Defending secure applications against Jedi mind tricks

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Here at Consult Hyperion, we are often involved in design implementation and testing of secure systems on devices such as smart cards and mobile phones for payments, banking and other applications where security is critical.

Ancient and modern

[Dave Birch] I was totally shocked to arrive home from work the other day to find my good lady wife celebrating with her tax rebate cheque. Apparently HMRC miscalculated millions of Her Majesty’s subject’s tax bills and we were one of the lucky overpayers. We are a couple of gallons of petrol better off than before. But a cheque! HMRC must have our ethnic background on file as “Amish”. Despite the fact that since time immemorial (for me) we have paid our tax bill online via internet banking, the creaking hand-cranked contraptions at the Revenue are apparently unable to use any form of payment invented after the Act of Union (in 1701).

To be honest, I’ve always been puzzled by the Amish, the strange religious sect in America made popular by the noted screen actor Harrison Ford in his 1985 film “Witness“. The Amish reject “modern” technology, but they seem to me to have a rather arbitrary definition of what constitutes “modern”. Why, for example, do they use wheels? Or nails? Or chemical fertilisers? What’s the cut-off point? 1750? Why not the invention of the transistor in 1948? Or the synthesis of urea in 1828?

The Amish, particular the Old Order Amish — the stereotypical Amish depicted on calendars – really are slow to adopt new things. In contemporary society our default is set to say “yes” to new things, and in Old Order Amish societies the default is set to “no.”

[From The Technium: Amish Hackers]

Speaking of reactionary sects that eschew the modern world to remain in the comforting cocoon of a romanticised rural past, I read in the Daily Mail that

Plans to scrap the use of cheques from 2018 were dropped today after the UK Payments Council admitted there was no better paper alternative.

[From Cheques will not be scrapped in 2018 but because there are no better alternatives | Mail Online]

Well, the wrinklies have triumphed again. Another minor skirmish in the intergenerational war for resources has been won by Joan Bakewell’s generation and our children are going to be made to subsidise a paper cheque system that should have been a distant memory for them. The Payments Council has been forced to cancel the end of cheque clearing (originally scheduled for 2018) and promise to keep cheques

for as long as customers need them

[From Payments Council – Payments Council to keep cheques and cancels 2018 target]

Note that I am specific in the wording, as were the Payments Council. No-one was banning cheques: they were ending cheque clearing. If someone else — the Post Office, Age Concern or the CBI — wanted to run a cheque system, they were free to do so. And, to be honest, that would be a good solution, because then their members could pay for it and those of us who couldn’t care less if they never saw another cheque could have ignored them.

I suspect that in the coming age riots of 2025, the cheque book will used as a rallying symbol of revolt by our impoverished offspring because the banks (ie, bank customers) are going to have to pay to support paper cheques into the foreseeable future. This is ridiculous. If some people (eg, my mum) want to carry on using cheques, it should be on the basis of full cost recovery: if you want a cheque book, you should pay for it, and if you want to cash cheques, you should pay £2 (or whatever) to do so.

The Government is aware that, although there are declining numbers, 54% of adults still write cheques, and on average every adult write 13 cheques and receives 4 cheques each year.

[From Frequently asked questions on the closure of the cheque system – HM Treasury]

Yes, but that misses the point. When I last wrote a cheque to my son’s school, I didn’t want to. I would much rather have used PayPal, internet banking, my debit card or M-PESA. I don’t want to receive cheques either, from HMRC or anyone else.

When someone sends you a cheque, it’s like being set homework.

[From Digital Money: I could imagine using this]

So what happened? In recent weeks I’ve had some conversations with people countries such as the Netherlands, Belgium and Denmark where no-one has seen a cheque for a generation asking me why the UK is different. It’s the British disease: faced with the end of cheque clearing in a generation, the British response is not embrace electronic alternatives, for charities to look at inventive and efficient online and telephone giving, for small businesses to exploit the Faster Payment Service (FPS) or for the Post Office to create its own paper-based alternative but to moan and complain and demand that everything be kept the same as it is. What happened was that reactionary press comment, entrenched interests, publicity-seeking MPs and a fragmented industry have combined to conspire against the forces of rationality and modernity. And they won.

