The UK’s new Payment Systems Regulator is now open for business. I imagine that their highest priority work stream will be around access to payment systems, because this is what “challenger” banks need in order to create the more competitive environment that the UK Treasury wants.

The payment systems regulator (PSR) has published their report on a new regularly framework for payment systems in the UK and, as I’m sure many other people did, I spent the weekend reading through it so that our clients can feed it into their product and service roadmaps where appropriate. It’s important to understand the pressures that the new framework will bring to bear and have some realistic ideas about where it will have an impact in the short, medium and long-term. We’ve all understood the big picture for some time. A couple of years ago, I wrote that

The Chancellor’s decision to go down this route clearly re-frames payments as a utility.

[From Consultation on a new payments regulator for the UK]

What most interests me at the moment, however, because of the projects that we happened to be involved in at the moment, is the high level strategic direction of travel. In the report, the regulator outlines three key areas of concern: governance, innovation and access.

• The first of these, governance, has long been a concern and it was clear from the government’s earlier consultations that there was a (perfectly legitimate) requirement to involve more stakeholders in the decisions that need to be made and more transparency around the decisions. I don’t think anyone would disagree with this and the proposed actions (such as publishing the minutes of meetings) seem reasonable. Note as an aside that the reconstitution of the Payments Council as a trade association for the industry is a direct result of the desire to split governance from “implementation”.
• Following the original Treasury consultation (the one where the Treasury essentially ignored all of the actual consultation input, or as our friends at Celent put it at the time “Our understanding is that the Treasury feels that the responses (56 in gave the wrong answer“) it was clear that the issue of the pace of innovation in payment systems was going to be added to the proposed regulators casebook. I have commented a couple of times that is not entirely clear to me how this is to be achieved but that’s not the point of this post.
• The third area of concern, and this is the one where all of the trouble will come, is the ability of new players to get access to the core payment systems. In most of the fora where I hear such talk, access is the nexus between stable, boring and legacy infrastructure and the challenges, up and comers and next big things.

It is this last point about access that is key to achieving the Treasury’s goals for more competition in the banking sector and it is exactly what one of the more interesting (in my opinion) challengers was complaining about in the press this very weekend.

The lender, Fidor Bank, had planned to launch in the UK by the end of March, but has been held up with the country’s difficult payments infrastructure. The big four – Barclays, HSBC, Lloyds and RBS – act as sponsor banks with direct access to payments systems. None has accepted Fidor as a customer.

[From UK launch of digital bank Fidor hamstrung by payments providers – Telegraph]

With respect to this point about the need for “sponsor banks”, who can access the payment system and under what circumstances, the PSR says that they propose an “Access Rule” .

This would require these Operators to have “objective, risk-based and publicly- disclosed Access Requirements, which permit fair and open access”. We proposed requiring these Operators to be compliant with our proposed Access Rule by 30 June 2015. LINK, MasterCard and Visa are already subject to an obligation to provide objective, proportionate and non-discriminatory access under Regulation 97 of the PSRs 2009.

The devil, as it always is with these things, will be in the details. People who want direct access to the payment networks are somewhat suspicious that while the operators will comply with the requirement to publish objective, risk-based and publicly disclosed access requirements, they will insist on non-proportionate countermeasures. The regulator has clearly said (in section 4.14) that their access rule will ensure that operators access requirements are proportionate to the actual risk that will be incurred by adding the new participant. I hope that they are militant in enforcing this because the actual risks, or should I say the marginal increase in actual risks, associated with the addition of direct access by low-value payment systems seems to me to be fairly small.

One specific “access” where I imagine industry participants were vocal is the case of access to the UK’s Faster Payment Service, FPS, to provide immediate settlement. Faster Payments (the scheme that operates FPS) had already put out a White Paper on their vision for the access model of the future in which they say that their goal is absolutely to provide such access to enable a level playing field for the Payment Service Providers (PSPs) that want to offer such immediate settlement services to their customers through FPS.

To show how this might achieved, they set out an architecture to offer open and fair access on “reasonable commercial terms” to the PSPs through accredited technology vendors. You can see why they want to go down this accreditation route and it makes a lot of sense because none of the participants would want to risk technology problems disrupting the operation of what is, in essence, a piece of critical national infrastructure.

What is also interesting to me about this proposed model is that for organisations that are not eligible for a Bank of England Reserve Account for settlement purposes they propose to provide an alternative to finding a sponsor bank. Organisations (such as for example Google or Tesco or Apple) might want to participate in the scheme and can easily afford to set aside the cash for what is known as “pre-funding” collateral but they might not be able to, or not want to obtain either a banking licence or a Reserve Account. What’s more, sponsor banks may not want to handle the accounts of such organisations for a variety of reasons (one of them being AML regulations) and the organisations might not want to have sponsor banks either.

Right now one of the main complaints (from, e.g., Fidor) about sponsor access is the opacity of the commercial relationships with sponsor banks, which is one of the things that the PSR intends to address. The regulator has also set out some changes on indirect access to make the sponsor banks open up their services by publishing service descriptions, eligibility criteria and costs. So for organisations who want to use sponsor banks, the menu and pricing of the sponsor banks would allow them to quickly choose the right partner and get down to business.

At high level, then, the alternative to using a sponsor bank to gain access to FPS will be to gain access through one of the accredited vendor but with liquidity guaranteed by a sponsor (in return for a fee, obviously). The settlement must be guaranteed in this way otherwise you would have to wait for it to actually occur rather make the funds available immediately. This should be cheaper, quicker and simpler than going through the sponsor.

Faster Payments see a competitive market emerging through the accredited technology venders operating aggregation services to the PSP’s (which I think is probably right) but also say that over the time they intend to work with the Bank of England to identify new models and these could potentially open more participation to non-banks (such as retailers for example). Although they don’t say what these new settlement models will be, it is certainly possible to imagine models that will allow PSPs to offer new products and services to their customers. I’m sure this is one of the areas that the PSR will be looking at in their innovation work stream.

One other point. The White Paper also talks about how the new access model will connect with non-UK markets and I can certainly see that integration into other European immediate settlement services and perhaps even in the longer term interconnection with immediate settlement services in other countries (e.g., Australia) and perhaps one day even the United States will deliver a payments infrastructure that is a world away from the 1960s legacy models that still constrain innovation today.

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.

I’m not smart enough to know what the most appropriate AML rules are, but I think I am smart enough to know that the current rules are not.

