platform, having a clean way of
  getting a request for payments, proof of payments is
  standardization candidate.
Jeff Jaffe:  Having a standard interface between browser/wallet
  is a good standardization candidate.
Jeff Jaffe:  Interfacing w/ external payment providers is
  important.
Jeff Jaffe:  Being able to select payment mechanism is
  important... we need to manage this complexity.
Jeff Jaffe:  Users should have greater choices, more choices,
  more consistency. There is enough automation/verification that
  merchants should be able to trust customers.
Jeff Jaffe:  W3C is a consensus organization, we bring
  stakeholders together. We bring them together to try and figure
  out the best way to address some of these issues.
Jeff Jaffe:  The Web is a global mechanism, we need things to
  work across borders. We want an open and level playing field.
Jeff Jaffe:  When we start to look at a complex problem, we fail
  if we try to solve the  entire problem at once.
Jeff Jaffe:  So, what's the lowest hanging fruit.
Jeff Jaffe:  What makes a workshop successful - enter it w/ a
  spirit of openness.
Jeff Jaffe:  There are many things related to technology and
  payments - we're focused on technology issues and enablement.
  Standards are a human activity.
Jeff Jaffe:  Let's start talking and seeking consensus.
Wendy Seltzer: Piggy bank swag from event:
  http://wendy.seltzer.org/media/webpay.jpg

