Building a global payment network raises a lot of questions. Some of them require deep knowledge to answer. When Interledger Foundation funds research, here are some topics I think would be valuable to have formal research on.
I don't represent the foundation in my suggestions. These just are questions I have asked from my personal experience participating in this community.
Background
The Interledger Foundation is attempting to build a federated global payment network. While some countries and regions have modern digital payment methods, none of them interoperate globally. The efficient international payment options that exist currently are single-provider solutions. Interledger envisions a world wide web of financial institutions capable of connecting every person on the planet to the global economy without sacrificing local regulatory compliance and safety.
The primary use cases are micropayments (Web Monetization), one-time payments, and recurring payments. A micropayment is a newer category of payment with unique nuance. This type of payment requires a transaction fee appropriate for the smaller size of the payment, which previously has not been possible with traditional payment networks. It creates new value exchange opportunities ranging from an optional tip to accompany one's gratitude to an improved user experience, like removing ads, to a more traditional transaction like paying to access of content.
1. EU GDPR compliance review
Does Web Monetization as spec’ed comply with GDPR? A payment pointer likely would be considered personally identifiable information, much like an IP address. Is sharing this, as required to facilitate a Web Monetization transaction, in the way Web Monetization works (automatically as you browse the web) complaint with GDPR?
Ideal researcher: someone with legal experience with GDPR
2. PSD2 compliance review
The EU’s Payment Services Directive (PSD2) introduced security requirements for the initiation and processing of electronic payments. PSD2 obliges payment service providers to apply so-called “strong customer authentication” (SCA) when a payer initiates an electronic payment transaction. Payment service providers include banks and other payment service providers.
There are exemptions for low value payments. Can Web Monetization meet all of the Article 16 conditions?
Ideal researcher: someone with legal experience with EU financial regulations
3. How money moves
Explain how money moves in the current state of the finance industry. How does money actually get sent from a person to another person/business? What are the intermediary service providers (merchant acquirer, credit card processor, payment gateway, commercial bank, clearing house) in that transaction? How does each make money off of a transaction? Who assumes risk/liability at each point in the transaction? How is this different for credit cards, international wires, US ACH, EU SEPA, EU PSD2 payments, India's UPI, Brasil Pix?
Model the answers after MobileCoin's documentation, where the information is presented to a 5 year old child, to a grandparent, to a first year college student, and to someone who works in fintech.
Ideal researcher: someone with experience in the finance industry
4. Web Monetization tax implications
The Interledger Foundation should offer country-specific guidance for digital creators earning income via Web Monetization. (General guidance with the usual "consult your own tax attorney" disclaimer.)
What is the legal definition of tipping? Does a streaming micropayment qualify as a tip? Does it have to be optional? Does it require voluntary amount selection?
How much value can be exchanged for a tip? Is there a difference between a Patreon membership to get access to an ebook and a purchase of an ebook? Is providing an ad-free experience for people who tip different?
How are tips taxed compared to other income in terms of both the transaction (“sale”) and the recipient’s income? Is the taxation different if it’s an individual, incorporated entity, or registered non-profit?
Ideal researcher: someone willing to find and consults with tax attorneys in many countries
5. Understanding the creator economy
Examine the major services digital creators use, what monetization opportunities they offer, how creators earn money from their influence, and what challenges creators have with each. Services of interest: TikTok, Instagram, Twitter, Twitch, YouTube, Patreon, GitHub sponsors, Substack, OnlyFans
Ideal researcher: someone with formal experience conducting user research and familiarity with user generated content platforms
6. Interledger threat modeling
How could Web Monetization, Open Payments API, Interledger Protocol be exploited by a bad actor?
Ideal researcher: someone in information security (InfoSec)
Cover image by Hans-Peter Gauster on Unsplash
Top comments (2)
@jeremiahlee , you've pinpointed vital research areas that are crucial as we progress toward an integrated digital creator economy. At BessPay, our mission aligns with many of your insights, especially supporting digital creators in developing regions like the Caribbean. We'd like to share some info from our research within Jamaica and Caribbean that highlighted a few hurdles that creators face in this region :
1. Financial Incompatibilities:
Creators often face delays(7 days or more) accessing their income due to third-party financial software not optimized for their specific region.
There's a significant gap in financial products and services tailored to these creators.
2. Limited Access to Creator Funds:
Access to Multi Billion $USD Social Media Creator Support Funds(shopify.com/blog/creator-fund) from platforms like TikTok, YouTube, Snapchat and Instagram is often restricted from developing countries, stifling growth in developing areas.
Further reads:
3. Monetization Barriers:
Eg.
4. Steep Transfer Fees:
Transfer fees, such as Jamaica's $40 USD charge for each international wire transaction, significantly diminish creators' earnings.
Potential Solutions:
With the upcoming availability of more tailored financial services, growth of available ILP-enabled Fediverse platforms and wider Interledger platform ecosystem, we're optimistic about potential solutions. We envision a world where creators, especially from underserved regions, can fairly monetize their work and receive earnings quickly and hassle-free.
Eager to foster deeper discussions and collaborations with you and the Interledger community on this.
This is an interesting and inspiring article. I will definitely look forward of talents to answer these questions!