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

What is a “suitable” ID for banking?

Monday, 12 October 2009 by Dave Birch 3 Comments

[Dave Birch] There was a really interesting letter in The Daily Telegraph "Money" section (2nd October). I can't find it online to link to, so I hope they don't mind me quoting a couple of chunks here. The letter comes from someone who tried to open a bank account with HSBC, but who didn't have a current passport or driving licence.

When I explained this at a branch, it was suggested that I ask the police station for proof of identity. The police officers said they had never heard of such a thing unless I had a criminal record.
[From The Daily Telegraph "Jessica Investigates", 2nd October 2009]

That can't be right: you can only have a bank account at HSBC if you have a criminal record? The disappointed would-be bank account holder went back to their branch to ask for alternatives.

The counter person showed me a list of possible documents, but, as I am not a pensioner, nor in receipt of benefits, the only item on the list she could suggest I try was to get a letter from HMRC. I duly went to the local tax office, where the assistant said she wished banks would stop sending people there… they would not waste public money providing such letters for banks.
[From The Daily Telegraph "Jessica Investigates", 2nd October 2009]

The letter goes on to list the documents that the wannabe-HSBCer had presented, and had had rejected by the bank: an out-of-date passport, a birth certificate, a current payslip from an employer (the local council, for whom the person had worked for more than two decades), a work ID card (complete with microchip), utility bills, statements from another bank, house deeds and a voting card. Any one of these would have got you a job with the bank, but not, it seems, an account. Identity is broken, and the Conservative plan to scrap the national ID card scheme is a bad as the government's plan to keep it. What this country needs is a working national identity infrastructure.

[Read more...]

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.

Bottom of the pyramid schemes

Saturday, 10 October 2009 by Dave Birch Leave a Comment

[Paul Makin] Earlier this week, I attended an interesting and enjoyable round table session, hosted by the CSFI, entitled ‘Credit and the emerging consumer: The developing world of African lending’. The discussion was led by Jason Shedden (Blue Financial Services), Mark Napier (the newly-appointed Citi/DfID Fellow at the CSFI) and Malcolm Harper (BASIX). The discussion highlighted the fact that, despite high expectations of their effectiveness in reducing poverty, none of the existing microfinance institution (MFI) lenders actually reach the so-called “Bottom of the Pyramid” (BoP). Instead, not unreasonably, they are all lending to those that they have a reasonable expectation of being able to make repayments; those in employment, and self-employed businessmen wishing to expand their businesses.

This excellent event was the first in a series of roundtables that Mark will be running as part of his fellowship programme at the CSFI and we’ll be asking him along to next year’s Digital Money Forum as well so you can meet him there if not before.

emerging markets, mobile, money transfer, social and community

[Read more...]

Coin star

Thursday, 8 October 2009 by Dave Birch 2 Comments

[Dave Birch] Pottering along the M4 (otherwise known, but not by the inheritors of Queen Boudicca’s robust policies on European integration, as the E30) the other day, I really enjoyed an edition of Moneybox on BBC Radio 4. It had everything: plastic card fraud, card charges and the cost of cash in a bizarre context. Which was that they had a story about a chap who blogs about what he finds discarded by the Coinstar machine in his local supermarket. Frankly, the Internet was made for this.

It’s amazing what people leave behind on the Coinstar change counter machine in my local Sainsbury’s…
[From The Copper Counter Blog]

There was a serious side to the story though, which was about the cost of converting cash into other forms. The machines currently charge 7.9% and this about to rise to something like 9.5%.

Supermarket coin-changing machines are popular, even though they charge a fee. Banks change money for free – but it is not always so convenient an option.
[From BBC NEWS | Programmes | Moneybox | Have your say: Pin fraud and coins]

Judging by the interviewees, and other previous discussions I’ve been involved in, people seemed quite happy to pay the massive transaction charge of heading towards a tenth in order to use up coins in the supermarket. You put in ten quids-worth of coins and you get back a voucher for £9.21 to use at the checkout. As the Copper Counter blogger pointed out on the show, this is odd, since if you pour the coins into the self-checkout machine then you pay no transaction charge at all. Anyway, the point is that coins are so much of a pain that customers will pay a high fee to get rid of them.

notes and coins, retail

[Read more...]

