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[Dave Birch] In this month’s excellent SPEED magazine, there is an article by Harry Leinonen. I know Harry from the conference circuit, where we occasionally fetch up together, but you probably know him as an advisor to the Bank of Finland and the Finnish representative on the Payment and Settlement System Committee with the Eurosystem. I always pay attention to his well-informed and well-thought out points. In the article he looks over the last decade’s worth of statistics to highlight six main trends in European payments. I’ll get on to those in a moment, but what I wanted to first draw attention to was this paragraph in Harry’s piece:

Payment developments seem to be quite slow. Major changes in payment habits need five to ten years to be implemented. One reasons for the slow pace is probably the lack of transparent price and cost information.

I realise that I sound like a broken recordscratched CD on this topic, but it seems to me to be a question of rudimentary economics: no price information, no working market. If the European Commission wants to make the European payment market work better, they could do worse than start by actually turning it into a market in the first place by insisting on better price signaling. One inevitable consequence: the cost of cash will go up, the cost of cards will go down.

Technorati Tags: costs, payments, SEPA

Continue reading “The six main trends in European payments”

[Dave Birch] When you’re discussing the future of identity in the U.K., it’s impossible to avoid talking about the national identity card scheme. What individuals, organisations, companies decide to do about identity depends to a great degree on what the national scheme looks like. So what should it look like? Should we even have one? My personal view is that the government should not scrap the proposed scheme but that it should radically rethink it. It should postpone introducing the physical ID card and focus instead on allocating a unique national identity number, backed by biometrics, to each citizen—that is all that needs to be held in a national register. I’m also in favour of using the “Austro-Canadian” idea of sector-specific numbers, with one-way cryptographic mapping from the national identity number stored on the register to the sector identity numbers stored in databases.

Technorati Tags: ID cards

Continue reading “Alternative thinking”

[Dave Birch] By complete coincidence I found myself reading two papers on the “third way” for European cards this morning (yes, my life really is that interesting). The first from our good friends at Payment Systems Europe, the second from our good friends at Wellcome R/T. Welcome’s Pierre Boces has published a whitepaper that compares strategies for payment scheme competition. His perspective is that the existing international card schemes are so well-established that it would be better to focus on having them deliver more value to the marketplace than spending a lot of money creating a new “third way” euroscheme (whether under the EAPS or something else). Peter Jones from PSE also points out that creating a new “third way” euroscheme will involve considerable effort and expenditure and puts forward another alternative: hook up the ATM networks and then extend them to POS. As Peter points out, many of the domestic debit schemes that are vanishing because of SEPA started life at ATM networks anywa.

Technorati Tags: payments, SEPA

Continue reading “Third men”

[Dave Birch UPDATED] In the U.S. ATM fees are going up, as they should be: the average number of transactions per ATM has fallen by (if my arithmetic is correct) about two-thirds over the last decade. Therefore the cost per transaction should have gone up quite a bit. Bank of America’s decision to raise the cost of an ATM withdrawal to $3 may therefore be well calculated (because they have more deposit accounts and associated ATMs across the nation than others, so they have the strongest potential to gain rather than lose. Meanwhile, in the U.K., where according to VocaLINK the average number of transactions per ATM has fallen by a third in the last five years, there are going to be more “free” ATMs: 600 more, in fact. The government, via the Treasury, has struck a deal with banks and cash machine operators to increase free access to cash. Ed Balls said:

The free cash machines…

I didn’t read any further, because they’re not free, of course. They are paid for by other bank customers. The deal is that to persuade the cash machine operators to set up and maintain cash machines free-of-charge, banks and building societies agreed to pay a ‘financial inclusion premium’. This scheme, which will compensate cash machine operators for the expected lower cash machine-use in these areas, began on 1 March 2007 and will be funded through the transaction fee banks and building societies are charged when their customers use other cash machines.

Technorati Tags: ATM, costs, government

Continue reading “ATM access”

[Dave Birch] Gartner have published a report agreeing with Aneace that payment schemes need to offer merchants new promotional marketing capabilities at the POS to reduce pressure on interchange. They tend to be thinking about loyalty, receipting and that kind of thing. But I also wonder if one of the most obvious value-added services around payments isn’t, after all, a bank account? Perhaps an way to bring down costs is to provide limited functionality payment account rather than full-blown bank accounts that overshoot the needs of a substantial fraction of the customer base and don’t address the needs of the population of non-consumers of bank services, thereby matching the value offered more closely to the customer needs.

