Tomorrow's Transactions

Thought leadership from Consult Hyperion

Archives for October 2007

Blookseller

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[Dave Birch] The blook that we put together for the Digital Money Forum turned out to be rather popular. As one of our consulting clients put it, we’d accidentally invented the perfect business product for the tube! So we’ve done the same for the Digital Identity Forum. Jane Adams and I have taken the “best” (in an utterly subjective contest) posts on the Digital Identity Forum blog over the last year or so, organised and edited them, indexed them and turned them into a blook: a book made from a blog. The blook is the “The Digital Identity Reader 2007” and all delegates to the eighth annual Digital Identity Forum in London on November 20th and 21st — sponsored by the kind, wise, good people at CPP, CoreStreet and ACI Worldwide — will receive a complimentary copy. Less fortunate persons can still order it from Amazon.

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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.

Which planet?

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[Dave Birch] I had a fun time in London the other day. I took my son to the Forbidden Planet London Megastore and when I got to the cash register I was genuinely shocked to see a Barclays Business contactless terminal there. I couldn’t use it, of course, because my purchase was over ten quid, as I imagine most of their purchases are. Yet when we went to the Cafe Nero down the road, and our coffee and hot chocolate came to less than a fiver, they didn’t take cards at all, let alone contactless ones. So we couldn’t buy the pastries we wanted (I only had a five pound note in cash on me). Their ridiculous cash-only restriction meant that I didn’t get the goods that I wanted and they didn’t get the money that they wanted. Afterwards, I was still consumed with curiousity — a genetic flaw, I imagine — so we went back to Forbidden Planet and I bought a Pirates pack for my son just so I could use my OnePulse card: it worked great, and I estimate that it was about thirty times quicker than using my chip and PIN card.

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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.

What kinds of competitors?

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[Dave Birch] PayPal has pottering along nicely. The steady growth of their off-eBay business means that they are sitting side-by-side with traditional online acceptance brands (Visa, MC, Amex, Discover, et. al.). Competitively, payments companies and their issuers have looked at this as an online phenomenon. Rightly so, as it has been. Online transaction volume is just north of 10 per cent. One of PayPal’s new products is their virtual debit card, a response to customer requests that PayPal be accepted at more online merchants. If you want to buy something at a merchant that accepts cards but not PayPal, PayPal will generate a one-off MasterCard number for you. Now in testing, the virtual card is expected to be rolled out in the Unites States by Christmas. They are also steadily putting together other services that may pose a genuine threat to incumbents, according to Aite Group payments analyst Adil Moussa: deferred-payments options and mobile payments. But why? Surely a bank can work out how to offer a good mobile payments service can’t it (or, more likely, wait until someone else has worked out how to do it and then buy it, rather as RBS did with WorldPay and Bibit). Why is it considered a threat to banks? Similarly, the deferred-payment option is already provided by banks in some countries, and if customers show that they want deferred-payment options that it doesn’t seem wholly implausible that MBNA or HSBC could provide them. In this particular case it’s not actually PayPal that provides the underlying instrument, it’s GE Money that is delivering the credit behind the deferred payment and since (as a general rule) providing credit is the most profitable part of the payment process for banks, that is why banks might be eyeing PayPal more nervously than 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.

Come and join in the conversation

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[Dave Birch] If you fancy listening to some single sign-on vendors presenting product features and calling them a strategic vision for the future of identity management then you have plenty of conferences to choose from. If, on the other hand, you fancy joining in intelligent conversation and genuine debate about the future of identity in a networked world, you’ll probably want to come along to our annual Digital Identity Forum in three weeks’ time. There are presentations and expert panels featuring representatives from the Home Office, UCL, Identity & Passport Services, Visa, Oxford Internet Institute, ACI Worldwide, University of Surrey, Garlik, CoreStreet, EMAP, Hitachi Europe, Valimo, DEMOS, Ping Identity, Sun, Bournemouth University, ARM, CPP, the Mobile Data Association and the National Policing Improvement Agency. They’ll be covering subjects ranging from the use of digital signatures in Turkish mobile phones to the potential for authentication as a business in its own right. But most of all they’ll be continuing the Digital Identity Forum’s tradition of open, friendly and informed discussion. And there’s a pub quiz too! What’s not to like! And they’re virtually giving away the delegate places for the miniscule sum of 445 pounds plus VAT.

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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.

More data points

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[Dave Birch] I’m still curious to see whether we can assign a cost to identity for business planning purposes. One path to take is to simply look at the market value of stolen identities. Naturally, there is a spectrum here depending on what “identity” it is that has been stolen: Credit card details up for saleemail passwords can cost as little as $1 whereas credit card details go for up to $350. There must be a wide variation in these bands though: my e-mail password would surely be worth more than $1 to someone (I’d be crushed if it wasn’t) and David Beckham‘s or Hillary Clinton‘s would be worth even more. But those are special cases where the “theft” is very personal: in reality, the overwhelming majority of identity theft isn’t.

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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.