In his first major speech, the new European Commissioner for Financial Stability, Financial Services and Capital Markets, Jonathan Hill, talked (amongst other things) about innovation in digital money and virtual currencies, saying that:

when considering electronic financial services, we need to strike the appropriate balance between guarding against fraud, hackers and money laundering and maintaining ease of use for customers.

[From European Commission – PRESS RELEASES – Press release – Turning around the telescope – consumers at the centre of financial services policies]

He is right about this, of course, but I wonder what the benchmark for determining what is “appropriate” is? I don’t think we should cripple the development of digital money by applying benchmarks that are so stringent, so rigorous, so absurd that they stop progress completely. We should be building digital money systems that are better than cash, yes, but to pick on one of the Commissioner’s specific points, we should not be applying utterly inappropriate, expensive and pointless anti-money laundering (AML) rules, especially when Europe as a whole is doing nothing about cash.

I noticed this in a story in “The Times” (21st August 2014). The story is headlined “Playboy Saudi prince ‘blackmailed’ after Paris ambush” and concerns the theft of £400,000 in cash from a 12 car convoy taking the entourage of the prince to Le Bourget airport. (The newspaper reports that, in a plot worthy of a John Grisham novel, the theft of the cash may have been a cover for the theft of documents containing sensitive information.) Now, if you or I were to carry more than €4,700 into or out of France, we would have to declare it to customs. However at Le Bourget, as “The Times” puts it, such controls are not “strictly” applied. Not strictly applied, as a phrase, means (I’m sure) not applied at all, so rich people can fly as much cash as they like in and our of France in their private planes. For those without private plans, though, the cross-border payments infrastructure is less facilitating.

In addition, money-laundering regulations are putting impossible demands on systems designed to serve the poor, requiring, for instance, “know your customer” procedures like taking copies of ID documents for anyone receiving an international payout.

[From Remittance rip-offs – WorldNews]

So you can’t help but wonder what the point of stringent KYC/AML/ATF controls over people sending part of their meagre paycheque from the UK back to Somalia or from South Africa back to DRC are, when rich people with private planes can import and export unlimited amounts of untraceable cash? The impact of such controls, as far as I can see, is twofold: firstly, criminals and terrorists use cash so we can’t monitor their activities and, secondly, the costs of sending money are higher than they should otherwise be.

Africa pays a “remittance supertax” of nearly $2bn a year due to the higher-than-average cost of sending money to the continent, according to… The Overseas Development Institute,

[From Africans face $2bn yearly ‘remittance supertax’, says report – FT.com]

Average remittance fees for sending money to Africa are around 12% (as opposed to the global average of 8% and the UN target of 5%). And remember, these fees fall on people sending money home to their families.

The biggest challenge for the MSB sector is adapting and responding to the global banking de-risking agenda, which is threatening the development and recovery in emerging economies and post-conflict states around the world.

[From Operating in conflict zones: lessons from a financial institution in Somalia | Guardian Sustainable Business | The Guardian]

Now, it’s not as if the powers that be do not know about this problem. The international body that is charged with reviewing such things is the Financial Action Task Force (FATF) and in their February 2013 paper on “Anti-Money Laundering and Terrorist Financing Measures and Financial Inclusion” [PDF] they themselves point out overly prescriptive legislation can cause payment organisations to be so risk-averse that millions of people are excluded from global remittances. And, as Consult Hyperion has noted in its work for the UK government in this area, payments organisations are wary of offering services even when they think they comply with such overly prescriptive legislation because of their worries about future turns of events. As Neil Burton, who knows a thing or two about international payments, wrote earlier this year:

Easily said, but less easily resolved, when fines are in excess of $1bn, and the right to operate in the US is at risk.

[From INTERNATIONAL PAYMENTS COMPLIANCE: SEEKING CERTAINTY AMID COMPLEXITY]

Surely there is something fundamentally wrong with a set of legislative arrangements that mean that the rich can ship money around freely but the poor have to pay 12% to transfer tiny amounts. The current system cannot be “appropriate” whichever way you look at it.

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 biggest factor shaping the strategic plans of players in the European payments sector is regulation and right now understanding the impact of new regulation is far more important than understanding the impact of new technology.

The wonderful people at Barclaycard were kind enough to invite me along to a seminar about innovation in payments. I was there as the tech guy and my job was to show the corporate clients how the mobile-centric payment ecosystem will enable new kinds of business, new opportunities for products and services, and new markets (and some ways to cut costs). I made the transition to in-app payments the central theme of my talk, explaining how APIs will enable great customer experiences.

Mike Walters, the Product Director, Global Payment Acceptance for Barclaycard Business Solutions gave a great presentation about the evolution of their product range and he made a really good point about the personalisation of the payment experience. Mike noted the range of options for both making and accepting payments goes beyond mobile phones. When we talk about the mobile phone as the key payment technology for most of our clients, we are really talking about mobility as the “strange attractor” and mobile phones as only one of the technologies that nudge us there. Wearables, digital coordination, smart TV and so on all have a role to play and I made a mental note to blog more about these in the future.

The main point I want to make, though, is that Mike flagged “EU regulations” as the number one strategic issue facing organisations such as his – above technology issues such as the shifter mobile – and the most important driver framing strategy. But, perversely, this also means that EU regulatory tinkering will therefore become a dominant driver for innovation. I’ll give you a couple of examples.

Earlier this year, I read Peter Jones’ comments in his article on changing EU regulation and its impact on the card payment schemes in the summer edition of the Journal of Payments Strategy and Systems (Volume 8, No. 2, pp.140-118). Peter said, in essence, and he is surely correct, that the major beneficiaries of the proposed rule changes around Visa and MasterCard in Europe will be the continent’s largest merchants. As far as I am aware, this has been the result of interchange capping in Australia and it will be the result of interchange capping in the US: money is reattributed from banks to merchants. In Europe, credit card fee income will drop by around €3 billion and debit card fee income will drop by around €2 billion.

But the consequences in Europe go further. Peter says that the changes will be good for large-scale non-bank acquirers who can consolidate across borders and he also explains that further likely consequences of DG Comp’s main proposals around the card market will be to benefit Visa and MasterCard at the expense of domestic issuers who will not be able to compete in a harmonised market. And, since three party schemes are excluded, is highly likely that we will see more of them, and not only from banks. I speculate that this means a proliferation of app-centric three-party schemes to replace the domestic debit schemes, which means in turn that a euro-MCX may not be a bad idea (contrary to the view that says that lower interchange in Europe reduces the demand for a euro-MCX). These potential new schemes can succeed because merchants will “tender steer” customers towards their preferred payment method which may not always be card based. I’ve written about this before, referring to the Polish example, where one of the biggest banks is launching its own three-party scheme.