Topic: Introduction from Alexander Gee, European Commission

Slides for presentation by Alexander Gee, Deputy Head of the
  Payments Unit for the European Commission's DG Competition:
  http://www.w3.org/2013/10/payments/slides/gee.pdf
Alexander Gee:  I've been doing payments since 2008.
Alexander Gee:  We welcome what's being done here. Anything that
  makes payment on the Web better, we'd welcome anything that would
  expect the single market from the EU.
Alexander Gee:  What I'd like to do now is simply go through  -
  explain what we're doing.
Alexander Gee:  My slides are detailed, so I'll skip through
  slides relatively quickly.
Alexander Gee:  Payments in EU - epayments are largely card
  based. As far as EU is concerned, payments is 1% of GDP
Alexander Gee:  It's 25% of bank revenues.
Alexander Gee:  Card transactions have grown from 7.4% to 17.4% -
  price for accepting card payments is not reflecting scale and
  increased efficiency.
Alexander Gee:  DG Competition has focused on interchange fees.
  This is one of the biggest barriers to competition in payments
  market.
Alexander Gee:  We have been embroiled in a legal debate for
  years. MasterCard has said they'd move interchange fees down 0.2%
  to 0.3%. They're around 1% right now.
Alexander Gee:  Visa says they'll match Mastercard's fees.
Alexander Gee:  Lower fees - markets segmented between national
  markets.
Alexander Gee:  We are now continuing w/ cases against MasterCard
  and Visa - regarding international payments.
Alexander Gee:  With interchange fees at this level, merchant is
  indifferent on getting paid w/ cash vs. card. We don't have
  enough info on what a good comparator is for epayments.
Alexander Gee:  Direct debits of credit transfers would be good.
  Offline figures would be good.
Alexander Gee:  We've carried out a detailed study - 0.2% or 0.3%
  seems reasonable.
Alexander Gee:  Normal standardization is pro-competitive, but
  we've found that major players have banded together to create an
  exclusionary effect on non-bank epayment mechanisms.
Alexander Gee:  In Netherlands, more internet-based payments are
  made than card-based ones.
Alexander Gee:  Non-bank players were excluded - the way
  standardization was being done - it was exclusionary.
Alexander Gee:  We tried to work w/ European Payments Council .
Alexander Gee:  Interchange fees are a way to pass fees onto
  customers in a way that they can't see them.
Alexander Gee:  New entrants to innovation - atms / internet
  banking, paypal, payfair, monnet, ideal and Mybank, sofort.
Alexander Gee:  Paypal is more expensive than card payments
  [scribe assist by Prakash Hariramani]
Alexander Gee:  From our point of view, Paypal is expensive -
  more expensive than card payments. It's a closed system. You have
  to establish a new account w them.
Virginie Galindo: Payfair : http://www.payfair.eu/
Alexander Gee:  Monnet replaced national schemes, but it failed,
  they were willing to offer 0.2%-0.3%, they wanted to match fees
  elsehewre in EU (not in France)
Alexander Gee:  If they didn't do these higher fees, they were
  taking much more risk.
Alexander Gee:  Systems in Italy - click directly on bank via
  credit transfer.
Alexander Gee:  Recently proposed regulation - we want to create
  a level playing field - it can't be done by competition
  enforcement.
Alexander Gee:  It cannot act very fast - mastercard case took 7
  years.
Alexander Gee:  Competition enforcement cannot act fast/last
  mover advantage [scribe assist by Prakash Hariramani]
Alexander Gee:  So, we want to create a legal base for non-banks
  - third party providers.
Alexander Gee:  So, here's the proposal:
Alexander Gee:  Promote consumer welfare - reduce excessive fees.
Alexander Gee:  Increase choice
Alexander Gee:  Promote competition, efficiences should be passed
  on to consumers.
Alexander Gee:  We want to reduce barriers for competition and
  increase transparency, reduce barriers to entry.
Alexander Gee:  Reducing interchange fees - Monnet and PayFair -
  they cannot enter the market because banks are expecting a
  similar revenue.
Alexander Gee:  Banks are keen to have more expensive card
  payments schemes, so we need to work on that.
Alexander Gee:  The commission proposes - regulate the fees of
  "Must take" cards - 4 party schemes, consumer visa/mastercard
  card.
Alexander Gee:  National schemes problematic
Alexander Gee:  Immediately cap the fees for cross-border
  transactions.
Alexander Gee:  Promote the idea of a single market - 2 years
  delay on national/domestic transactions.
Alexander Gee:  More effectively functioning cards market -
Alexander Gee:  What we can do:
Alexander Gee:  Allow merchants to refuse cards
Alexander Gee:  Provide a legal base for 3rd party providers -
  supervise licensing, make sure their presence in the market is
  secure - supervised/licensed, identify themselves, limit access
  to minimum necessary.
The scribe missed the content of slide 13
Alexander Gee:  No strong confidential data, need strong
  authentication.
State of play regarding proposal.
Alexander Gee:  EU Parliment voted in 20 Feb 2014. MIF caps after
  1 year, 7 cent max debit fee
Alexander Gee:  Caps should also cover commercial cards.
Alexander Gee:  Cross-border acquiring at rate of acquirer's
  country.
Alexander Gee:  Ongoing work on Greek Presidency, under Italian
  presidency in Italy.
Eric Tak:  Considering that fees were identified are also being
  used online - does that mean it's a basis for services like
  MyBank to consider?
Alexander Gee:  No, under competition rules, we have the
  obligatin to say that there is a problem. They can always come
  forward w/ efficiency arguments. They'll find it difficult to do.
Alexander Gee:  So, I don't see what efficiency arguments they
  could bring forward.
Dave Birch:  I don't see what the principle of the regulation is?
Dave Birch:  Since the DG Competition has been doing this for a
  decade - and there is no new competition. I don't get what you're
  doing?
Alexander Gee:  I don't think it's fair to say nothing "new" has
  happened, there have been new things.
Dave Birch:  You can only use it in the Netherlands, it's not
  effective!
Alexander Gee:  There is so much money floating around in this
  system, banks have not wanted to comply w/ competition law.
  Mastercard has made no attempt to do anthing other than bare
  necessary changes.
Alexander Gee:  Visa has always made changes at very last
  section. We haven't seen lowering of interchange fees. It takes a
  very long time to force people to do it.
Alexander Gee:  Regulatory approach is necessary. If we enforce
  lower interchange fees, we might be able to do something about
  it.
Hannes Tschofenig:  In Jeff's talk - he said we should have more
  user choice. Been working on identity - there's an interesting
  pattern. Little choice w/ identity providers on internet.
Hannes Tschofenig:  Identity providers layering payment on top.
  How do we provide more user choice? To prevent us from using 3
  payment providers that are going to be US companies.
Alexander Gee:  Regulators have a hard time leading the market.
Daniel Appelquist: Some side discussion going on here kicked off
  my my comment on http 402 status code and also link rel=payment
  (see http://relpayment.com) :
  https://twitter.com/torgo/status/448016153869574145
Alexander Gee:  Danish market - banks operating through banking
  association - NETSID - ID system used by danish banks - used for
  online gaming.
Alexander Gee:  Way of verifying that people are over 18.
Alexander Gee:  This is the only recognized system - banks have
  used this power to kick out new entrants. This is a difficult
  area for regulators to get involved in.
Charles McCathie Nevile:  Two questions - in 3rd party providers
  - they're not allowed to store confidential data? What kind and
  why? Isn't there a risk that if you silo off EU as a limited
  income space, won't they just jack up the prices for the rest of
  the world? Isn't that what they do?
Alexander Gee:  Second question first, this is an argument that
  we often hear from the banks / card schemes. What we see is that
  we're moving away from hidden fees to fees people can see.
Alexander Gee:  System of transparent pricing - see what happened
  in US - Durbin amendment - banks said that they want to increase
  card payment fees, found that they couldn't do it - people didn't
  want it.
Alexander Gee:  Banks would like to say - we want to raise fees -
  they will be constrained by market opportunities. If they could
  raise them, they'd have already done it.
Charles McCathie Nevile:  There is a difference between
  transparency and caps on pricing.
Alexander Gee:  In this case, we're capping the part that
  customers can't see
Charles McCathie Nevile:  Trusted Third Parties (TPP's) and why
  can't they hold data?
Alexander Gee:  The concern is that payment providers can hold
  your data and get back into your bank account.
Alexander Gee:  That should not be possible, there should be a
  transactional business model. You leave no trace w/ the TPP.
Alexander Gee:  Minimize risks - they need to keep basic info on
  transaction.

Topic: Format of Sessions

Stéphane Boyera:  Ok, so the rest of the sessions are 2 hours
  long. We're trying to keep presentations short - less than 1
  hour. Chaals w/ be moderator for the first session.

-- manu

-- 
Manu Sporny (skype: msporny, twitter: manusporny, G+: +Manu Sporny)
Founder/CEO - Digital Bazaar, Inc.
blog: The Worlds First Web Payments Workshop
http://www.w3.org/2013/10/payments/
Received on Friday, 28 March 2014 19:27:09 UTC

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