ABC Newsradio Interview with Bahram Boutorabi, CEO/CTO of GPaymentsNow there's been a big problem with e-Commerce. There are plenty of would be online vendors. There are potential customers as well yet the two haven't quite been able to get together. Largely it seems because the payment options are seen to be too risky, too complicated and generally not worth the bother when you can usually buy or sell offline a bit more easily. There have been alternative payment options tried, internet currencies and credits like beenz. There have also been encryption systems and credit cards with guarantees that the financial institution will accept liability for any fraud involving their card in online payments. But it looks like that's all changing with the standards emerging like SET which have the backing of Visacard and Mastercard. Now a product called ActiveWallet from GPayments offers multiple payment options just like the wallet or purse in your own pocket. Bahram Boutorabi is the CEO/CTO of GPayments. Mr. Boutorabi tell me how this works:
An ActiveWallet is a generic name given to a series of products that are designed to provide authentication to users and enable financial institutions to allow their customers to accurately authenticate themselves and proceed with purchasing online in a secure manner using any type of payment. In other words it is a product which is going to address one of the fundamental issues for online payments. What we normally perceive to be a matter of security, once we start digging in, we find that it is mostly about authentication of parties so that we are absolutely sure that the person who is making the payment is the person who is supposed to be using that payment method and not a false pretender of some kind.
To whose benefit is this? Is it primarily for the financial institution's benefit? Is it for the consumers, is it for the vendors or is it for a bit of each?
Very good point. It really is to the benefit of all parties involved. To give you an example, a consumer would have guarantees that once they use the wallet they are assured of their transaction and only their transaction being approved and no-one else being able to use their credit card or debit account or any kind of payment account that they might be using....so this is to their benefit. For once their is absolute certainty to the degree that is possible on the Internet that there wouldn't be anyone else using their payment instrument. It is to the benefit of financial institutions because one of the most expensive processes currently is the process of chargeback. The process of chargeback refers to the fact that if someone utilises my credit card on the internet and purchases a product and then I receive that on my statement and then I turnaround to my bank and say I did not authorise this - that entire process from that point on which means the bank contacting the merchant etc. etc. is a manual process and very, very expensive process. It is estimated and this is only an estimation that about 4% of the value of total credit card transactions is lost to fraud related matters which includes chargeback etc....so it is to the benefit of financial institutions. At the very end of this spectrum is the merchant or a seller of an item who has an absolute guarantee that the person who is paying it is genuine. Therefore, unless the products are not shipped or the wrong product is shipped they absolutely get their payment. This is to provide certainty into a process that hasn't had any certainty to date.
In your assessment do you think in the rush for people to get involved in e-Commerce that perhaps the cart was put before the horse somewhat and the security concerns of consumers, as well as the problems that the vendors have had with stolen cards being used to make purchases and so on, that these weren't addressed and it is only now that with systems like yours they are actually being addressed?
That's actually very true. That has happened although there have been attempts in the past to address this issue. You might have heard about SET or Secure Electronic Transaction....an initiative by Visa, Mastercard, American Express and other card companies to address the issue of authentication and, generally speaking, the issue of security or what we perceive as being security. Sometime ago a standard was issued in and around 1996 but unfortunately the complexity of the suggested solution was such that financial institutions, merchants and consumers were not able to participate. It was too costly, too complex and it wasn't justified at that point in time. However, following from that the industry got together and the payment industry in particular, namely Visa, Mastercard and others and they are coming up with New Standards for Authentication of Payment. These now are being designed to be extremely simple, not requiring a lot of expense on anyone's part. In fact, compared to SET, very little expense, however, this time they are providing the same assurances that they wanted to provide intially....and weren't successful....in a simple manner and at very small cost to merchants and financial institutions and no cost to consumers because consumers have the right to be assured of their security and authentication. Therefore, you will see financial institutions providing this free of charge to their customers and therefore ensuring that from now on all e-Commerce transactions are absolutely secure and fully authenticated.
Once there is that sort of a simple and workable solution standard allowing a variety of payment options across it, how great a task would it seem to be to sell the technology. Is it a case of here is a way to do it and this is the way to do it, now go ahead and start buying and selling?
I think the whole process must be transparent to buyers and sellers. Fundamentally the aim is to make this as simple as possible so that one day when you open up your system something downloads onto your system....this is coming genuinely from your financial institution and the process is that you go to your bank, sign up, and you get your wallet into your system. From that moment on you are fully authenticated. Very little impact on consumers and very little change on the merchant's side. Therefore it is a natural process. We now carry lots of credit cards in our wallets and we don't question how complex the process is when I put my credit card into an ATM machine in Rome and access my account or my debit account. The same, I can access my account and get money in a different currency so the complexity has been hidden from the user in this case and in the future when you look back you will see that e-Commerce transactions have no security issues, everything is fully authenticated....and to the extent that we can provide assurances today will be available in the electronic world as well. So it will be a very smooth and natural process. That is my view.
Do you expect to see the other attempts at Internet payment options, the online currencies, the things like that to fall by the wayside or remain as one payment option along side credit cards and other forms.
Very interesting question. I think my personal view is that these attempts at addressing the lack of authentication and payment options on the internet will not survive the real process of bringing confidence into credit cards and debit accounts - those instruments and methods which we are comfortable and familiar with. You might have heard of using beenz for payment, using all kinds of "gadgety things" for payment. My view is that these will not survive the real attempt to provide security and authentication of existing payment methods but there again that is my personal opinion. If you ask the founder of beenz or some other payment method they would still say they are confident they will become the standard of the future.