Friday, June 22, 2007

Open Payment/Commerce Gateway : Is this the right time? Part 1

Open Payment/Commerce Gateway : Is this the right time?

Part 1

We live in such a wonderful period of technological changes in human history that might make our grandfathers jealous. They lived during (or later part of) the industrial revolution, computers were beginning to show up as everyday appliances and human productivity was rising at tremendous rates. Well they were wrong... If they thought that human progress was running like a fast train then today technological progress is running more like a speeding bullet and there is no slowing down in sight. And as humans, we like to classify and mark each era with a name or a tag and so I wonder... What I would call this era that we are currently living in? And as I think about it, what jumps right at me is how "Open Source" has changed the face of earth. It all began with simple and yet powerful ideas from people like Linus Torvalds (creator of Linux), Jimmy Wales (founder of Wikipedia) and others. The seeds they planted have now become trees and they are ready for the harvesting. There was a time when people mocked at Linux and called it a toy in the developers hands, eventually they began laughing. And today people take notice and Linux is gaining prominence and competing with the giants of the operating system businesses. It has driven the idea of open source to every home and is here to stay. Open source has proven that it is a viable and healthy alternative to propriety software.

Similarly, the seeds of open, common, public content began in the minds of a few people such as Jimmy Wales. And today we have the wonderful Wikipedia which changes the way encyclopedia's are created, managed and published. Similarly the idea of internet has created so much synergy that today it has become an integral part of our daily living. Imagine a closed internet where only a few elite can use and participate. This would have created a class system that's equal to the feudal or caste system found in ancient cultures. Well, I think you get the point... The internet and the seeds of open source and open content have broken the chains of knowledge and have liberated us with opportunities beyond measure.

And now I wonder if the time is right for a "Open Payment Gateway" - "an open Visa or Mastercard"... Today, ecommerce is growing and has become a vital part of our existence. Credit-cards have become the defacto standard of currency. But this standard has also built within it a powerful conglomerate where a few elite enjoy the benefits of ecommerce. Today, in order to purchase a product online or at a store - the seller pays a small fee for the transaction. And this fee can be anywhere from 2% to 4% of the purchase price. And the reasoning that banks and credit corporations tell you is that - that's the cost of exchanging data and having systems with checks and balances in place to ensure the security of your money. They say that they take a small fee to build all the back-end communication channels by which they talk to the various financial institutions to take the money from the buyer and move it into the sellers financial institution. But today we live in a day and age where the internet is everywhere and each financial institution has created their own proprietary way of communicating with their bank and so that puts the burden on the credit-card companies to speak not only one language but many languages. And in the past there has been a lot of work put in by open source supporters to create a common infrastructure for paving the way. But what I'm questioning is this - Are we in a point of time where there could be open payment gateways that can help create commerce and at the same time allow the open gateway to be profitable and self sustaining?

In the next few blogs, I will try to gather the users feedback on the above question and try to propose some methods by which we can pave the way for a true "Open Payment/Commerce Gateway" that everyone can benefit.

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1 comment:

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