Payment and tender

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[Dave Birch] We’re previously discussed the Snap Cafe in Washington, an establishment of some note to Digital Money debaters because the owner stopped taking cash. As I recall, there was some discussion about whether it is legal to do this, since Federal Reserve Notes (ie, greenbacks) are legal tender in the U.S.A. so the cafe owner could not refuse them. I came across some interesting clarification in a paper from the New Zealand. It’s called Payments and the concept of legal tender by Nick McBride, Legal Counsel, Reserve Bank of New Zealand. The paper describes what happened last year, when the coins in New Zealand changed. The new coins were introduced on 1st July 2006. For a period of three months, the old coins were circulating in parallel with the new, but some retailers put up signs saying that they wouldn’t accept the old coins. This, presumably, was because they didn’t want the hassle of having to bag them all up and take them to the bank to swap for new coins. So could they refuse to take the old coins in payment even though they were legal tender? The answer is yes (sort of).

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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 real stuff

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[Dave Birch] Identity by itself isn’t enough to help solve the problem of counterfeiting: both product and provenance must be secure to give confidence. It’s a problem worth solving, because of both the scale of the problem and the potential seriousness — counterfeit handbags is one thing, but counterfeit parts for aircraft another. In the U.K., we tackle the most serious problem (loss of tax revenue to the Exchequer) first: cigarettes subject to UK duty are to carry a “covert security feature” intended to combat the problem of tobacco counterfeiting and smuggling. Apparently, British American Tobacco, Gallaher and Imperial and Phillip Morris have been manufacturing cigarette packets with the security feature since 1 October. The feature “will allow customs staff to use small hand-held readers to authenticate cigarettes” which most commentators have interpreted to mean that RFID tags are being used. Even though I haven’t touched a packet of Marlboro in years, I’m pretty sure this is not the case. Anyone who saw the presentation on Document DNA at last year’s Digital Identity Forum will have seen a more plausible alternative brilliantly demonstrated.

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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.

eBay to east Africa

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[Dave Birch] The microfinance story continues with the new that eBay has launched MicroPlace, a website that enables US customers to invest in microfinance projects. The site acts as a broker, allowing customers to buy microfinance investments for a minimum of $100 from microfinance security issuers. How fun. Investors can choose the country and microfinance institution that their money goes to. At launch the site will allow people to direct investments to Africa, Eurasia, Latin America and Southeast Asia. As soon as the scheme is extended to the U.K., we will make a Digital Money blog investment in Africa on behalf of all of our readers. I know just how worthwhile microfinance is because of Consult Hyperion’s work for Vodafone in Kenya. Kenya continues to provide a fascinating case study on the evolving competition and cooperation between banks and mobile operators in the world of payments. Safaricom’s m-payment scheme M-PESA has been signing up 2,500 customers per day. Just to put this in context, Barclaycard in Kenya issued 7,000 cards last year. Kenya has about 70,000 credit card users, up from 10,000 in the eighties, and nine million mobile phone subscribers. As an aside, there is an obvious corollary to this kind of development: whereas phishers in the U.K. target banks, in Africa they have started targeting mobile. Bad guys have conducted fraudulent transactions on ABSA accounts by swapping the customers’ SIM cards. It was actually quite a complicated fraud, defeating a security measure implemented by ABSA where a one-time password is sent to a customer’s mobile phone. By swapping SIM cards (an accomplice inside the phone company moves the mobile number to the new SIM), the fraudsters could intercept that password and move money. Repeat after me: one factor bad, two factor better…

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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.

Identity management in a big organisation

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[Dave Birch] Sounds like the identity management business is a good place to be. The market has lots of issues — privacy and compatibility issues, high initial investment, and troubles in management — that are holding it back, but even so the investments ought to generate a good return because of increased security, restricted unauthorized access to information and time saving. Thus a 7%+ CAGR is forecast 2007-2011. Within this, the hardware token authentication market will grow faster (11%) until 2009. All good news for us, but how will organisations make it pay?

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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.

It was a cunning plan

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[Dave Birch] It’s amazing to me — no, not amazing, more kind of quaint, reassuring and comforting — that in this high-technology e-money world, there are crooks who still try to rob banks the old fashioned way. Not the modern way (by working for them as traders) but the old fashioned way. There are still people out there who rob banks with shotguns. And there are still people out there who make dodgy banknotes. An example being the gang of Chinese counterfeiters currently on trial in London for attempting to defraud the Bank of England of more than TWENTY EIGHT BILLION POUNDS. Yes, that’s right. They tried to cheat the Bank of England out of more than FIFTY BILLION DOLLARS by swapping 360 “special-issue” £500,000 notes and and 28 million £1,000 notes for lower denominations. Unfortunately, there were two tiny flaws in their masterplan: the Bank of England has never issued a £500,000 note and £1,000 notes were taken out of circulation in 1943 (and there are only 63 of them not accounted for). The criminal geniuses tried to get the Bank of England to accept £1,000 notes with the signature of Jasper Holland, the chief cashier in 1963. Now, far be it from me to criticize — I know virtually nothing about counterfeiting — but c’mon guys. Didn’t anyone think that the Bank of England might double-check if someone turns up with twenty eight billion pounds in used notes? The only way to get away with this kind of thing is to skim off a small amount from each legitimate note in circulation (like the Chancellor of the Exchequer does).

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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.

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