But why stop there? Cheques are quite modern invention and I don’t understand why the Commons Treasury Committee and the Daily Telegraph want to turn the clock back only to the 17th century. They are not true conservatives, whereas I am. I have therefore decided that my only course of action is to appeal to the European Court of Human Rights to force the Payments Council to reinstate the tally stick system that was prematurely ended in 1834. My great-great-great-great-great grandfather was perfectly happy using tally sticks and was, I’m sure, most distressed by the end of the scheme and the burning of the sticks in the Houses of Parliament furnaces which, as you may recall, resulted in the fire that destroyed the medieval palace and a splendid painting by Turner. It is most unfortunate that Associated Newspapers and Saga did not exist at that time, since I feel they might have been able to spearhead a successful campaign against the introduction of foreign methods (such as double-entry bookkeeping).

Tally sticks had numerous advantages over paper cheques. They were much harder to forge, for example, and were understandable by a largely illiterate population (a situation soon to be restored in this United Kingdom). The sticks were far more durable than cheques are, cheques being made out of flimsy paper instead of fine English wood. Why was this sound and practical system swept away for the convenience of bankers! It is my right to continue to use the tally sticks developed under William I for as long as I need them and quite reasonable of me to demand that the rest of society bears the costs. I hope The Telegraph will support my campaign with vigour. And while we’re at it, why haven’t farthings been legal tender since 31st December 1960? I tried to use some when out shopping the other day and they were refused: outrageous.

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


Once again, an outraged article in a British tabloid — this time the Daily Mail — about the end of cheque clearing in 2018. Predictably, it is the desperate plight of the elderly that forms the centrepiece of Lauren Thompson’s article “Clueless banks pressing on with purge on cheques”, featuring a case study on a 76-year old woman who sends her gardener to the Post Office every week to collect her £315 in benefits. She says “cheques work perfectly well for me”.

From April next year, Giro cheques will be scrapped. Pensioners and benefit claimants will be forced to go to their nearest PayPoint outlet – found at shops like Co-op, spar and Sainsbury’s Local – instead of the Post Office.

[From Banks and the Government are pressing on with purge on cheques | Mail Online]

It is not explained why sending her gardener to the corner shop to pick up her benefits from a PayPoint terminal fills her with such dread, but her comment is telling: cheques work well for her because I’m paying for them. I couldn’t care less if I never see a cheque again: the only cheques we’ve written in the last month have been to schools (I simply don’t understand why they can’t take PayPal or payment via FPS) and to the local council, which presumably regards cheques as the most modern of payment instruments. But cheques waste time and money, and it’s right to have a national plan to get rid of them, no matter what the Daily Mail thinks about the Payments Council.

I have to say that I sympathise with the Payments Council. I read somewhere that half of British consumers are unaware of the 2018 target date to end cheque clearing. But then half of them of unaware of anything, so I’m not sure that there’s much the Payments Council could do to change this. We live, as I’m often reminded, in a country where 50% of the population don’t know what 50% means.

The Payments Council seems to have become a particular target for middle England’s hatred. A letter in the very same edition of the newspaper notes that “obviously banks prefer cheaper systems of cards and electronic transfer” (as do I) and asks what about (once again) elderly or housebound people who depend on cheques by post. This is an interesting line of debate. In Finland, no-one has used a cheque since 1993. Nobody in Sweden has a cheque book. You would need a Powerpoint presentation to explain what a cheque is to anyone under 30 in the Netherlands. Yet elderly and/or housebound people seem to survive in Rotterdam and Espoo. Unless the Daily Mail has a specific reason to suspect that elderly people in Amersham are somehow stupider, or less flexible, or less able to learn than elderly people in Amsterdam, I don’t understand the problem.

Of course, the Daily Mail could always step in to ameliorate these desperate circumstances. Cheques aren’t being outlawed in 2018, but cheque clearing is going to stop. If Associated Newspapers wants to apply for a Payment Institution (PI) licence and operate its own cheque system, then good luck to them. I truly hope that they can do this and make a profitable business out of it, because I am genuinely in favour of choice. The merit of this plan is evident: people who want to keep on using cheques can pay for them. I should say, by the way, that this won’t predominantly be pensioners and their domestic staff, but small businesses.

Obviously mobile payments will be huge. But from my perspective, it is easy to get caught up in what the 5-10% first movers are doing and forget that less than 30% of all small businesses accept any form of electronic payment.

[From PYMNTS Innovator: Checks are Checking Out – Will that be Cash, Credit or Mobile? –]

This is one of the reasons why I spent my time at PayPal X looking at the SME solutions rather than some of the “sexier” new technology thangs like set-top box payments. I’m not negative about this at all – a great many small businesses are moving to electronic payments (I bought my wife some jewellery from a stall at a charity fair last weekend and the lady happily accepted my credit card using her rented GPRS terminal – she told me it cost her £27 per month plus a per-transaction fee and that she was delighted with it) and I don’t doubt the trend will accelerate as mobile payments grow and their convenience overtakes the conservative inertia around cheque payments.