More on Payez Mobile

Monday, 5 October 2009 by Dave Birch 2 Comments

[Dave Birch] I’ve been particularly interested in the French national NFC payments “experiment”, not just because of the practical insight it delivers but also because it is a laboratory for co-ordinated specification development involving both bank and mobile operators. For many of our customers, this bank-operator interface is an important driver and/or barrier in their medium-term strategy, so it’s important to understand it.

AEPM, the Association Européenne Payez Mobile, has updated the technical specifications for Payez Mobile, the NFC solution developed by the leading French banks and mobile operators that has been on test in the French towns of Caen and Strasbourg since November 2007. The new Version 2.1 of the Payez Mobile specification incorporates the latest GlobalPlatform specifications and follows the signing of a Memorandum of Understanding between AEPM and GlobalPlatform in July.
[From Payez Mobile updates NFC specifications • Near Field Communications World]

Since I think these specifications are important, I asked my colleague Neil Livingston (who has been leading some of our work in this area) if he could provide a more detailed introduction to the specifications for blog readers, and he has kindly provided the overview that follows. If you’re interested in understanding how NFC is evolving in the payments space, it’s well worth you taking a few minutes to read through.

contactless and nfc, EMV, mobile

[Read more...]

“Identity” theft and identity theft

Thursday, 1 October 2009 by Dave Birch 1 Comment

[Dave Birch] There’s a fascinating, but slightly creepy, category of issue that makes for a good acid test of proposals for population-scale identity management. How does the “system” recover when an identity really is stolen? If there’s another you out there, if you have an evil doppelganger, if an ex-partner is taking revenge… if there’s someone out there who is pretending to be you (in fact, in virtual terms, is you) then who do you call? And when you call them, what are they going to do? This is a complicated issue. How do you establish that you really are you? And once you have established this, what do you do with the compromised virtual identity?

[Read more...]

On the money

Thursday, 1 October 2009 by Dave Birch 1 Comment

[Dave Birch] It’s rather exciting for us transaction chaps to be centre stage for a change. In the space of a couple of years, payments has gone from being a dreary corner of banking, an unexciting cost base, to the future of the “narrow bank”: the utility, as economist would say, that is attached to the investment banking casino. But if you were to go down to a real casino and put a bet on the next big thing in retail payments, where would you put your money?

One way to start thinking about this is to go back one economic cycle and look at what kind of innovation in that cycle led to real change in payments. At conferences and seminars, people tend to use the example of Paypal as a success forged in the last recession that has moved on to become part of the mainstream.

At Ebay’s first analyst day in three years, the contrasts it gave between its core auction business and Paypal were black and white. The company expects its marketplace segment, which only grew revenues 1% last year, to grow slower than the online commerce market this year. By 2011, it may finally surpass industry growth rates again. On the other hand, Paypal grew its revenues by 26pc last year and could see them double over the next three years to $5bn, with margins of 20pc.
[From Ebay’s future lies in payments not auctions - Telegraph]

Just by way of comparison, although it’s not a perfect comparison, look at the value of the newcomer Paypal compared to the value of a long-established player such as Visa.

Visa trades at 14 times 2011 estimated earnings. On that basis Paypal would be worth $14bn – or $2bn more than Ebay’s total enterprise value today. Moreover, Paypal is growing faster than Visa, so it arguably deserves to trade at a higher multiple of earnings.
[From Ebay’s future lies in payments not auctions - Telegraph]

When you get transactions right, they become a thin but crucial layer between technology and the market, turning places into marketplaces, enabling growth and progress. But this thin layer must spread widely enough to make money as well and so any challengers to PayPal obviously need ecological niches big enough to expand into (although as the example of M-PESA shows, you only need one decent niche to get off of the ground).

history and future, innovation, transit

[Read more...]