If the mobile phone means that people begin to carry around some three-party payment schemes to support the majority of their spending (which is one the one hand domestic and on the other hand in a very limited number of retail outlets) it could lead to some rather interesting knock-on consequences, which may not be limited to the distribution of transaction fees.

[From Search Results three-party]

A particular point that interests me about the changes to regulations is their ultimate purpose. The Commission cannot seriously have the goal of increasing cash usage based on their nutty “merchant indifference test” that takes into account the private costs of the merchant but not the costs to society as a whole.

Furthermore, why the MIT should be used as input to regulation remains utterly opaque.

[From Forget the “merchant indifference test” and get on with eliminating cash]

With PingIt, a euro-MCX, a pan-European iDEAL and other new entrants, this all means that cards may cease to be the primary instrument of choice to replace cash – this is why, I imagine, that Visa and MasterCard are developing plans for non-card alternatives, new direct payment account mechanisms that abandon the PAN (that should, but won’t, form the son-of-EMV next generation standard). From Peter’s comments about the need for ACH investment, I am sure he shares our opinion that this next generation “Super EMV” for retail payment will be API-based direct access to payment accounts.

Underlying all of these discussions, though, there is the issue of why the European Commission is interfering in the card market in this way at all.

Taking into consideration relevant developments globally, this author concludes: card interchange fees do not cause market failure – at least as far as debit cards are concerned.

[From EPC | Card Interchange Fees Regulation: What is the Right Question?]

Norbert Bielefeld is an expert. A proper expert. He is absolutely correct. I don’t know what interchange fees should be. Norbert doesn’t know what interchange fees should be and he knows a hundred times more about the topic than I do. But most importantly, the European Commission doesn’t know what interchange fees should be. Only the market knows this and the only way to get the right answer is ensure a competitive market, which means regulating for competition, not for competitors.

It seems to me that of the reasons why regulation (and not only in the EU) may not be the optimal solution to real problems in the retail payment space is that regulation is forged in the crucible of vested interests and hammered into shape by lobbyists. It does not shift toward lower total social costs but instead focuses on the redistribution of (often marginal) private costs. This is particularly true in that narrow case of interchange, a point noted by The Economist.

The problem is that the European Commission just addresses the merchants’ opinion and forgets about all the other actors, and does not consider other costs and benefits of the means of payment that affect directly consumers and the economy as a whole.

[From Economist: Lower card fees did not benefit Spanish consumers | EurActiv]

A point that still holds. The Commission really should have some clearly-articulated and agreed-upon targets before it decides on the most appropriate regulatory strategy to reach those targets. This would mean that organisationds such as Barclaycard would at least know the direction of travel and might adjust their investment plans accordingly.

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.

I’m hoping somebody can send me a plausible and documented cost-benefit analysis for anti-money laundering legislation but it’s proving difficult to find one. I’m not saying it’s a waste of money, I’m just saying that I don’t know whether it’s a waste of money or not. Please note this is a repost as the original was lost through a tear in the spacetime continuum.

Minty Clinch is a well-respected British travel writer. She writes about going off of the beaten track here and there.

More and more tourists are going on organised trips to remote or dangerous locations in search of adventure and travel kudos; Minty Clinch joins a group trekking through the High Pamirs of Tajikistan.

[From Magazine / Geographical]

Minty had an account at Barclays Bank for more than half a century until it was closed earlier this year after an electronic credit to her account for an article that she had written. Apparently this triggered some kind of bonkers transaction trap and she was booted out of the banking system.

Freelance travel journalist Minty Clinch told the BBC Radio 4’s You & Yours programme this morning that Barclays had blocked a payment into her bank account because it was for an article about Iran.

[From Barclays blocked payment to journalist for mentioning Iran | Edmund O’Sullivan]

So, receiving a payment that mentioned “Iran” in the remittance advice springs the trap. How dumb are these terrorists? I certainly wouldn’t put “money for bomb” in the description field for my PingIt payment to the Al Qaeda quartermaster-general, but perhaps I don’t think like a proper terrorist. Still, it’s good to know that anti-money laundering (AML) legislation is in place and effective.

The topic of AML came up time and time again in the discussions around Money2020 in Las Vegas, whether in the sessions about cryptocurrency or remittances or innovation or anything else.

As an industry, we are doing a poor job at identifying money launderers or prevent them to have access to payment systems @money2020

— The BayPay Forum (@baypayforum) November 2, 2014

This is astonishing when you consider the incredible amounts of money spent on AML. According to a KPMG survey, the cost of compliance with anti-money laundering (AML) regulations grew “beyond expectations” for banks last year. In fact, it grew by nearly two-thirds. I’ve been unable to find any authoritative figures to show how much global money laundering fell last year in response to this. The World Bank say that money laundering is between two and five percent of global GDP and in 2009 the World Bank calculated it to be four percent of global GDP. I’ve seen estimates of around two percent of GDP for the UK. I’m no expert, but it seems to me that there is an awful lot of money laundering going on and no evidence that vastly increased AML spending has had any impact. So where is the cost-benefit analysis (CBA) for AML? I found one from a few years ago and it concludes that for AL to be effective we would need to spend around half

Using the multiplier model of the relationship between criminal markets revenues and money laundering activities and data for 2004, the value of money laundering is equal to US$ 1.2 trillions (2.7%of the world GDP), while the maximum theoretical benefit in combating money laundering using financial regulation – in steady state – is equal to S$ 280 billion (0.6% of the world GDP).

[From Worldwide Anti-Money Laundering Regulation: Estimating Costs and Benefits by Donato Masciandaro, Raffaella Barone :: SSRN]

I can see why politicians are in favour of tough AML (it doesn’t cost them anything) and I can see why lawyers are in favour of it, since it is in essence a full employment act for them, but where are the figures that show the expenditure on AML makes any sense? And the way that AML regulation is structured and “managed” means that the market is being undermined.

“Banks need a specific set of expectations which, if followed, would shield them from blame,” David Landsman, the executive director of the National Money Transmitters Association, told American Banker in 2012. “Right now they do not have that.”

