How a simple API is going to change the payment landscape.


The future of payments

Even if you don't follow online payments or have an interest in e-commerce it's about to get really interesting out there. The web has been slowly working toward an open, standards-based way to pay in your browser after more than three years of work by the W3C to ensure it's a fair solution. The idea? Fix the mess that is online payments.

Bear with me, we're going to jump into the deep end and look at a bunch of work that's coming together in a big way, made up of three separate parts.

The big news is the Payment Handler APIa new standard which allows a website to securely hand off a payment to a digital wallet, which can be completed natively by the web browser (or otherwise) in a special pop-over window. 

Combined with the recently released Payment Request API this is a huge step forward: we can now make digital payments in a predictable interface, securely, and trust that it's properly implemented thanks to the requirements in the standard.

Google, among others, is already planning big things that leverage this API. Last year it rebranded Android Pay to Google Pay in anticipation of an eventual cross-platform payments product and it now (optionally) synchronizes cards added to the mobile wallet across Chrome seamlessly so you can pay without tying something in finally.

To get a feeling for why the Payment Handler API is such a big deal we can already experiment with how it might feel. Stripe has a new intelligent button, for example, as a part of its Elements product that detects payment API support and triggers the correct service, like Apple Pay or Google Pay, seamlessly.

If you're in a supported version Chrome (68 and above, available in the developer channel) and you click the payment button, you'll see a new interface presented by the browser that looks the same every time you pay.

There are so many things to this dialog that get me excited about the future of the online commerce here that it's worth breaking down.  

First, I'm able to pay in just a few seconds without typing in my card yet again, because the API is able to handle all of the banal details of card, address and so on.

Second, this dialogue is presented by the browser and means that regardless of the website I'm on, so I can be sure that it's implementing a level of security high enough to trigger it in the first place. 

Third, the dialog also works natively on mobile devices, across mobile platforms, and can be implemented by any browser:

Behind the scenes is even more exciting, however: that new payments API isn't limited to only support credit cards: it's able to be extended to support cryptocurrencies, bank transfers and any obscure local payment methods that countries may have.

Essentially it's a new way to funnel payments to the most convenient endpoint for the web store, rather than implement multiple payment providers or other tools to take money all just to add support for an obscure system only used by the Dutch.

Those writing the API were rightly concerned that the biggest issue with such a project is actually getting people to use it, because one of the core issues with the standards-based web is it often feels something like this XKCD comic.

I don't think this is the end result here at all, and the team's post about how the standard was developed is evidence of that, along with how many platform providers are poised to provide support for payments:

"Creating a new global payment method seems all but impossible. First, there is acceptance. Visa is accepted by tens of millions of merchants worldwide. Any new payment instrument would have to first convince a significant number of merchants to support it. And that’s the easy part. What’s much more difficult is to change consumer habits such that people actually use this new option. "

By supporting a wide array of networks for payment, there's an opportunity here to disrupt the traditional credit card networks and provide methods of payment most convenient for the end user, while making the experience of paying for things more secure and consistent. The motivation for Visa and Mastercard to support this is people will finally have the choice to use whatever they want and if they're late, people will switch habits.

This all presents a big opportunity for Google to make an end run around Apple Pay (or vice versa). Chrome is used on more than 60 percent of active web browsers, so with the launch of native web payments via this API it's able to reach a few billion users on day one. Apple Pay, however, requires the user is paying with Safari and an iOS or MacOS device. 

Google has an opportunity to run circles around the credit card networks (Visa, Mastercard), Apple, and others, and win big in the payments space where nobody has stood a chance over the last decade. 

Instead of needing to convince people to use Google Pay on mobile, it'll have a billion cards on file, synchronized across devices for even in-person payments at retail. All it has to do is educate the user that they're now magically able to pay with their phone, too. I assume the next logical step is a Google-branded card, too, or moving beyond that with its own payments infrastructure.

We'll see how that plays out in a few years, but these payment buttons are already close to appearing across the web. Shopify, for example, has already said it plans to "kill the checkout" with the API and will implement it soon. Others will follow, and I suspect we'll see this as a dominant payment choice within a year or so.

To me what's most astounding about all of this work that's flying under the radar is that we only just figured out a consistent way to do payments, but it's more than welcome. 

The only curveball here that will matter, of course, is whether or not anyone implements these new APIs on their own web store... but the reality is that Chrome's reach is almost certainly to make sure of that. If you're looking for a quick, secure way to make payments online, it's likely going to become a no-brainer to use these modern payment APIs rather than build your own checkout flow.

All that's left as an open question is who the winners and losers will be: the credit card companies? Payment networks? We've got an opportunity to change the payments landscape forever, and I'm optimistic these new APIs are going to do that.

This week's insight is an amended version of a briefing sent to re:Charged subscribers. To get it earlier, become a member and support the newsletter!


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