Help me learn: Is there something like OpenID out there, but for money?
By Stefan Constantinescu on Wednesday, July 1st, 2009 at 5:42 AM PST In Concept
A few days ago, one of my favorite online services, Spotify, launched a new feature for premium users. I wanted to sign up to become a premium user, but my credit card does not work on their site. This got me thinking about decentralizing payment systems.
Today there are several groups of people pushing federated identity. I’m sure you’ve heard of OpenID, Facebook Connect and OAuth. The promise is simple: use your existing credentials to log on to new services.
Here is how it works in practice: I go to a site, XYZ123.com, and I want to leave a comment on a blog post. I click on the OpenID button and it asks me to select my OpenID provider. I select AOL and the site then takes me to AOL and asks me for my AOL username/password. I enter in the right data and then AOL sends me back to XYZ123.com and I’m logged in.
What happened there is that XYZ123.com let AOL handle the identity portion of their site so that they don’t have to deal with building a database of usernames, passwords, and all the other fun complicated bits that come with creating a new account. Can the same be done for money?
Why should Visa, American Express, Mastercard and PayPal have a monopoly on the online transaction business? Why not let competition flow so that the next time I try and sign up for Spotify Premium I just hit a single button and it takes me to my bank’s website where I can initiate a transfer or better yet it can give me a special code to SMS so that I just pay via my prepaid top up credit, similar to how they already do in Africa.
I do not have enough knowledge about these issues, but please leave a comment and help me learn.
Hello Stefan,
May or may not be true but here’s my theory:
With expanding monetary regulatory control initiatives* anyone not affiliated with existing bureaucracies or larger corporate entities that may/may not be inextricably linked to them – people like entrepreneurs who might do what you’re looking to develop by way of elegant solutions are getting squeezed out by groups like Visa, American Express, Mastercard and PayPal.
*Because hey, the people who’ve managed monetary policies so far have done so much better than say, allowing markets to actually operate which granted, causes immediate pain however that tends to prevent long term train wrecks such as we’re experiencing now.
Something similar to that is actually used quite frequently in Sweden. When asked for the usual payment options on web sites you can choose to use your bank, and you are then transported to your bank’s web page where you enter your login credentials and then confirm the purchase, and is then returned to the site.
On the negative side it so far only works for one bank (that I’ve seen?) and it does not seem like a very “open” solution. It’s also a lot more hassle (verification codes, dongles etc) than just entering a cc number. Safer too of course, but there’s always that trade off between convenience and security
We have that here in Finland too, but you can use any of the major Finnish banks. I agree, the codes are a hassle, but still, the concept of being able to pay for something using my preferred payment method is awesome.