[From A Modest Attempt to Ease AML Rules Side Effects – Bank Think Article – American Banker]

Indeed. It sometimes seems to me that the regulators feel that infinite AML would offer infinite protection and should therefore be the natural target. But AML doesn’t exist in isolation. It has a horizontal relationship with other regulation and a vertical one with the industry it is constraining.

We have the eternal conflict between AML and Data Protection where there is more than one specific point of friction:

[From Inconsistencies between the European Payments Legislative Proposals]

In addition, there is the pernicious impact of potential future action by (largely US) prosecutors.

One way to help banks overcome hesitations about working with money transfer companies would be to offer a legal safe harbor designation to institutions that do their due diligence, according to Schryer-Roy. This would protect banks from prosecution for money laundering charges.

[From A Modest Attempt to Ease AML Rules Side Effects – Bank Think Article – American Banker]

The reason I get so exercised about this is because the regulation on AML in practice translates into a tax on the poor and the disadvantaged. The serious money launderers just buy a bank, whereas the poor find they can’t send money home to their families. Therefore, in my opinion, we need to take on board the risk-based approach that the FATF recommends. Just as Bill Gates has suggested, we should remove low-value payments from AML and let innovators find ways to use new technology to serve excluded groups.

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.

Life is never boring at Consult Hyperion. If you’re not marvelling at a totally cool working prototype of HCE running over BLE on an unmodified iPhone, you’re in the Italian Parliament at their hearing on Bitcoin.

I went off to Italy to take part in a hearing about Bitcoin in the Italian Parliament. Naturally, the hard work began the night before with a delicious meal in the centre of Rome. It’s important to soak up the atmosphere before speaking in a parliament building I always feel. Anyway, here I am at dinner giving Jordan Kelley a few tips on running a crypto currency business.

Jordan is the CEO of Robocoin, who are launching a network of Bitcoin ATMs. We found a lot to share in our world views, even though we don’t agree about everything. Which was good, because it was important to put a spectrum of views in front of the hearing. Next morning, we set off for the Italian Parliament building, Montecitorio, for the public hearing. The nice people at  Cashless Way made a photo album of the day for you, but here are a few of my photos.

Our host, Geronimo Emili (below) from the “War on Cash”, who had invited Jordan and I as the overseas “experts” joining the list of Italian individuals and organisations speaking at the event [Italian]. These included MasterCard, Unicredit, the consumer association, acdemics, entrepreneurs and the tax police. A fascinating, fascinating range of views. I won’t regurgitate here because the discussions have been covered elsewhere (e.g., here) but I focused my contribution on the radical and innovative nature of the Bitcoin protocol while remaining sceptical about the potential for Bitcoin as a currency (although I did support the idea that new kinds of currency are around the corner).

The hearing was held in the Aldo Moro Room. The Red Brigades, supposedly under the direction of activists from the Hyperion (!) School in Paris, kidnapped the former Christian Democrat Prime Minister Aldo Moro and killed five members of Moro’s entourage. They murdered Moro 54 days later.

In preparation for the days activities, I created a new Bitcoin Wallet and posted it to Twitter to appeal for donations to try out the new Bitcoin ATM later on.

And guess what! A kind soul sent a donation! Under the cloak of anonymity and with an increase in the sum total of human knowledge as their only reward, a benefactor responded.

After the presentations in the parliament, we all went over to the LUISS EnLabs accelerator where the Robocoin Bitcoin ATM was duly unveiled to appropriate media fanfare and members of the general public (sort of) were invited to give it a go.

So here’s how it works. You register with the network. You enter your mobile phone number. The system texts you a code. You enter the code. Then you hold your ID (in my case, a passport) up to the scanner and then you place your right hand it a palm scanner (four times). The you look in the camera and it takes your picture so the person at the other end of the line (it is a person) can see that you are the person in the ID document. You log in. You generate a Bitcoin Wallet.

And then you wait. You get a text message when the  chap at the other end has OK’d everything.

When you get confirmation that your account has been created, you put money into the ATM, it credits the cash to the wallet. Alternatively, you can turn Bitcoins in the wallet into cash. So, you log in to your account and then you feed money into the slot. Once this is done, the ATM prints out a ticket for you with the wallet private key on it. You can hide this under your bed, have it tattooed on your inner thigh or, as I did, “sweep” it into another wallet.

I gave it a go. My €50 was determined to be real, presumably, and the system generated a receipt for the transaction. And then the blockchain goes off and does its stuff and some indeterminate time later, the purchased Bitcoins show up in your wallet.

Did it work? Yes it did. Was it easy and convenient? No it wasn’t. Will the general public use it? I wouldn’t have thought so, although it may well find a niche. Personally, I can’t really imagine any circumstances under which I’d use it, and there are two main reasons for this.

The first is that I already have a bank account that works fine and I’d rather people who want to give me money just send it to my bank account so I don’t have to go near an ATM anyway.

The second is the pain of KYC. I gave my passport details, mobile phone number and palm print to a box of unknown provenance (well, not strictly true, since I’d met Jordan and he’s nice guy) and I was distinctly uncomfortable about it. And all the time I was doing it I was wondering why.  It’s just not worth the hassle or the risk.

So, in summary, I stand by my comments to the hearing. Bitcoin is a genuine technological breakthrough and it will cause a revolution. But probably not in payments.

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 new payment systems regulator is tasked with increasing innovation. This means increasing competition, which means reducing barriers to entry.

There was a good article back in the September “Financial World” magazine arguing that transparency is a key to regaining confidence in the banking system. I agree strongly, and I’m not the only one.

More transparent record keeping would allow law enforcement to trace the transfer of funds and identify those responsible for the illicit use or theft of virtual currency.

[From Virtual Currencies, Real Theft – Javelin Strategy & Research Blog]

Indeed it would, and some might argue that that transparency be extended to legacy infrastructure as well. (It’s not really the topic of this post but remember than transparency need not subvert privacy. You could have pseudonymous dark pools but force the release of linked identities given a warrant, for example.) If, however, transparency is taken to mean thorough KYC/AML/ATF procedures (henceforth known as CDD, or customer due diligence) that identify all participants to a transaction to all observers, then it will force criminals, terrorists and corrupt politicians to abandon electronic means of exchange and go back to cash. If that happens, then we are all worse off. Having some traceability is better than having none at all, as I’ve argued before. And it’s not as if having rigorous CDD solves the problem.

