January 2009 - Page 2 of 2 - Tomorrow's Transactions

A good solution, but only if you don’t understand the problem

Monday, 12 January 2009 by Dave Birch 2 Comments

[Dave Birch] It’s all for the kiddies. There’s a terrible problem out there on the interweb: there are people who aren’t children who are pretending to be children and there are children who are pretending to be not children. Therefore, something must be done.

MySpace is now encouraging users to post their real names to their profiles. This is quite a shift – like many sites, MySpace used to refer to a ’screen name’ rather than ‘real name’.
[From Privacy Value Networks » Blog Archive » The danger of ‘real names’?]

Well, it might be considered an inconvenience that your children’s identities should be disclosed to the entire world online, but it’s for the greater good, right? And if we know who the children are online, then we can protect them, and help retailers to avoid accidentally selling knives to teenagers, and that’s a good thing too.

Child-safety activists charge that some of the age-verification firms want to help Internet companies tailor ads for children. They say these firms are substituting one exaggerated threat — the menace of online sex predators — with a far more pervasive danger from online marketers like junk food and toy companies that will rush to advertise to children if they are told revealing details about the users.
[From Ping - Online Age Verification for Children Brings Privacy Worries - NYTimes.com]

Perhaps this whole anonymity vs. absonymity argument around online identities is actually important, and perhaps we should be doing some thinking about it instead of leaving it to people (eg, Ministers) who don’t really understand the problem or the solution.

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These are the personal opinions of Consult Hyperion and its guests and should not be misunderstood as representing the opinion of its clients or suppliers. To discuss how any of the technologies discussed in this post can benefit your business, please contact Consult Hyperion.

On the ascent

Monday, 12 January 2009 by Dave Birch 2 Comments

[Dave Birch] We were chatting in the office earlier about something I saw on the Niall Ferguson series on the “Ascent of Money” on Channel 4. Well, actually I watched it on Virgin V+ “Catch Up TV”, but you know what I mean. It’s not bad. In one of the episodes (about property) he said in passing something like “it’s always happened before”. In the business of money, unlike the in technology of money, no-one ever learns. I made this point over on Kashklash recently, using the story of Northern Rock and the Goldsmid brothers to illustrate the point.

Note that this case of the Goldsmids is not “similar” to that of the Crock, nor is it “analagous” to it, nor is it a “metaphor” for it. It was exactly the same. In every respect.
[From kashklash:: exchanging the future » Blog Archive » Technology is progressive, finance is cyclical]

Anyway, with my current focus on innovation — I’m helping the CSFI to plan the first round table in the Visa Europe Research Fellowship series for 22nd January — it set me thing (again) about the cyclical nature of the finance business. Is there something I need to take account of here: I haven’t quite put my finger on it yet, but is there a connection between the stepwise march of technology and where it intersects with the circle of financial services evolution? Perhaps there are some points on the circle where the new technology gains purchase, and some where it is flung away. I need to work on my analogies!!

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Paying for innovation

Friday, 9 January 2009 by Dave Birch 2 Comments

[Dave Birch] So who, exactly, is going to pay for innovation in the payments field? Should individual stakeholders incrementally innovate or shoudl we make co-ordinated attempt to improve the payment system and share the cost? Should we regulate and let the market sort things out or should we try to constrain some of the paths through the roadmap. Hhhmmm. In this, as in so many things, Australia proves a useful case study. They had one of the first and best-developed EFT-POS systems in the world, but of late it has been looking a little antiquated.

Australia’s central bank has criticised the nation’s four largest commercial banks for shirking on investments in payment systems technology, resulting in a lack of innovation and neglect of systems like EFTPOS.
[From RBA criticises payments innovation: News - Hardware - ZDNet Australia]

This is, of course, the very same Australia that capped interchange fees, so reducing banks income from cards and therefore reducing their incentive to invest. The results are not surprising. If we use online payments market share as a proxy for innovative new products, then the result has been a steady loss of market to more innovative competitors.

Research from Nielsen Online has tagged PayPal as the most preferred online payment method in Australia and the UK. There are more than 141 million PayPal accounts worldwide. In 2007 more than $47 billion in payments were processed by the service.
[From The Better Banking Blog: PayPal vs Credit Cards]

In Australia, it was the merchants who were the winners. They obtained reduced merchant services charges because of reduced interchange and, broadly speaking, pocketed the difference. Was this what the regulators wanted? It’s hard to imagine that this is the case, so the lesson to be learned here is (surely) that we need a clearer vision of what we want before we set off, if you see what I mean. If we want some real innovation, then simply focusing on interchange isn’t going to deliver anything.

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Business and ID cards

Wednesday, 7 January 2009 by Dave Birch 12 Comments

[Dave Birch] Just a quick reminder about the Digital Identity Forum’s joint seminar with EEMA at the British Computer Society in London on January 29th. This seminar, sponsored by Consult Hyperion, will be looking at the business opportunities that might arise from the introduction of the UK national identity card. You can register for the seminar at the EEMA web site. The event will be chaired by John Elliott of Consult Hyperion, who has considerable international experience of designing national ID card schemes. With speakers and panelists including

Meg Hillier, the Parliamentary Under Secretary for Identity.
Martin Linda, Siemens PLC.
Frank Layman, Federal Civil Service Information and Communication Technology department, Belgium.
Andy Smith, Identity and Passport Service.
David Blanco, Tractis, Spain.
Colin Whittaker, APACS.
Me.

it should be a useful day out and will hopefully lead to some genuine innovation. Whatever your opinions about ID cards — and I’ve made mine plain — the fact is that the first ones have already been issued. Since the UK scheme is now here, it makes sense for business to look at the opportunities that have arisen around ID cards in other markets, for both online and offline use, in the public and private sectors.

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Greater utility

Wednesday, 7 January 2009 by Dave Birch 3 Comments

[Dave Birch] The economist John Kay wrote an excellent, excellent piece in Prospect magazine at the turn of the year. In it, he says, amongst other things, that

The modern financial services industry is a casino attached to a utility. The utility is the payment system, which enables individuals and companies to manage their daily affairs… Modest levels of speculative activity may improve the operation of the utility
[From Essays: 'Making banks boring again' by John Kay | Prospect Magazine January 2009 issue 154]

His imagery is not only, as always, accurate and thought-provoking but also valuable because it gives us a context for thinking about the way to take the payment system forward.

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Straight bananas

Monday, 5 January 2009 by Dave Birch 2 Comments

[Dave Birch] Normally the only stories about European standards that you read in the newspapers here in Britain are the ones about straight bananas (actually, I think that the rules on banana curvature were recently relaxed) or people going to jail for advertising brussels sprouts in imperial measures (although, once again, the EU’s stringent policy appears to have been abandoned). But I read in last month’s Cards & Payments that the European Commission are upset about EMV being chosen as the standard for the SEPA Cards Framework (SCF) because they view it as “non-European” (worse still, and more specifically, they view it as American). The EU Competition Commissioner, Neelie Kroes, recently labelled the worldwide standard for card payments as “proprietary”.

Perhaps there is some displacement going on here. Perhaps the Commission are upset because they pushed for SEPA and SCF. It is now clear that SCF will lead to an increase in the average merchant service charge in Europe as low-cost domestic debit schemes are replaced by more expensive international credit and debit schemes (ie, Visa and MasterCard branded cards). But it’s an interesting development to move on and begin the attack on EMV.

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