Manu Sporny, Founder/CEO of Digital Bazaar, Inc., sat down with SemanticWeb.com to discuss Payswarm, a new standard that he is working on through a W3C Community Group. This article is Part 1 of 2.
SemanticWeb.com: What is PaySwarm?
Manu Sporny: It is a universal payment standard designed specifically for the Web. Think “an open source PayPal on steroids” - an open, patent and royalty free specification for Web Payments. The goal of PaySwarm is to make crowd-funding, world-changing ideas, buying and selling online as easy as sending an e-mail or an instant message. We want payment to be baked into the core of the Web so that exciting new companies can be launched on top of this truly open payment platform.
We want to enable anybody in the world to launch a PayPal, KickStarter, or Kiva. Think of what the Web did for companies like Google, Facebook, Twitter and Yahoo. We think PaySwarm can do that for the next generation of start-ups that want to transform the way we reward each other on the Web. Improving the way we organize financial resources to enhance our personal lives and pursue endeavors that improve upon the human condition is at the core of what we’re doing.
SW: Why did your company create PaySwarm?
MS: The way that people create and publish was revolutionized by the Web. However, as we empowered people to distribute content, we didn't simultaneously empower them to be able to reward each other directly for that content. I can hand a person a dollar in real life with ease. I can effortlessly send a person an e-mail. So, why is it so difficult to send a dollar to a website through my web browser.
SW: There are numerous payment start-ups out there. What makes PaySwarm different?
MS: Yes, there are many new payment start-ups, but all of them have proprietary solutions. We're the only one that is proposing an open, patent- and royalty-free payment standard, which goes against the common practice of "owning the payment network." That is, if we’re successful, we expect there to be thousands of PaySwarm Authorities (companies providing payment processing servers) out there - you pick whichever one you like and trust the most.
The reality is that banks are very inefficient at moving money around, and that people that create technology see that inefficiency as an opportunity to innovate. Open Transactions, Open Transact, BitCoin, Ven, RipplePay - some of those tend to be anti-establishment angles on money in society. We don’t go that far, we are taking the middle path. We think that there is a great deal that is wrong with the financial sector today, but there are hundreds of years of lessons learned there that you don’t want to just throw away. That is, we believe that there is room for large and small banks in PaySwarm. There is room for large and small retailers. There is definitely room for innovative new start-ups.
SW: Who do you see using it and how? (and who is it NOT designed for?)
MS: We think that people that sell digital content online will be the early adopters. So, things like for-profit blogs and news sites like the New York Times, web applications, online services, games, and anybody that would like to implement some sort of micropayment-based revenue stream on their website.
From the vendor-side of things, we have PaySwarm plugins for WordPress and will eventually have plugins for Drupal. The goal is to enable many of the current Content Management Systems out there to be able to make certain pages or downloads on their site monetizable, without setting up a gigantic paywall - a prospect that nobody likes, not even the publishers. The entire PaySwarm vendor setup process takes somewhere in the ballpark of 10 minutes, we don’t ask for credit cards or bank accounts, and there are no setup fees. This is what we feel is necessary in order to really innovate for Vendors in this space.
From the buyer-side of things, you do need to create a PaySwarm account, which is free and then you need to deposit some money into that account via PayPal, a credit card, or a direct bank transfer. Once the money is in your PaySwarm account, you can spend it anywhere on the Web. The big benefit to buyers is that they never have to expose any of their credit card or banking details to websites, so it’s more secure than just using a credit card.
At first, we probably won’t do physical purchases because that has a potential fraud risk to it that we’d like to avoid until we see good uptake on the digital sales front. However, we do plan to support physical product sales in the future.
SW: Traditionally, a business owner with a presence on the web needed several pieces in place to process transactions: a Payment Gateway, a Merchant Account, perhaps a Shopping Cart application, card-processing terminals, etc. Where does Payswarm fit in that workflow? Does it require or can it integrate with any of those other pieces?
MS: The nice thing about PaySwarm is that you don’t need to spend the money on creating a merchant account, setting up a payment gateway, integrating a shopping cart application, purchasing a card-processing terminal or buying SSL certificates for your site. PaySwarm greatly reduces the barrier to entry if you just want to sell some stuff from your website. We’ve tried to make the barrier to entry for people that want to sell stuff via their website as low as possible. In fact, the cost to set up a PaySwarm-enabled store should be very close to $0 per year, as opposed to the $480 per year that is typical with the setup you describe above - and that’s if you don’t process any payments!
The overall effect is a greatly simplified workflow for both the vendor and the buyer. See something you like? Click it and you’ve bought it - it’s that simple. In many cases, you don’t even have to leave the Vendor’s website. No credit card forms to fill out, no shopping cart to manage, no physical terminals necessary. The other advantage is that all of your purchase history lives with your PaySwarm Authority, which means that you have access to your entire purchase history. We believe strongly in data portability, so you can take your purchase history with you and move it to a different PaySwarm Authority if you’d like. It also means that it’s far easier for websites to integrate the technology because they don’t have to save receipts, credit card numbers or other payment information.
All this to say that there is a huge reduction in complexity - that’s by design - we wanted to make this stuff as simple as possible for the vendors and the buyers.