Worse still, the increased cost associated with a tougher stance on KYC does nothing to make the system any more secure, and may in fact drive up risk rather than reduce it.

[From Cost of KYC too high says Swiss start up » Banking Technology]

I suppose you could argue that what is driving the players at the moment is not risk but liability. So long as they can shift the liability onto someone else, no-one really cares who you are. The system is broken.

The two set up 68 accounts in 19 different cities using 24 aliases to handle the transfer of funds and sent the bulk of the money to individuals in Nigeria, who set up the operation. Money was also wired to addresses in the UK, Ecuador, India, the United Arab Emirates, and the US, none of which has been recovered.

[From Mother/daughter team jailed for million-dollar internet dating scam • The Register]

Hold on. 68 accounts using 24 aliases? What was the point of the billions of dollars spent on KYC, AML and ATF? And why am I going on about this anyway? Well, in her keynote at Payments Innovation 2014, Mary Starks (the acting MD for the UK’s new Payment System Regulator) said that on the whole regulators “don’t do innovation”. I was on the panel with her, so I made what I think was a reasonable point that the best regulatory approach to innovation is competition, and that a focus on reducing the barriers to entry to payments markets that do not involve systemic risk is probably sufficient. We don’t need to imagine what people might come up with, we just want to make it easy for them to do so.

When it came to the discussion that followed, I used CDD as an example of such a barrier. The costs and complexity of CDD can make it very difficult for new entrants, especially those dealing with low-value payments, the excluded and specialist niches to get off the ground. One of the reasons for this is that there is no infrastructure for them to plug in to, so everyone has to build everything from scratch.

Surely all of this dialogue about passports and utility bills, declarations and signatories and KYC and AML is pushing a demand for a new digital infrastructure to cure all of this mess.

[From Digital identities demand a digital infrastructure | Banking View]

Karen Wendel from Identrust talked about the infrastructural approach in her presentation as well, and this all links to the discussions about the idea of a financial service passport (or a “pay name”) at techUK last year. I really think that the idea of pseudonymous, strongly-authenticated CDD identities is an idea whose time has come. I should be able to participate in a transaction as John Doe, provided that I can prove that someone (e.g., my bank) knows who John Doe actually is. You don’t need to know who I am to do business with me, so long as you know that _someone_ knows who I am.

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.

We can use identity and authentication (ie “recognition”) technologies to improve Internet safety, if we use them correctly.

It is good to wander out of the comfort zone from time to time and expose your ideas to more acid tests. Hence I went along to the seminar on “Childhood and the Internet – Safety, Education and Regulation” in London in January. I was there for three main reasons:

1. I am interested in the evolution of identification and authentication in an online environment, and protecting children is one of the cases that brings the mass market practicalities into sharp relief.
2. We have clients who are developing recognition services, and it seems to me that if these services can contribute to a safer environment for children then we may have something of a win-win for encouraging adoption.
3. Protecting children is an emotional topic, and as responsible member of society it concerns me that emotional responses may not be society’s best responses. This is a difficult subject. If, as technologists, we make any comment about initiatives to protect children being pointless or even counterproductive we may be accused of being sympathetic to criminals and perverts hence we need to learn to engage effectively. I’m not interest in childhood e-safety theatre, but childhood e-safety.

The seminar was kicked-off by Simon Milner, the Policy Director (UK and Ireland) for Facebook. He started off by noting that Facebook has a “real” names policy. Given my fascination with the topic, I found his comments were quite interesting as they were made on the same day that the head of Facebook, Mark Zuckerberg, was interviewed in Business Week saying that the “real” names policy was being amended.

One thing about some of the new apps that will come as a shock to anyone familiar with Facebook: Users will be able to log in anonymously.

[From Facebook Turns 10: The Mark Zuckerberg Interview – Businessweek]

Simon went on to say that the “real” names policy, setting to one side whether it means anything or not, is a good thing (he didn’t really explain why and I didn’t get a chance to ask) and then talked about how children who are being bullied on Facebook can report the problem and so on. I know nothing about this topic, other than as a parent, so I can’t comment on how effective or otherwise these measures might be. To be honest, there were several talks that I’m not qualified to comment on so I won’t, other than to say I found some of the talks by the subject matter experts extremely thought-provoking and I’m glad I heard them.

The main discussion that I was interested in was led by Helen Goodman MP (the Shadow Minister for Culture, Media and Sport) and Claire Perry MP, who is the Prime Minister’s special advisor on preventing the sexualisation and commercialisation of childhood. The ex-McKinsey Ms. Perry attracted a certain amount of fame in web circles last year (just search on “#PornoPerry”) when she made some public statements that seemed to indicate that she didn’t completely understand how the internet worked, despite being behind the government’s “porn filter”. (I am not picking on her. I should explain for foreign readers that most MPs are lawyers, management consultants, property developers, PR flacks and such like and they don’t really understand how anything actually works, least of all the interweb tubes. Only one out of the 635 MPs in the British Parliament is scientist.)

Now, let me be completely honest and point out that I have previously criticised not only the “real” names movement in general but Ms. Goodman’s views on anonymity in particular. I think she is wrong to demand “real” names. However, as I said a couple of years ago,

I’m not for one moment suggesting that Ms. Goodman’s concerns are not wholly real and heart felt. I’m sure they are.

[From The battle of the internet security experts – Tomorrow’s Transactions]

This does not make her right about what to do though. Forcing people to interact online using their mundane identity is a bad idea on so many levels.

But that was the same month that the Communist party struck its first major blow against Weibo, requiring users to register their real names with the service. From that point, those wishing to criticise the Party had to do so without the comforting blanket of anonymity and users started to rein themselves in.

[From China kills off discussion on Weibo after internet crackdown – Telegraph]

I’m not suggesting that Ms. Perry represents a government intent on creating a totalitarian corporatist state that reduces us wage-slaves to the level of serfs to be monitored at all times. I’m sure her good intentions are to block only those communications that challenge basic human decency and serve to undermine the foundations of our society, such as MTV, but the end of public online space seems a drastic step. What has been the result of the Chinese campaign to end anonymity? What is the practical impact of a real names policy?

Once an incalculably important public space for news and opinion – a fast-flowing river of information that censors struggled to contain – it has arguably now been reduced to a wasteland of celebrity endorsements, government propaganda and corporate jingles.

