Building a Better World with Web Payments

TL;DRWeb Payments will enable a new era of people-powered finance on the Web.

The World Wide Web Consortium (W3C) just announced their Community Group standardization process, which is basically an incubator for technology projects that could eventually become world standards. One of those groups is called the Web Payments Community Group and is something that I’m really excited to see moving forward at W3C. This blog post outlines what we’re hoping to accomplish in that group and what it will mean for the world.

One of the first reactions that I usually get when I tell people about Web Payments and PaySwarm is this sort of wide-eyed look that usually translates into one of two things: either they get the long-term implications of having a universal payment mechanism for the world, or they’re having a very hard time figuring out how PaySwarm is any different from credit cards, ACH, Google Checkout, Amazon Payments, Square, PayPal, Flattr and the myriad of other payment solutions on the Web.

We have a ton of ways to get money from point A to point B, but all of them fail at least one of these two principles:

  • Open – Is how the technology works publicly documented and available for implementation under patent and royalty-free terms?
  • Decentralized – Does the technology work with the architecture of the Web – is it decentralized?

If you go down the list of payment technologies above, you will find that all of them fail both tests – but who cares!? Why are those two principles above important?

The Foundation of the Internet and the Web

Centralized systems work quite well most of the time, but when things go wrong, they really go off of the rails. Having a single point of failure in any system that is meant to be the foundation on which humanity builds is a terrible idea. This concept of decentralization is at the core of how the Internet and the Web was developed. All systems that are meant to become a core part of the infrastructure for the Internet and the Web must meet the two requirements above. In fact, every major technology that is baked into your Web browser meets the two requirements above. TCP/IP, HTTP, HTML, CSS, JavaScript, XML, JSON – each of them – are decentralized in design and are open Web standards. That is how technology becomes ubiquitous. That is how technology gets into the browser.

It is the year 2011, and we still don’t have anything like that on the Web for transferring the fundamental unit of value exchange used by the human race – money. There are great inefficiencies that will be resolved if we can do that and more importantly, many lives will be made better with a solution to this problem.

Exchanging Value

Today’s systems are built on technology developed during the 1980s that was based on thinking from the 1940s that arose from the same antiquated monetary guidelines that banks have operated upon for hundreds of years. In the past 20 years, you could count the number of companies that have fundamentally changed the way that an individual distributes and collects capital online using one hand. People-powered finance has not been a priority for a variety of reasons. One could say that PayPal was really the first to break ground in this area and be successful – but it is still a closed, proprietary and centralized solution. PayPal, in its current form, will never be a part of the Web like HTTP, HTML and JavaScript are today. That’s not to say that PayPal is a bad thing – it just doesn’t address the issue that we’re interested in addressing.

The world needs an open payment platform that they can innovate upon. We need the freedom to innovate upon a financial system that is open, transparent and built by people that truly understand how the Web works.

What the Future Holds

We are not attempting to create another PayPal, or Flattr, or Google Checkout. We are attempting to change the way we fundamentally collect and distribute capital online. There is already a demo of how this technology works, so I won’t go into that here. I am also not attempting to state that PayPal, Flattr or any of the other services are inherently bad. The currently popular payment services online are all very good at what they do – they work for their intended purpose. However, I’d like to focus on what is possible to do with a payment platform like the one being worked on at the World Wide Web Consortium.

Wouldn’t it be great if you could receive money from anyone or send money to anyone on the Web with just one click in a browser? Wouldn’t it be great if this mechanism was open and universal? That is, it worked in the same way across every single blog, Web App, news site, Web-based game, tablet, and mobile phone? What could you accomplish with such a universal payment system? Today, exchanging cash is really the only analogue. Not everybody takes credit cards, not everybody takes PayPal – but everyone does take a set of bills and coins – you can buy any product or service with those economic instruments. Wouldn’t it be great if you could do the same via the Web?

If there were a universal payment mechanism, most anyone that creates digital content could make a living on the Web. Creating an app and launching it through a website would be simple, as the payment solution would just be a part of the Web’s infrastructure just like delivering an HTML page from a server to a client is a part of the Web’s infrastructure. Hardly anyone has to think about how HTTP and the Internet gets a document from one side of the world to the other. It just works. Our goal is to make payments on the Web as ubiquitous as HTTP.

Automatic Micro-donations to Eradicate Malaria

Let’s assume that you believe that the Bill and Melinda Gates foundation is changing the world for the better and that you would like to help out. The W3C Web Payments work would allow you to fund local or regional change by automatically transferring $0.25/month into a few initiatives that you believe in. You could set aside a budget for the year, say $25, and trickle your money toward the groups that you believe are making a difference. There is no long-term commitment like there is today. This would not only be a way of helping those non-profits achieve their goals, but it would also be a vote of confidence – “I still believe in what you are doing and the direction you’re taking.” If a better non-profit comes along, or you feel that they are no longer being effective with your money, you can always re-allocate the monthly donations somewhere else. With a universal payment infrastructure and micropayments, funding world-changing initiatives doesn’t have to be an involved process. Just allocate the payments at the beginning of the year and forget about it until you decide to change them at your leisure.

People-powered Politics

If you are politically inclined and participate in the election of your government, wouldn’t it be nice to be able to fund the candidates that best represent you on a monthly basis during the election cycle? What about live donations during a televised national debate over the Web? Many of the donations during the last presidential election were very small dollar amounts. How would allowing people to automatically donate $1 here and there change the way we elect officials? How would crowd-financing a lobbyist to work on your behalf for Net Neutrality or Technology Education change the way our nations operate? It is currently very difficult to give money through the Web – far more difficult than just sending somebody an e-mail. There must be a reduction in friction to remove the large separation that exists between the people and their representatives.

Micro-funding for Start-ups

What about funding people, non-profits and start-ups? Kickstarter is a fantastic service that supports an all-or-nothing funding model that has been very successful at funding artists, writers, directors and software developers. Innovators ask investors to cover their start-up costs and investors get something in return for supporting the innovator. Kiva is another great example of people-powered finance – where hundreds of thousands of lenders around the world loan small amounts to people in developing countries that build or grow something and re-pay the loan after they sell their goods. Kiva has a loan re-payment rate of 98.83% – which is impressive. This model could be applied to a variety of areas that depend on more traditional funding these days; blockbuster films, farming, construction, small business loans, and open-source software development, to name a few. Having to create a new account and enter your credit card information across 10-20 sites is too much to ask of most people browsing the Web. Eventually, with the Web Payments work at W3C, a single click is all it will take to fund these types of endeavors.

The Big Picture

So, hopefully the long-term goal is more visible now. The Web Payments work at W3C is not just about making payments easier on the Web, it is about empowering people to affect positive change in the world.

There are a number of ways that you can participate. The easiest is to follow this feed on Twitter (@manusporny) or on Google+, I’ll be updating folks about this stuff over the next couple of years through the standardization process. If you want to keep tabs on the technical progress of the Web Payments standardization work – join the Web Payments mailing list. If you would like to contribute to the technical work or make sure that your use case is supported, join the Web Payments Community Group.

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