[Dave Birch] Some time ago, I pointed out that aggressive retailers might use ID cards to cut payment schemes out of the transaction loop, by using ID cards as payment tokens and using the ACH network rather than Visa or MasterCard and I subsequently wrote a piece on this for Electronic Finance & Payments Law & Policy. Having been thinking about this and other implications of the introduction of a national ID card scheme, I was surprised to hear from a bank that I was talking to that they had no strategy on the UK ID card (despite the fact that the first cards have already been issued) and no plans to develop a strategy. Now, on the one hand this is understandable, since the UK cards don't do much and there are no readers for them anyway, but on the other hand it may be unwise if other people are developing strategies that may impact banking.

As I have long been advising our clients in the payment space, there will be inevitable implications for retail payments businesses once a national ID card is in place.

[From Digital Identity Forum: Paying for identity]

Retailers want business change, not just lower fees, and has been discussed over on Digital Money, retailers may well be the key stakeholder group when it comes to developing new payment schemes for use at retail POS. Now, a barrier to their competing with existing card schemes themselves has been the cost of issuing and managing secure smart cards or other tokens. But if the government is going to do it for them, then they may as well exploit it. I can easily imagine taking my ID card and a blank cheque down to Tesco, putting them both into a machine and punching in my PIN. Then, next time I go shopping, I punch my PIN into the keypad at the checkout lane, wave my ID card over a reader and then go on my way. This kind of the service has already begun to spring up in the U.S.A., in response to the issuing of “Real ID”drivers’ licences which have machine readable magnetic stripes that can be read at POS terminals. A company called National Payment Card (NPC) has begun to exploit the opportunity, by getting customers to register their bank details and a PIN against their licence. This means that customers can then pay for fuel by swiping their licenses at petrol stations and entering a PIN. A similar national scheme has just launched in Malaysia, where one of the leading banks has begun installing kiosks where customers can use their bank chip card and the MyKad ID card (without biometric authentication) together to link the ID card with the bank account automatically:

Consumers will have to open either a savings or a current account with EON Bank, which is the only bank providing payment transactions through the MyKad at the moment.

[From Buy fuel with your MyKad]

The scheme is targeting the fuel sector in the first instance and has signed up all Caltex and BHP filling stations, so that customers can fill up and they pay at the pump with their ID card. Since the margins on fuel are thin, the sector has every incentive to cut payment schemes out of the loop and move to direct bank transfer via ACH. I wonder if they even bother to authorise the transactions: after all, if you try to cheat them by presenting the ID card when you have no money in the bank, they have your ID details and I imagine you'll be hotlisted pretty quickly.

If I'm right about the trend to use government smart identity cards in retail transactions, then the issue of biometric authentication needs raising. I tend to think that identity is best kept out of transactions where it is not required, since the more you spray your identity around the more likely it is to be abused. But if biometric authentication becomes the norm, then this argument goes away since no-one can misuse your identity. (It's still wrong to introduce identity where it isn't needed, on privacy grounds, but I can't figure out how to stop people from doing it.) If biometrics become cost-effective and reliable — let's put aside whether they are not at the moment — then the temptation to use them will be overwhelming.

I'm going to be talking about this kind of thing — businesses exploiting ID cards in interesting ways — at the Digital Identity Forum's joint seminar with EEMA at the British Computer Society in London on January 29th next year. This seminar, sponsored by Consult Hyperion, will be looking at the business opportunities that might arise from the introduction of the UK national identity card. You can register for the seminar, which is sponsored by Consult Hyperion, at the EEMA web site. Look forward to seeing you there you there.

These opinions are my own (I think) and are presented solely in my capacity as an interested member of the general public [posted with ecto]

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