[From China kills off discussion on Weibo after internet crackdown – Telegraph]

None of us, I’m sure, would like to see pillars of our society such as the Daily Mail reduced to the level of “celebrity endorsements, government propaganda and corporate jingles”. Perhaps there is now less crime in China too, but I have yet to discover any statistics that would prove that. I don’t want this to happen to Twitter, Facebook and The Telegraph web site (where it is my right as Englishman to post abuse about the Chancellor of the Exchequer should I so choose). So here is a practical and positive suggestion. At the seminar Helen said the “The gap between real-world identity and online identity is at the root of [the problem of cyberbullying]”. So let’s close that gap. Not by requiring (and policing) “real” names, but by implementing pseudonymity correctly. I wrote an extended piece on this for Total Payments magazine recently.

Now imagine that I get a death threat from an authenticated account. I report the abuse. Twitter can (automatically) tell the police who authenticated the transaction (i.e., Barclays). The police can then obtain a warrant and ask Barclays who I am. Barclays will tell them my name and address and where I last used my debit card. If it was, say, Vodafone who had authenticated me rather than Barclays, then Vodafone could even tell the police where I am (or at least, where my phone is).

[From Dave Birch’s Guest Post: Anonymity – privilege or right? – Total Payments : Total Payments]

As I said, I don’t just want to talk about doing something about cyberbullying and the like, I actually want to do something about it. “Real” names are a soundbite, not a solution. What we need is a working identity infrastructure that allows for strongly-authenticated pseudonyms so that bullies can be blocked and revealed but public space can remain open for discussion and debate. Then you can default Facebook and Twitter and whatever to block unauthenticated pseudonyms without insisting the kid looking for help on coming out, the woman looking at double-glazing options or the dreary middle-aged businessman railing against suicidal economic policies from revealing their identities unless they want to

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.

You may think payments regulation is a rather dull subject, but it isn’t. Angus McFayden from Pinsent Masons spoke about the changes to the regulation of the UK payment sector at the Westminster e-Forum on “Digital Payments in the UK” [PDF] that I spoke at last November. As I remember him pointing out, with characteristic accuracy, these changes are not going to drive down costs (there is nothing in the UK National Payment “Plan” about this anyway), which I would have thought to have been a reasonable goal. So what are they going to do? Well, they are supposed to improve competition while simultaneously ensuring stability and so forth.

How? You may remember that HMT (Her Majesty’s Treasury, the UK’s Ministry of Finance, essentially) had a public consultation on the options for UK regulation a while back, and…

So given it was what the government said they wanted, want the respondents said they wanted and, most importantly, what I said that I wanted… the government has decided to choose an alternative path and it now says it will create a new payment regulator

[From You searched for response to consultation – Tomorrow’s Transactions]

So we are going to have a new payments regulator, and this will improve competition and ensure stability. Angus explained that this regulator, expected to be operational in April 2015, will have a number of powers and that one of them will be to mandate access to payment systems. This means for schemes, rather than direct access to accounts, and is laudable. If more organisations have access, there will be more competition and therefore, hopefully, reduced costs. So far, so not particularly interesting.

However, under proposed reforms to PSD2 things might move a little further and, somewhere downstream, there may be changes following on from the European Commission’s consultation on third-party access to the bank account, known as “XS2A”. In this scenario, I would be able to grant a licensed third party (a Payments Institution or bank, essentially) access to my bank account so that they could get the balance, look at transactions and perhaps even trigger FPS payments. Now this is really interesting. The potential for new services here is obvious and by removing an intermediary layer there should be a reductions in costs. But, and this is a big but as far as I am concerned, without the right identity infrastructure, the right security and the right compliance regime, this could be another Chernobyl.

I imagine that this is the sort of thing that will be discussed in London in February at the forthcoming “Payments Intensive”, where you can listen to Consult Hyperion’s Anthony Pickup and Adrian Kamellard, the Chief Executive of the Payments Council, amongst others, talking about payments regulation in more detail.

Payments Intensive 2014: Future Development and Regulation, will bring together key figures from business, legal and regulatory backgrounds, to discuss the most pressing issues in the payments sector today.

[From Payments Intensive 2014: Future Development and Regulation | Cecile Park Conferences]

The magnificent group of gentlepersons and scholars at Cecile Park have very kindly given Tomorrow’s Transactions a complementary delegate place at this event to dispose of as we please, so we’re having one of our blog competitions. If you are going to be in London on 6th February and would like to attend the Payments Intensive, then all you have to do is be the first person to comment on this post with the name of the British record label that has just released a version of Bach’s Wurttemberg Sonatas performed by the Iranian-American harpsichordist, Mahan Esfahani, and you will be given entirely free a place at the event (worth an astonishing THREE HUNDRED AND FORTY FIVE of your English pounds).

As always, the judge’s decision is arbitrary and capricious.

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 early days of the British government’s new cyber-filter have been predictably amusing, but they highlight a serious issue. What are the principles? What do politicians want the technologists to do?

At the end of last year the nice people at Information Risk Management invited me along to their “Risky Business” event in London to enjoy a morning of serious thinking about some key issues in information security. They had some pretty impressive speakers: Mike Lynch, the founder of Autonomy; the head of cyber policy for GCHQ, the head of IT security from the London Olympics and so on. The reason I was thinking about this was because I was thinking about the issue of Internet “filtering”, as is now the fashion in the UK.

If their parents have chosen this option, children using O2 phones will be unable to access almost all of the internet: police websites, the NHS, ChildLine, the NSPCC, the Samaritans, many schools and even the main government website, GOV.UK.

[From Some websites should be unblockable – Adrian Short]

These problem are inevitable. But what do we want? Do we want children to be able to see things like MTV online? Who gets to decide? What is the principle at work? Alec Ross, who was Senior Advisor for Innovation and Technology to the Secretary of State Hilary Clinton, gave the keynote address on “The promise and peril of our networked world”. I was looking forward to this, as I think that it’s important to understand what the State Department’s policies around security, privacy, the web and filtering are. Alec was a good speaker, as you’d expect from someone with a background in diplomacy, and he gave some entertaining and illustrative examples of using security to help defeat Mexican drug cartels and Syrian assassins. He also spent part of the talk warning against an over-reaction to “Snowden” leading to a web Balakanisation that helps no-one.

