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

In 2018, we can start catching up with Lithuania

Wednesday, 11 March 2009 by Dave Birch 1 Comment

[Dave Birch] One of my most frequent criticisms of the UK's national identity card scheme is that it is backward-looking, an electronic simulation of a Victorian ID card rather than an ID card for the 21st century. I gave an example of this in a talk recently by using the case of OpenID, noting that in Finland you can use your ID card to log in to OpenID, and pointing out that this bringing together of |nternet standards and national ID made sense on a number of levels. Needless to say, I have never heard OpenID mentioned in connection with the UK national ID card.

Now I hear that another country has gone over to OpenID. In this case, Lithuania.

Starting January 1st 2009 every issued Personal ID card has OpenID in it, backed up by personal digital certificate. National Certificate Center under the Ministry of Interior will be the national OpenID provider (https://openid.vrm.lt/). Provider service is currently in testing mode, it is not yet open to the general public, but it will go public anytime soon.
[From [OpenID - Eu] Republic of Lithuania goes OpenID]

Doesn't anyone else find it odd that our flagship national identity programme is so unambitious? That our roadmap to 2018 does not include services that are already rolled out in Lithuania?

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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.

Some real mobile, nfc and payment stuff in the UK

Tuesday, 10 March 2009 by Dave Birch 5 Comments

[Dave Birch] It would be silly to pretend that all is well in the world of mobile proximity payment. I’m a big, big fan of the technology — particularly because I have seen at first hand the very positive consumer reaction to it — but I have been open about some of the challenges and honest about the reality. Some of our clients have decided to develop a consensus between sectors whereas others have decided to go it alone: horses for courses. In the UK, it has to be said, we’re some way away from the Japanese situation where mobile proximity is already a mass market even if penetration is not 100%. As I pointed out last year

About 89% of the DoCoMo phones sold have the mobile wallet (the Nokia phones do not have it), about 50% of au by KDDI phones have it and 46% of the Softbank phones have it. In total, although 43% of subscribers have the mobile wallet, only a third of them (14% of the total subscriber base) are currently using the mobile wallet function
[From 15Mb: another blog from David G.W. Birch]

In other words, about a sixth of Japanese mobile phone users already use mobile proximity. Meanwhile in the UK there are currently 0% of phones with mobile wallets! It’s going to take some bold moves to get the market moving. The first example of this has been unveiled with the public launch of a product that Consult Hyperion has been working on for some time for Barclays:

Mobile operator Orange UK and credit card company Barclaycard have announced a long-term strategic partnership to develop m-payments technology including mobile wallet handsets.
[From Barclaycard, Orange share a mobile wallet - Financial Services - Breaking Business and Technology News at silicon.com]

Barclays chose CHYP to assemble product requirements into an initial specification, help to develop the functional specification for the product provisioning and management across the NFC ecosystem and to develop working prototypes to demonstrate concepts. I’m really looking forward to seeing the first fruits of this partnership — an Orange phone that has a Barclays MasterCard built in to it — arrive in the shops in the not-too-distant future, building on Barclays’ rapid transition to contactless technology in the card space.

[Barclays] will deliver the new contactless cards to customers when their current cards need to be replaced. New customers signing up to a Barclays current account will also receive the new type of card. The bank estimates that up to three million customers will be using contactless debit cards by the end of the year [and] the majority of Barclays debit card customers will have contactless cards by 2011.
[From The Paypers. Insights in payments.]

This is a great time to be in payments!

mobile

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Announcing Identity & Privacy 2009

Friday, 6 March 2009 by Dave Birch Leave a Comment

[Dave Birch] Here’s another date for your calendars: London, 14th an 15th May 2009. The Digital Identity Forum and the Enterprise Privacy Group will be hosting the first Identity & Privacy Forum, sponsored by Consult Hyperion with support from HP, Microsoft, Symantec, Verisign and VoicePay. The Forum will be held at the Guoman Charing Cross Hotel, London, and I’m looking forward to seeing you there. Toby Stevens and I will be sending out a detailed agenda in a couple of weeks, but just as a heads-up there are going to be four sessions: “a snapshot of electronic identity”, “co-evolving privacy and consent”, “sharing front line experiences” from the public sector and “catching up with biometrics”.