Even in the cheque’s last redoubt, the United States, its position is being eroded. All new federal benefit recipients will be switched to electronic transfer from May of this year and all existing cheque recipients will be switched to electronic transfer by 2013. These moves will save the government more than $100m per annum. And there are plenty of other problems with cheques aside from the cost (which, to be fair, has been substantially reduced because of Check21). Here’s noted computer scientist Don Knuth, reflecting on some bank fraud problems that arise from the fact that account details are printed on the face of cheques.

One consequence of this debacle is, alas, that I can no longer write checks to reward the people who discover errors in my books. The system that I’ve been using has worked well for almost forty years; but recently I have had to close three checking accounts, and the criminal attacks on those accounts have caused significant grief to my bankers… Instead of writing personal checks, I’ll write personal certificates of deposit to each awardee’s account at the Bank of San Serriffe, which is an offshore institution that has branches in Blefuscu and Elbonia on the planet Pincus.

[From Knuth: Recent News]

The switch is underway from checks as well as cheques. The primary beneficiary of the switch will, I think, more likely be the prepaid card industry rather than the Bank of San Serriffe, because the economics of banking mean that providing what used to be known as “basic bank accounts” to most of these welfare recipients makes no sense, and I expect the increase in volume to bring more players, and more competition, and therefore better products to the sector. Now, let me be clear in saying that I am not shilling for the prepaid boys here. There are plenty of things wrong with the prepaid proposition (and I’ll be writing more about this shortly). But as prepaid evolves to the mobile, TV and other platforms, it provides the natural route to cheque eradication, and even Joan Bakewell will get used to it.


I really enjoyed the first Finovate Europe in London. We had an excellent couple of days, because we had BarCampBankLondon the day before (I’ll write something about it later), and lots of folk came in for that too.

Although it was in London, three of the UK’s four biggest banks had just one person at the event. Three of the others didn’t send anyone at all. Barclaycard and Santander sent six each. Hmmm. Perhaps the others are just being careful with taxpayers’ money. I wish the head of eBusiness from my bank had been there.

[From Some Observations From Finovate Europe | Forrester Blogs]

To be completely honest, I was looking at most of the presentations in horribly mercenary terms: asking only which of our clients might be able to exploit this? As a consequence, I wasn’t really grabbed by what one of my fellow delegates called the “wheelspinning” around personal financial management (looking at pie charts of your overdraft and that sort of thing). Our space is the secure electronic transaction space, so I enjoyed the presentations from our friends at SecureKey and VoiceCommerce. It’s that kind of thing that is hot, I think. I’m going to find out more about Miicard as well.

I liked the StockTwits presentation, which probably combined innovation in technology and innovation in business model in the most interesting way, targeting a specific niche in an engaging way. There’s a lesson for me here: if I used Twitter for something more than moaning about South West Trains, I could have been a contender. Boku were great and so were Ixaris: I understand what they are trying to do in payments and I’m sure that both of them will succeed. None of my picks made it in to the delegate’s top three in the final vote, but I’m happy to stand alone.

All things considered it was a super day, an excellent opportunity to connect with clients and colleagues, and an energising look around the space. Jim and all of the chaps should be very happy with it.

The presentation that I probably thought about the most after the event, though, was the one from Fidor Bank. They have integrated a variety of alternative currencies into their online banking platform. These are presumably attractive to German consumers fleeing the euro, with folks memories of hyperinflation pushing them toward non-fiat stores of value.

The partnership will enable Fidor’s customers to buy gold, silver, platinum and palladium without completing any GoldMoney application forms. Orders will be processed daily through the FidorPay Account at the bank and then placed with GoldMoney through an ‘Omnibus-Holding’ in the name of Fidor.

[From Finextra: Germany’s Fidor Bank to offer retail access to precious metals via GoldMoney]

If you want to find out more about GoldMoney, forum friend James Turk, their CEO, will be at this year’s Digital Money Forum. Although only precious metals are live at the moment, Fidor are planning to integrate virtual currencies the future. I didn’t get a chance to talk to them to find out what the mechanism for this is: as far as I know there’s no API for accessing your Everquest platinum (or, literally, a payments wizard) so it would have to be done using screen scraping with usernames and passwords, just as it is for other services with no security (eg, banking).

I’m naturally fascinated to see how customers respond to this. If you can shift from euros to gold to World of Warcraft gold in a simple and friction free way, then we might see some interesting markets emerging.

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