I was thinking about policy though. Governments, and people, don’t really know what they want us (ie, technologists) to do. This is what I have casually referred to as the “Clinton Paradox” before, and it is nicely summarised here:

We must have ways to protect anonymity of good people, but not allow anonymity of bad people.

[From Digital Identity: May 2011]

I challenged Alec about this in the Q&A — slightly mischievously, to be honest, because I suspected he may have had a hand in the speech that I referred to in that blog post — and he said that people should be free to access the internet but not free to break the law, which is a politician’s non-answer (if “the law” could be written out in predicate calculus, he might have had a point, but until then…). If we take that at face value, though, what does it mean? Alec wasn’t clear if he means just US law or anyone’s law. We didn’t get to discuss that.

When I pushed on the issue of openness, he was clearer. He said that he thought that citizens should be able to communicate in private even if that means that they can send each other unauthorised copies of “Game of Thrones” as well as battle plans for Syrian insurgents. I think I probably agree, but the key here is the use of the phrase “in private”. I wonder if he meant “anonymously”? I’m a technologist, so “anonymous” and “private” mean entirely different things and each can be implemented in a variety of ways.

The politicians are going to have to tell us what they want. If they want people to be able to communicate anonymously, then they are going to have to accept that criminals will do so. If they want us to be able to communicate in private, then they are going to have to introduce an identity infrastructure and tell us under what circumstances the state will be able to “undo” that privacy.

It was an enjoyable and thought-provoking morning, so thanks for that IRM, but it left me slightly pessimistic that the gap between people like me and the who people who a running things is widening. Is this an age thing?

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.

• 13% of voters think Barack Obama is the anti-Christ;
• 29% of voters believe aliens exist (so do I – I just don’t think they’ve kidnapped anyone from Arkansas to date);
• 4% of voters say they believe “lizard people” control our societies by gaining political power (someone you trust is one of us);
• 15% of voters say the government or the media adds mind-controlling technology to TV broadcast signals (the so-called Tinfoil Hat crowd);
• Just 5% of voters believe that Paul McCartney actually died in 1966

[From Conspiracy Theory Poll Results – Public Policy Polling]

I was thinking about this because I was thinking about electronic voting. In my keynote talk at the Fourth International Conference on e-Voting and Identity, sponsored by Consult Hyperion and IBM UK, I said that the nature of digitisation is that we end up with new processes rather than analogs of analog processes. We don’t use iTunes to buy CDs, so the nature of the music business changes. The world music industry is now bigger than ever before (it’s just that sales of recorded music are continuing to fall, but so what). Think about this in the context of voting. We might start by using electronic voting to work in exactly the same way as non-electronic voting, for example.

Estonians today vote online and pay tax online. Their health records are online and, using what the President likes to call a “personal access key” – others refer to it as an ID card – they can pick up prescriptions at the pharmacy. The card offers access to a wide range of other services.

[From BBC News – How Estonia became E-stonia]

Why stop there though? Why not use electronic voting to improve the democratic process? While there are a great many different possibilities, I thought I would construct four scenarios for using an electronic vote along these lines to improve the voting process. The first is based on engaging young people, the second is based on the “Who wants to be a Millionaire” pub quiz machines, the third is designed to add convenience while reducing costs and the fourth is based on eBay.

The Provisional Vote

When the then Lord Privy Seal, Leader of the House of Commons, Deputy Leader of the Labour Party and the Minister for Women and Equality (all the same person: Harriet Harman) said that she was thinking about giving the vote to 16 year-olds I was naturally horrified. As the parent of one at the time, I remember being puzzled as to why society would ask such a teenager about anything at all, let alone who should be running the country.

It did occur to me, however, that there might be an alternative. Just as teenagers can obtain a provisional driving licence, under which they can drive but only when accompanied by a driver with a full licence, perhaps they could be given a provisional vote. The provisional votes cast in an election would be tallied and reported, but they would not count toward the result. That way, young people can be drawn in the democratic process — getting what Ms. Harman called “the habit of voting” — and learn the mechanism of the ballot box, but their opinions would not bind the rest of us.

In this scenario then, young voters are encouraged to download the standard government voting app (I propose to call it “Angry Voters” or “Call of Duty: Democracy” or “MPcraft” or something like that) immediately after their 16th birthday. When an election comes along the government sends a reminder to the app and the teenager can then click a button or two to obtain their voting certificate. In order to encourage teenage participation in the democratic process, the app could show them a map of where the nearest polling station is and provide the occasional nudge to remind them to pop down there.

Up until their 18th birthday however, these votes would be provisional votes. The next morning the newspapers could report the result of the general election and also what the result would have been had the provisional votes been counted so that young people might feel that there preferences were being recognised.

We might find a way of integrating with social media too. Perhaps the app can automatically post an “I just voted” status update on Facebook or perhaps offer young people the chance to join various Facebook groups. I only belong to one such group (“Che Guevara was a murderer and your T-shirt isn’t cool”) but they might be a way of getting teens to at least engage in some of the key issues of the day.

The Informed Vote

Engagement is important for democracy, but it’s not obvious to me how we benefit from getting people to vote when they have no idea what they are voting about. A rather depressing Ipsos/MORI poll conducted in June 2013 and published on 9th July 2013 illustrates the extent of public ignorance.

• Almost a third of people think that the UK spends more on dole than on pensions, when in fact it spends 15 times more on pensions than on dole;
• A quarter of people think that foreign aid is in the UK government’s top three areas of expenditure, when it is in fact slightly more than 1%;
• The public think that a third of the population are immigrants (it is around sixth) and that a quarter of the population are Muslims (it is around one twentieth).

In this scenario, I propose to encourage engagement and an informed populace by extending the voting app to include a game which is a little like the sort of “Who wants to be a millionaire?” machines that you get in pubs so that when the citizen enters the polling booth the app asks three quick questions and gives them a few seconds to answer each. These would be general knowledge questions of political economy. Nothing too vexing: just basic questions such as “who is the Chancellor of the Exchequer”, “how much does a pint of milk cost in Tesco today” and “what proportion of government spending goes on welfare”. That kind of thing. Each question would be multiple choice and the citizen would have a few seconds to answer. We might even have the system award some prizes to people who answer all three questions correctly in the shortest time.

The e-vote would be cast as normal, but with the twist that the vote would have appended the number of questions that the citizen answered correctly, and only those votes with a at least two out of the three questions answered correctly would be counted. This would hopefully incentivise citizens to read an occasional newspaper or watch the news on television from time.

