Manu SpornyYesterday, we ran Part I of our conversation with Manu Sporny, CEO of Digital Bazaar, about Payswarm, a new type of micropayment standard for the web. Today, we dive a bit deeper into the process of how Payswarm is being developed as a Semantic Web based standard rather than a proprietary technology.

SW: Tell us a bit about the choice to create PaySwarm as a standards project.
MS: The answer lies somewhere in a lack of open, patent- and royalty-free standards for online payments. Filling out your credit card information on every site you want to support is not the answer. Neither is signing up to a proprietary payment service. What we need are open standards for payment on the Web – once that is in place, we can look forward to an explosion in innovative start-ups centered around finance and crowd-sourced funding. We can also look forward to more individuals being enabled to make a living via the Web which, given this incredibly deep recession, will have a very positive impact on a number of people’s lives.


the family fortuneSW: What differences do you see in this approach?
MS: When you start off from the standpoint that you expect the work to become a world standard, you make different decisions than you would in a VC-backed start-up. We’re not anti-establishment, nor are we pro-establishment. We are pro-technology and pro-Web. We think many of the founding principles of the Web can be effectively applied to the way that we manage money online. Most importantly – we believe that all of the work should be done out in the open. Our communication is done over a public mailing list, the audio for every one of our meetings is recorded and transcribed, all of our specifications are publicly accessible – nobody else in the world is even attempting to do what we’re doing.

SW: What are the biggest challenges in creating a universal standard like this? Are they technical? Cultural? Business-related?
MS: All of the above? The technical challenges have been enormous, mostly in the area of making sure that the technology can scale as well as ensuring that the security is absolutely rock solid. That’s one of the reasons that we’re developing this specification out in the open – we want as many eyes on the security aspects of the specification as possible. If there is a security concern, we want to find it and fix it as early and openly as possible. We don’t believe that a world-wide specification for processing financial information should be developed behind closed doors.

There are two parts to the cultural difficulty. The first was finding a good avenue that we could use to pursue this open, highly-experimental (at the time), standard. Thankfully, the World Wide Web Consortium is really blazing a trail here with their Community Groups. We have started a Web Payments Community Group at the W3C where we work on the spec on a day to day basis. That provides us the openness, transparency and legal framework to start creating a world-class specification. Once we believe that we’re done, the work will transition into a full standardization effort at W3C (as long as the W3C members approve of the work).

The other cultural challenge has been getting people in the Web technology sector to feel comfortable creating systems that manage payments and money. It’s really a fascinating commentary on our society. These are incredibly talented individuals that can make a website handle tens of thousands of hits per second, return search results across the entire Internet faster than you can blink your eye, but when it comes to transferring money or processing payments – they become nervous and back away.

It’s as if there is this belief that the people that build financial software know a set of secrets that the rest of us don’t. A belief that finance should be squarely in the purview of the financial industry. So, getting technologists to believe that they have what it takes to create a world class payment standard has been difficult. I mean, look at the state of the world-wide financial industry at this moment in history – do technologists really believe that they could do worse? This is a moment that should be seized by Web technologists – we know how to build massively scalable systems. Luckily, we have a number of brave souls that are in the group now that are participating and helping us move this standard forward. We have participants from PubPie, Open Transact and Bitcoin, which are all bringing viewpoints into the standards making process that are vital for the long-term viability of Web Payments.

The business-related case is challenging as well. My company, Digital Bazaar, is sponsoring much of the work to create this open standard. We plan to launch a service based on the PaySwarm standard, we will probably license the software to others so that they can setup their own PaySwarm Authorities. Since it is an open standard, there is absolutely nothing stopping anybody else from jumping in and providing their own competing services and software. That’s the beauty of open standards – they create environments that are very market driven. If the standard is successful, we expect that PayPal, Amazon, Google and even Facebook will get involved. So, we will have to out innovate a large number of very large organizations, and if we don’t, our company is dead.

That said, even if our company dies because we don’t innovate fast enough, but the standard is wildly successful, we will be proud that we helped create THE universal payment standard for the Web.

SW: What is Semantic about Payswarm? What standards are you building upon and how might future integration work? For example, you mentioned the future goal of supporting physical product sales. Would there then be a way to tie in GoodRelations, for example?
MS: Just about everything about PaySwarm depends on Linked Data and Semantic Web technologies. From the way assets are listed for sale, to the terms in a license, to the messages passed between participants in the network, to the finalized digital contracts. PaySwarm is a living, breathing example of how Semantic Web technologies can take a technology from good to great. For example, all assets and listings are expressed using RDFa. This allows us to express human and machine readable assets for sale on any HTML page (or XML document). All long-term data and messages are encoded in JSON-LD, which allows us to define a basic protocol for financial transactions, but ensure that we’re able to extend that protocol in the future by utilizing more specific Web vocabularies in the messages that are being sent. We had tried to model financial data using simple key-value pairs and XML documents in the past, but everything sort of fell into place when we viewed the data as a graph. The RDF data model really helped us out here – it provides just enough structure for us to write code against, but enough flexibility to add and extend in the future without requiring a huge rewrite to our database schemas or software.

GoodRelations isn’t a future tie-in, you can use GoodRelations with PaySwarm today. Since PaySwarm allows very flexible asset, listing and license descriptions – everything is just an RDF graph – you can mix-in as much or as little GoodRelations as you’d like. We don’t depend on GoodRelations for the core payment protocol, but that isn’t really GRs focus. So yes, we do support GoodRelations today. We also support the Dublin Core, FOAF, RDFS, XSD, Commerce, Security and PaySwarm Vocabularies. Without the Semantic Web and Linked Data, PaySwarm would not be as powerful as it is today.

SW: You’re planning a service built on the PaySwarm standard for a future release. Do you care to provide any details on that? Perhaps a hint as to what it will be? When we should start looking for it?
MS: Yes, this is how Digital Bazaar intends to recoup it’s enormous investment in PaySwarm – by providing software and services to enable people to implement the PaySwarm standard for their business. There will be competitors in this sector, but we will be the most knowledgeable since we wrote the standard. We will be launching a PaySwarm Authority as well as licensing our software so that other people can setup their own PaySwarm Authorities. We will also offer support and hosting services, depending on if that part of the business takes off. I don’t want to hint as to when that will be – it’ll be ready when it’s ready.

SW: And if a site owner wants to start using PaySwarm today, where should they start? What should she/he do next?
MS: There is a technology demo that is available on the PaySwarm Wiki showing how the technology will integrate into a WordPress blog through a simple plugin. We’re still very involved in the technical development of the standard, but if site owners want to learn more, they can go to the PaySwarm Website to learn more about how it works and how it will help them make a living via the Web. There is also a quick video introduction on PaySwarm available below:

As I mentioned previously, all work that we do is open to the public and completely transparent – anybody can join the effort. For those that would like to follow developments more closely, we do have a Web Payments mailing list and frequent meetings. If you want smaller updates as things progress, I write about the state of Linked Data and Payments on the Web often via Twitter or Google+.