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Evolution in Payments & Commerce: Payment Standard - Relevance to Merchants (MAG Quarterly- Volume Seven, Issue One)

Laura Townsend 2019 Headshot_small
By Laura Townsend, SVP, Operations, Merchant Advisory Group


March 7, 2019


Standards in the payments industry are designed and published by various bodies.  Often the day to day engagement with those standards organizations requires a level of technical expertise. However, it is of critical importance to ensure business intelligence is layered on top to influence the technical design.  Retailers, financial institutions, and service providers alike that deliver experiences to their customers must engage in the evolution of payment standard design.  Your customers are worth it.

As I increase my engagement with standards bodies focused on consumer payments, it appears that the active contributors have become accepting that merchants won’t be significantly involved in the design, either because they don’t have the time, the interest, or the expertise to offer value.  In an effort to change this perspective, MAG has joined several standards organizations including EMVCo, W3C, X9, and NACHA with the goal to explore how merchants can be effectively involved in the standards setting process that drives commercial payment products to which our customers will ultimately be exposed. 

It isn’t difficult to understand that in this new digital age with such focus on the customer experience and the fierce competition that continues to endure in commerce, retailers can’t afford to NOT be engaged in the payment standards setting process.  A standards organization is defined as an organization whose primary activities are developing and promulgating technical standards that are intended to address the needs of a group of affected adopters.  Retailers and their consumers are those referenced as the affected adopters of payment standards.  How can you not be engaged?

As retailers develop new innovative ways to engage their customers in commerce, we have the choice to either accept the standards that are designed and ultimately commercialized or we get engaged with the intent to influence the outcome such that not only those designing standards but also those that develop products predicated on those standards understand the business needs of the retailer and their consumers.  
MAG’s more recent activities have primarily been through our joining EMVCo as a Business Associate as well as our membership in the World Wide Web Consortium (W3C).  Both have seen a lot of activity in light of the evolution and increased proliferation of both ecommerce and mobile commerce payments.   

EMVCo is represented and overseen by its six-member organizations—American Express, Discover, JCB, Mastercard, UnionPay, and Visa.  The mission of EMVCo is to facilitate worldwide interoperability and acceptance of secure payment transactions connected to traditional cards.  Their focus in 2019 has been primarily on Secure Remote Commerce (SRC), EMV 2nd Generation, EMV 3D-Secure, and EMV QR Code.  Since joining EMVCo in October 2018, MAG has formed a Community of Practice (COP) with active merchant member representatives engaged in the review of the SRC specification development.  SRC is an approach to promote security and interoperability within the card payment experience in a remote payment environment. This MAG COP provided a significant number of comments to the draft specifications of both v0.7 and v0.9 of SRC.  Our expectation is that many of those comments and concerns will be addressed and incorporated into the final v1.0 or future versions of the specification.  This update on those efforts was communicated to membership recently. 

W3C is the World Wide Web Consortium (W3C) which is an international community that develops open standards with the goal of ensuring the long-term growth of the web.  MAG joined W3C specifically to engage in the Web Payments Working Group (WPWG) whose mission is to make payments easier and more secure on the web. The working group is comprised of volunteers from companies in the technology, financial services, and merchant/merchant services segments. The WPWG has been focused on developing the standards for Payments Request API and Payment Handler API, standardized APIs to allow merchants (web sites or mobile web applications selling goods) to utilize one or more payment methods with minimal front-end integration and a simplified customer experience.  They have also engaged in efforts to evaluate how EMVCo standards such as 3DSecure, Payment Tokenization, and Secure Remote Commerce would interact with W3C web payment standards.  There are many other working groups or interest groups managed through W3C which you can find on their website to learn more about each.  Several of them intersect in some way with web payments including the Web Authentication Working Group or Web Commerce Interest Group.

Most recently, W3C announced the call for input on a Secure Web Payments Interest Group proposed and founded by EMVCo, FIDO Alliance, and W3C in recognition of the growing importance of strong customer authentication in payments and other interactions on the web.  The mission of the Secure Web Payments Interest Group will be to enhance the security and interoperability of web payments and will focus on the interoperability of payment standards to enable web payments.  Although MAG supports strong consumer authentication and security on the web, our position is that payment standards developed by these different standards bodies should stand alone to offer competition in enabling payment security while offering capabilities that complement each other to provide unique value add security features.  Dependencies on any one or a combination of independent payment standards, products, or solutions to deliver sufficient security could negatively impact innovation and competition.  MAG will continue our engagement on the Secure Web Payments Interest Group once it is officially formed to advocate for security, flexibility, and choice in the collaboration among these various payment standards bodies while keeping the customer experience and merchant perspective at the forefront.

There is ample opportunity to provide insight and experience to the standards setting process whether you are an expert in payment operations, data security, technical development, technical implementation & deployment, operational execution, or the end user experience.  We can be more effective as a merchant association in advocating for our desired outcomes with more merchant voices at the table.  Please reach out to me if you are interested in representing MAG alongside me in any of these efforts.