The Continuous Vote

If people become more informed, that is a good thing but we still need to encourage them to exercise their democratic right. With an electronic voting system, there’s no real reason to restrict voting to a limited time or to specific places. The suggestion that the UK should look at the option of advance voting to allow people to cast their vote in secret at specified locations during a designated period prior to voting day (Electoral fraud in the UK–Èvidence and issues paper 2013) has already been made. But what about the places?

Electronic or otherwise, voting must be a public act otherwise we face the insurmountable barrier of coercion. There is no reason, however, for it to be in polling stations. What about using Post Office counters or bank branches? Surely it would be much cheaper to pay the Post Office or the banks £1 per vote cast than to spend the close to £100m that a general election costs now (and that doesn’t include the disruption caused by closed schools and so forth).

So, perhaps elections could take a week. Any time during that week, a citizen can pop into a bank branch and cast a vote at the counter. After all, the machine in the polling booth would just be, in essence, another mobile phone so the tellers at the bank branches could just as easily use them. I would let citizens change their mind as well. If I pop in and vote for the Monster Raving Loony Party on Monday but then on Wednesday change my mind and pop in and vote for the Communist Party of Great Britain (Marxist-Leninist branch), or indeed change my mind ten times during the course of the week, then only my last vote would count.

The Transferable Vote

This kind of scheme ought also to provide a solution to the problem of proxy voting. This provides an alternative method of voting for those who are unable to vote in person in a polling station for reasons such as illness, disability, vacations, living overseas or serving in the armed forces, and who may appoint a proxy in advance to vote on their behalf. So I can’t vote, but I can pass my vote to my sister and she can go and vote for me.

Therefore votes have to be transferable.

Noting the common heritage of the kind of e-voting scheme assumed here and Bitcoin induces another thought experiment. If votes become a bit like Bitcoins, then why can citizens transfer them? There’s no reason why we couldn’t find a way to allow the voting app to transfer votes from one app to another. We could decide that it’s allowable under certain circumstances. I don’t think it would benefit society to allow “P2P” transfers because we’re trying to get away from the corruption attendant on for example postal votes. We don’t want husbands to be else to force their wives to transfer their votes to them any more than we want husbands to be to force their wives to accept their driving licence points for speeding. But we might allow authorised exchanges, whereby citizens transfer their votes to registered organisations.

Suppose, for example, that I find the democratic process confusing and exhausting. I know little about politics and genuinely don’t know who to vote for. But I like Greenpeace, and I trust them to make the right choices on my behalf, so I’ll pass my vote to them. I’d suggest that organisational votes are not blinded, so that in the pursuit of transparency anyone could log in and see where the Greenpeace votes went.

You can see how this might work in combination with social networking to create a kind of citizen engagement in the political process that makes sense. You might, for example, a Facebook campaign against, oh I don’t know, franking underneath the Surrey Downs. At the moment the best that a committed activist can do is write letters to The Guardian, but under a transferable vote system they could set about trying to collect votes for their campaign and then donate those votes en bloc to a politician who shares their distaste for inexpensive, local energy supplies.

Treating. A person is guilty of treating if either before, during or after an election they directly or indirectly give or provide any food, drink, entertainment or provision to corruptly influence any voter to vote or refrain from voting. Treating requires a corrupt intent – it does not apply to ordinary hospitality.

Definition from the UK Electoral Commission.

This triggers a final speculation. Under English law, political parties are not allowed to “treat” individual voters. Thus is my local Tory candidate were to offer me a bottle of champagne for voting for him, he would go to jail (although, oddly, not if he offered my favourite elderflower squash, because the law on treating only covers alcoholic beverages). It is, however, entirely acceptable to treat groups of voters. A political party can say to pensioners, for example “vote for us and we will loot the future prosperity of the nation’s youth in order to excuse you from contributing more to care costs” and that is fine. This is buying votes in a non-transparent way, but it’s still buying votes.

I think a more transparent approach would be better for democracy. So why not just take your transferable vote and put it on eBay? If I don’t feel strongly enough one way or the other on any issue, I might just choose to sell my vote — in an entirely above board and transparent way — rather than donate it to the English Defence League. Again, I would suggest that whereas the votes of individuals are blinded, the votes of purchasers (whether individuals or organisations) are not, so that it is a matter of public record as to how much was paid for each vote and to which candidate the vote was given.

So where next?

I think we have the technology. We have cryptography, mobile phones and biometrics. We can build a better voting system. But what should we use it for? What are the priority problems that we should be tackling first? In the UK, I think it is remote voting that stands out.

One of the biggest problems with postal votes is that they don’t guarantee you a secret ballot.

[From Mary Ann Sieghart: How dodgy postal votes may decide our next government – Mary Ann Sieghart – Commentators – The Independent]

That is not the only problem though. Our manual, paper-based electoral system is open to fraud at many levels. A random search of the UK newspapers for this month find this:

Nasreen Akhtar, who was a polling station clerk at the Madeley Centre Polling Station, in Arboretum Ward, yesterday admitted helping her nieces, Tameena Ali and Samra Ali, to cast fraudulent votes by pretending to be someone else. Tameena Ali cast her vote for the Labour candidate, Gulfraz Nawaz, in the name of Noshiela Maqsood, who is no relation, whereas Samra Ali left before marking the ballot paper. Maqsood, 24, then lied to police, saying she had personally voted.

[From Women admit election fraud | This is Derbyshire]

We (technologists) need to come up with a solution that makes this sort of thing impossible. Or at least detectable.  But with all of these problems, where do we start? According to an article in the 18th May 2013 edition of The Spectator (“My vision for Eurovision”, p.20), in Azerbaijan the Baku police tracked down and questioned people who used their mobile phones to vote for Armenia in the Eurovision song contest. This gave me a brilliant idea: why not use Eurovision as a testbed for secure electronic voting technologies?

Remote voting is a real issue in the UK right now and it is one of the key problems that electronic voting is supposed to solve. So let’s make the next Eurovision song contest a testament to British creativity, problem-solving and algorithmic excellence rather than a testament to our song writing. If we can create a world where people in Baku can cast a vote for [insert name of popular beat combo here] in safety and confidence, we will have achieved something.

These are personal opinions and should not be misunderstood as representing the opinions of 
Consult Hyperion or any of its clients or suppliers

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.