We’ll be sending out the agenda in a couple of weeks and fleshing out the expert panels. As soon as we do, you’ll be able to buy tickets!

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Think local, act…

Thursday, 5 March 2009 by Dave Birch 7 Comments

[Dave Birch] Larry White — perhaps known to some of you as Lawrence H. White, the F. A. Hayek Professor of Economic History at the University of Missouri, St. Louis — wrote the book on competition and currency. Literally. It’s called “Competition and Currency” and I have a well-thumbed copy of this splendid tome on my desk. (Once again, I must say that I am absolutely delighted that Larry has agreed to give the kick-off talk at this year’s Digital Money Forum.) One of the reasons why the book is so interesting to me is that when I first began to look into the idea of using electronic payment systems to transfer value other than fiat currency I thought it was a really radical idea and it was only once I started to trawl through some of the literature that I realised that it was something that “serious” economists talk about. From there on, the inter-related issues of private and alternative currencies became, as far as I am concerned, part of the future roadmap for electronic money.

cash and cashlessness, history and future, money, social and community

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Privacy-enhancing anti-technology in Europe

Tuesday, 3 March 2009 by Dave Birch 1 Comment

[Dave Birch] There’s been another rash of stories about fingerprinting and the linking of identity and authentication and I thought I’d take a look at a few of them after my afternoon at the Social Market Foundation. Let’s begin by looking at a mass market use of biometrics…

Under a new law published Monday, Mexico will start a national register of mobile phone users by fingerprinting all customers in an effort to catch criminals who use mobile phone to extort money and negotiate kidnapping ransoms. The new law, which will be in force this April, will give mobile phone companies a year to build the database of their clients – complete with fingerprints and any other personally identifiably information.
[From New Mexico Law to Fingerprint All Mobile Phone Users]

Fingerprint mobile phone users could never happen here, of course. Well, not for a while. But fingerprint mobile providers might…

Vodafone dealership DigitalMobile is the latest employer to introduce fingerprint scanning for staff. DigitalMobile spokesman Will Allan says the scanners have been installed in the company’s 22 stores around the country and most of its 190 staff are using them to clock in and out.
[From Vodafone sales staff asked to scan in - New Zealand's source for technology news on Stuff.co.nz]

This seems pretty reasonable: using biometrics to make life easy more people is a much more convincing business case and, as far as I can see, a much more effective use of the technology than biometrics for security (outside nuclear missile launch codes and that kind of thing).

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It’s a big “if”

Monday, 2 March 2009 by Dave Birch 4 Comments

[Dave Birch] Just as mobile proximity payments start to slide into the trough of despair, their inevitable trajectory before they climb slowly to the plateau of productivity, the tension at the heart of the current non-market is again under discussion.

For carriers, the benefits of offering mobile banking are ambiguous. Though companies like Verizon Wireless, AT&T and Sprint facilitate the service, mobile banking does little more than provide a marginal boost to data ARPU at this point. That may change down the road as features like contactless payments and the multi-mode mobile wallet become a reality, providing revenue opportunities for banks and carriers alike. Carriers will be able to use payment-enabling near-field communication (NFC) chips as a way to upsell customers on handsets while boosting data ARPU.
[From Mobile Banking Poised for Takeoff]

Without a decent mobile offering, which must be something more than getting texts with your account balance in them, there is no way for banks to bring in the next generation of customers. But if it is carriers who use payment-enabling NFC, how is that going to help banks? Banks don’t control the handset, the SIM or (thanks to the GSMA’s sterling work in the standards space) the NFC interface either. It’s not like banks can just ignore mobile, write it off as a “nice to have” channel but a low priority in difficult economic times. Mark Schwanhausser of Javelin kicked off a nice piece about the need for banks to make mobile central to their strategies with a lovely “sign o’ the times” fact:

Santa Clara University shut down 1,300 land lines in its dorms Tuesday, saying they’re unnecessary because virtually all students have cell phones now.
[From Javelin Strategy and Research » Technology + Investment + Adoption = Ubiquitous Mobile Banking]

This is a generation that banks simply will not be able reach, influence or service without an effective mobile offering. I can tell you from personal experience that my teenagers never, ever use fixed line telephony and they almost never use e-mail and they hadly use the web (they use Facebook, and YouTube and BitTorrent, but not the web itself, if you see what I mean). So what does this mean for payments? Well, for one thing it means that something is going to have to change in the relationship between banks and mobile operators because the current stalemate isn’t serving either of them. There is an enormous market out there and it it’s not being served properly under current arrangements.

Informa Telecoms & Media forecasts that in 2013 almost 300 billion transactions, worth more than US$860 billion, will be conducted using a mobile phone – a twelve-fold increase in gross global transaction values in just five years.
[From 300 Billion Transactions Worth $860 Billion by 2013, Says Informa Telecoms - WIRELESS AND MOBILE NEWS]

Wow. No small potatoes. But read the small print, and you’ll find a crucial qualification around the NFC projections (added emphasis is mine)…

Informa predicts that if the key players collaborate effectively the mobile payments and banking market offers a shared annual revenue opportunity of over US$10 billion in five years time.
[From 300 Billion Transactions Worth $860 Billion by 2013, Says Informa Telecoms - WIRELESS AND MOBILE NEWS]

That’s what we found too in our study for the Infocomm Development Authority in Singapore. Collaboration of course means more than carving up a number of very small pies: it means creating an interoperable infrastructure so that customers and service providers can connect over any network. It’s self-evident that an “open” market contributes more to the net welfare than a closed one, but it can be difficult to work out how much more, because you have to look at business that do not currently exist and make sensible estimates as to how they might perform. Nevertheless, the big picture is undoubtedly correct.

The IDA claims ubiquitous consumer access will spur businesses to deploy NFC services. The authority cites a study it commissioned from Consult Hyperion which suggests a fully interoperable NFC environment would generate a market size approximately eight times that of a non-interoperable environment.
[From Finextra: Singapore moves towards interoperable NFC infrastructure for m-payments]

I don’t think that’s a particularly hard call to make: look at the size of the non-interoperable text market compared to the interoperable text market on the size of the non-interoperable payment card market compared to the size of the interoperable payment card market. So, you might reasonably ask, why isn’t the whole world singing along in harmony. Well, it’s a new technology, a new business, and it depends on conservative, well-established, stakeholders making changes to their long-term strategies. It’s inevitable that it’s going to take time. The mobile operators are uncomfortable about simply adding NFC to handsets and letting things evolve.

The present remains a world where the carriers do control the interaction between customer and handset, and in turn the technology that gets placed on the handset. The primary tide the carriers are looking to stem is that of irrelevance (if I had a nickel for every time I heard the phrase, ”…don’t want to be dumb pipes” when referring to a carrier).
[From Javelin Strategy and Research » The Mobile Wallet — Conflicting Business models and Evolution]

So carriers don’t want to be dumb pipes, just like banks didn’t want to be payment utilities, despite the fact that if each of them did stick to their knitting we might all be a lot better off. I’m beginning to wonder if there isn’t a new arrangement round the corner to break the current statemate. Suppose that there is, indeed, a return to “narrow banking”? I don’t see payments as part of narrow banking, which to me means savings and loans, essentially. But a tripartite “narrower banking” plus “narrow mobile operators” plus “payments utility” might optimise in the right ways and generate the high volume, low margin transactions of a mature marketplace that serves to increase the net welfare.

banking and finance, mobile, prize

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