Technorati Tags: ATM, banking, debit cards, prepaid

Continue reading “More on banks and payment futures”

[Dave Birch] The European Central Bank, which has already said that it would like banks to set up a debit card scheme to challenge the dominance of Maestro in the eurozone and proposed a a new cross-border legal framework to oversee all card payment schemes operating in that zone, is very keen on new regulation to improve the state of the European payments market. One of the ECB’s points is that they want to create a level playing field of payments. This is a good idea: so is there a single or simple action that could be taken to do this?

Technorati Tags: costs, prepaid, regulation

Continue reading “More regulation”

[Dave Birch] This week’s podcast features Tom Ilube, CEO of garlik. Garlik is a new consumer company pioneering a range of services to help give people “real power over their personal information in the digital world, using semantic web technologies”. In this podcast, we’ll find out what that means and how garlik will make a living out of it. Tom Ilube was CIO at Egg until 2005, so he knows a thing or to about innovative plays in the consumer space.

Technorati Tags: identity, podcast

Continue reading “Tom Ilube, Garlik”

[Dave Birch] When developing business cases for some kinds of identification and authentication products, it’s difficult to round out the figures when no-one knows how to value personal data. How much is it actually worth? An interesting estimate comes from the loyalty world, where the Tesco Clubcard is the standard U.K. example. Tesco won’t say how much Clubcard means in terms of additional revenue, but the impact in some stores is put as high as 12 per cent, enough to push an £800,000-a-week branch through the £1 million barrier. So if you divide the sales by the number of customers, you ought to get a rough estimate of the value of each customer’s data. I don’t think it’s that simple though, because Tesco’s additional sales are not down just to the value of the data, but the value of the processing they apply to it. Simply having a list of your groceries would deliver little value (although it might be scary in 20 years time when the government bump you down the NHS waiting list because of all the rubbish you ate when younger).

Technorati Tags: costs, identity, retail

Continue reading “How much is “my” data worth?”

[Dave Birch] In a meeting a couple of days, someone said (concerning a proposed new product) that they would like it to be interoperable “just like e-passports are”. As the old saying goes, be careful what you wish for. Germany, for example, has said that it won’t join the e-passport PKI directory, or PKD. Dennis Kügler, of the German Federal Office for Information Security, says the PKD

saves you approximately half a second in the border-control process [but] open a potential security hole.

The hole is that the border control systems have to store certificates (with the public keys that are needed to check the signatures on passports) that are pre-verified, so if the bad guys can get their certificates into the system, their (bent) passports will be accepted as real. There is a proposal floating around to implement a more sophisticated PKD (with cross-certification, so that countries could check the signatures on other country’s certificates) but that means a more complicated structure. I’m not sure this is the kind of interoperability that should be a goal for other sectors.

Technorati Tags: fraud, identity, interoperability, passport, PKI

Continue reading “Bordering on crazy?”

[Dave Birch] For people who think I’m always going on about NFC but it’s not really that important, take a look at this news item from Tapei. The Farglory Group, a leading property developer in Taiwan, has announced that the residents of its four new complexes in Taipei County will be the first in the world to open their doors with their cellphones. This seems logical to me: I’d much rather use my own mobile phone for identity management and both logical and physical access control than some additional piece of plastic. The rationale in Taiwan is that since mobiles are a virtual necessity for most people, and since most people have one, then why not use them to replace house keys as well as cameras, music players and just about everything else. Farglory chairman Chao Teng-hsiung says

Instead of flipping through a big bundle of clinking keys, our residents just have to flash their mobile phones in front of a sensor to enter their homes.

The company will give two BenQ T80 handsets — the first NFCs phone made by a Taiwanese company — to each of the 5,990 apartments. There’s a fallback, of course, for people who forget their phones or for the kids in the family who don’t have one of the NFC devices: they can get it using the fingerprint identification system. The access control system will be applied to all of Farglory’s future housing projects as well.

Technorati Tags: biometrics, identity, nfc, transit, transport

Continue reading “The doors”