Spanish practice

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[Dave Birch] Mobile payments are developing in some pretty interesting ways at the moment. While we tend to think of mobile payments as being some sort of replacement for our familiar plastic cards, this is only one part of the market. In some parts of the world, retail is not the focus, and mobile money transfer has become a serious business and it’s already beginning to connect the developed and developing worlds. There’s no doubt in my mind that this will be one of the most important uses of the technology, in terms of improving the lives of the most people: making it possible to move money around means inclusion and financial services where there were none before.

Vodafone, Safaricom and Western Union have announced that they will partner to pilot a cross-border Mobile Money Transfer (MMT) service between the U.K. and Kenya.

[From Payments News: Vodafone, Safaricom, Western Union Partner for Mobile Transfers - December 08, 2008]

So you can now use your mobile phone to send money from one country to another. That’s not to say that retail payments are not participating in the mobile revolution. If you look at countries such as Japan and Korea — which I stress are not templates for the rest of developed world, but we can see them as testbeds for certain technologies that will inevitable spread — mobile payments are part of the mainstream. There, it’s the mobile operators who have been driving change and, while using mobile proximity payments to buy cups of coffee have long since ceased to be novel in those markets, those operators are continuing to drive innovation. Oddly, given the focus in the press, one area where contactless payment technologies may have great impact is not in stores but on line.

SK Telecom subscribers, who can already use the “T-Cash” mobile payment system to pay for bus fares, grocery products and parking tickets, will now also be able to purchase goods and services from the Internet… Since launching the service earlier this year, SK Telecom said it gathered more than 200,000 users of T-Cash. The mobile wallets are used for paying bus, subway and taxi fares, buying items at 24-hour convenience stores, and paying for parking at a number of major facilities such as Seoul Station, Gimpo International Airport and Seoul World Cup Stadium. T-Cash will now be accepted as payment at 11th Street (www.11st.co.kr), an online retail and auction site operated by SK Telecom, and Cyworld (www.cyworld.com), the country’s most popular social networking service, operated by SK Communications, the Internet unit of SK Telecom.

[From Mobile Payment Extended Online]

I wrote, four years ago, about Cyworld and its role in shaping next generation payments. In the Korean market, the Cyworld connection is particularly significant. So why isn’t the activity and energy from the developing world and from Japan and Korea yet having any impact in the mass market in Europe or the US? Well, one clear reason is that it has taken a long time for the GSM world to sort out standards and put the development of handsets on a firm roadmap. And although the standards have firmed up (in fact the GSMA got the standards it wanted) there’s still only a couple of handsets out there. A few months ago, the GSMA called for NFC to be delivered in to the mass market, well, round about now.

The GSMA, the global trade group for the mobile industry, today called for full NFC functionality — including the standardised ‘Single Wire Protocol’ interface — to be built into commercially available mobile handsets from mid-2009, in order to ensure that consumers can reap the benefits of mobile payment services as soon as possible.

[From GSMA Calls for Pay-Buy-Mobile Handsets]

It’s taken a lot longer for NFC to get near the mass market than many of us thought when the first experiments began four or five years ago. But it does at least seem that it’s now practical to begin thinking about the new businesses that will emerge when we combine the GSMA roadmap with the laboratory results from Asia and the game-changing business models from Africa. I’m getting more enthusiastic about NFC as the days go by.

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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.

The long and short of it

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[Dave Birch] I was at the European Patent Forum in Prague talking about biometrics in an enjoyable seminar on Privacy and Identity Theft, along with Ivo Teutloff from EPO and Max Snijder from the European Biometrics Group. The reason that the session was so enjoyable is that we’d each chosen to focus on different aspects of the topic. By coincidence, when I woke up and was sitting in my hotel room looking through my slides with BBC Breakfast TV in the background, the first item on the BBC news was the rise in card fraud, again. And this is in hand-in-hand with another massive increase in identity-related fraud in general.

A 40% increase in the number of people being impersonated indicates that the flat trend seen in 2008 (where identity fraud increased by only 0.06% from 2007) was exceptional. While last year’s figures were a surprise, the sudden and significant increase in the first quarter of 2009 heralds an unwelcome return of identity fraud as the fraudsters’ method of choice; as fraudsters assume creditworthy identities in order to swindle individuals and companies alike: stealing funds, goods and services at someone else’s expense… During this quarter, a staggering 75% increase in facility takeover (also known as account takeover) frauds – where the fraudster gains access to, and plunders the legitimately obtained accounts of innocent victims – continued the steep upward trend seen throughout 2008.

[From Fraud trends and recession go hand in hand - CIFAS Online]

If biometrics could make a dent in that, you would think that banks would be rushing to implement them. After all, as CIFAS notes, the account takeover fraud explosion has been going on for some time. Plenty of time to plan and develop a biometric countermeasure, you might think.

UK account takeover fraud grows 207% year-on-year in 2008 – study [From UK account takeover fraud grows 207% year-on-year in 2008 - study]

Yet nothing much is happening. Identity theft is growing and, in the UK at least, the government’s identity card scheme won’t do anything to help. But why? Max made a very interesting point, which goes back to my current obsession, the “narrative”. In his presentation, he pointed out that because the biometric sector had its origins in the identification problem, that is how they see the world. So they would see the retail payments problem as an identification problem, which leads to PayByTouch. On the other hand, other people (eg, me) see the retail payments problem as an authentication problem: so we need progress in what he called “anonymous” biometrics to get down to solving that particular problem. And he made a very positive suggestion that I had not considered before.

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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.