Open Standards Opportunities: Financial Transactions & Seamless Global Commerce

Posted on July 15th, 2015

Despite today's technological climate, the ability to make global transactions remains challenging. W3C's Web Payments Interest Group is exploring new ways to solve this problem.
Image: W3C

For anyone who has ever sent money abroad, set up an international bank account, or simply made a Web purchase from a foreign vendor, the challenge of translating cost into domestic currency is a familiar annoyance. Beyond the basic arithmetic of conversion, other challenges include additional fees, unavoidable delays, and other technicalities that can frustrate transactions as well as the user. In some cases, an individual may find that a desired transaction is not possible, due to the limitations of the payment systems involved.

The Web’s ability to introduce standardized avenues of communication into disparate systems is well established. Toward this goal, the W3C’s Web Payments Interest Group is working at the forefront of web payments to explore new ways to streamline global transactions. The group has developed a number of ideas for the future of global eCommerce, which range in complexity and promise a number of tangible benefits for users and the global economy.

One possible solution proposed to improve global transactions is to create a new, standardized front-end application layer that masks complicated financial transaction details. This approach leaves existing payment systems in place, leveraging a totally new web application that runs “on top.” The application layer simplifies the user experience and interfaces with back-end systems to seamlessly handles transaction and conversion complexities. This results in an improved and more reliable user experience. Because this solution focuses largely on the application layer, rather than the complexities of disparate back-end systems, it would be unable to produce marked improvements or new consistencies with regard to network interoperability, transaction speed, security or other variables (such as user input required for each transaction).

A second, more ambitious potential solution for streamlining global transactions involves implementing broader changes in Web standards infrastructure for financial payments. Rather than focusing on a higher level application that masks transaction details, this scenario centers on modifying the way funds move from one system to another. This proposed solution would create a new, standardized environment within which users do not have to worry about having a particular payment method in common with a vendor. Instead, the system would ensure complete transferability – connecting all payment methods available to a user – from debit to credit, BitCoin to PayPal and other payment types. While the up-front cost of implementing a new standard like this would be greater, the benefits of this approach would include guaranteed network interoperability, improved speed and security, and lower cost per transaction.

Without question, the Web-based financial transactions area is fertile ground for improvement. Open standards for global financial transactions promise to improve global transactions by improving user experience, simplifying and streamlining transactions, improving security, lowering costs, improving transaction speed and more. While there are some standards already in place for interbank connectivity and communication, such as the electronic data standard ISO 20022, there are no current standards in place that are as ambitious as those proposed by the W3C’s Web Payments Interest Group.

W3C’s Web Payments Interest Group’s Value Web Task Force committee is actively studying the need for Web standards in internetwork transactions. The Task Force is working to gather industry use cases and requirements and uses that data to aid in proposal development. They are currently seeking interested parties such as banks, clearinghouses, cryptocurrency companies, and related organizations that recognize the potential of a standardized field of Web commerce and wish to contribute to future development. Participation is open. W3C is also an affirming partner of the OpenStand Principles.

If you are interested in contributing to the work of the Web Payments Interest Group, you can reach out to them at standards+w3c@ripple.com. If you’d like to have more information about the mission of the Web Payments Interest Group and the Value Web Task Force, you can email public-webpayments-ig@w3.org with the subject line, [value web]. Where you like to see development in the sphere of web payments and commerce? Share your thoughts in the comments below!

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