Merchant Payments Ecosystem 2021

When we look forward to 2021, it is no surprise that COVID-19 is the dominant factor. So far as the merchant payments world is concerned, the shape of the post-pandemic new normal transaction environment must be the key strategic consideration for stakeholders and I am desperately keen to hear the variety of informed opinion on this topic that I have come to expect at Merchant Payments Ecosystem every year. At Consult Hyperion we like to contribute to these conversations by providing a useful framework for discussion: our annual “Live 5”, our yearly set of suggestions for strategic focus. This year, we choose to look at the key issue of pandemic transformation and its impact of on the three key domains where our clients operate: Payment, Identity and Transit, together with (as is traditional!) a suggestion as to a technology that the POS world may not be thinking about but probably should be.

Fintech South 2020 – Maintaining trust and safety in a digital world

At the (sadly, virtual) Fintech South event the year, I was asked to chair a discussion on identity and privacy with three extremely well-qualified experts who had informed perspectives on the state of, and trends in, those important pillars of a digital society. These were Adam Gunther (SVP, Digital Identity for Equifax), Andrew Gowasack (Co-Founder and President at TrustStamp) and Megan Heinze (President, Financial Institutions, North America for IDEMIA). It was great to talk to a group of people who were not only well-informed on these topics but had some passion for them too.

I won’t go over everything that was discussed, but I do want to pick up on a comment that was made in passing when I was chatting to the panelists: someone said that a guiding principle should be “no scary systems”. Hear hear! But what is a scary system? It is, in my opinion, a system that privileges security over privacy. This is not how we should be designing the identity systems for the 21st century!

Malware Wolves in Developer Sheep’s Clothing

internet screen security protection

When consumers install software on their devices, they often perform some sort of risk evaluation, even if they don’t consciously realise it.  They might consider who provides the software, whether it is from an app-store, what social media says, and whether they have seen any reviews.  But what if once a piece of software had been installed, the goalposts moved, and something that was a genuine software tool at the time of installation turned into a piece of malware overnight.

This is what happened to approximately 300,000 active users of Chrome ad blocking extension Nano Adblocker.  You see, at the beginning of October, the developer of Nano Adblocker sold it to another developer who promptly deployed malware into it that issued likes to hundreds of Instagram posts without user interaction.  There is some suspicion that it may have also been uploading session cookies.

Internet voting – challenging but necessary

i voted sticker lot

What did you think of the US election? I don’t mean the candidates and the outcome. What did you think of the election process? Should it be possible for national elections of this type to be done online? Last week the IET published a paper on internet voting in the UK, led by our good friend at the University of Surrey, Professor Steve Schneider. It’s well worth a read. As the paper explains, internet voting for statutory political elections is a uniquely challenging problem. Firstly voting systems have exacting requirements and secondly, the stakes are high with the threat of state level interference.

The best definition of Digital Identity

red lights in line on black surface

Our friends at Smartex challenged its readership to define Digital Identity the other day, with a bottle of wine on offer for the best definition. I’m pleased to say that the bottle of wine was won by Consult Hyperion, with a couple of competition entries submitted.

Coming up with a definition for digital identity is not easy. It can refer to quite a number of different things, making the task of encapsulating it in a sentence next to impossible. For my attempt I thought that rather than try to describe what it is, it would be better to describe what it does. I came up with this:

Digital identity allows us to trust each other by enabling us to share the minimum amount of verifiable information needed for the thing we want to do.

In one sentence I was trying to capture several points:

  • Digital identity is a means to an end not an end in itself
  • It’s bi-directional – in any transaction both parties need to have confidence in the other party
  • It’s about the information you need to share, which will vary considerably between contexts.
  • It protects privacy by only sharing the information (or claims) necessary.

DIACC announces launch of the Pan-Canadian Trust Framework

flag of canada

The Digital ID & Authentication Council of Canada (“DIACC”) announced the launch of the Pan-Canadian Trust FrameworkTM (“PCTF”) this week, a set of digital ID and authentication industry standards that will define how digital ID will roll out across Canada. Its launch marks the shift from the framework’s development into official operation and will begin alpha testing by public and private sector members in Canada. The alpha testing will inform the launch of DIACC’s PCTF Voila Verified Trustmark Assurance Program  (“Voila Verified”), set to launch next year. 

The tension in facial recognition

Facial recognition camera

The rise of facial recognition technology and the erosion of privacy

In the 2002 movie Minority Report, Tom Cruise’s character has his eyes surgically replaced so he can avoid being identified by the all-pervasive retina scanning system that the state uses to track people… and of course, uses to show targeted ads to people. This is a rather dystopian view of the broad application of biometrics technology.  However, judging by a lawsuit targeting Macy’s for their use of Clearview AI’s facial recognition technology in their stores, it seems that staying anonymous in the bricks and mortar world is becoming a little more like the movie. Whilst you may not require surgery, you may soon require something akin to glasses and a fake beard to avoid being tracked. The issue here is that Clearview AI has been scraping images from publicly viewable sources on the web for a while, enabling them to create a database of facial biometrics against which to match captured facial images. Amongst the sources of this data are Facebook, Twitter, LinkedIn, YouTube and Vimeo, with some of these companies having sent cease and desist letters to Clearview AI for breach of their terms of service.  The aim it seems is for Clearview AI to create a one-to-many facial recognition solution that can identify an individual from only an image of their face from anyone who is in a photo or video on the web.  Based on a report on Buzzfeed, they were working with over 2000 companies as of February 2020, and they are probably not alone, so perhaps we should be concerned.

Identity in Vegas

Identity, authentication and authorisation are amongst the hottest of hot topics in our world right now. Even if we put Apple and it’s new face recognition technology to one side, there’s no shortage of excitement at the intersection of biometrics and electronic transactions. Remember this from earlier in the year?

A UK supermarket has become the first in the world to let shoppers pay for groceries using just the veins in their fingertips.

From British supermarket offers ‘finger vein’ payment in worldwide first

As I wrote at the time, this came only a few weeks after people forwarded me a link from to Time Out, calling attention to a new payment mechanism using a new biometric identification technology to effect retail payments in a new way. The system, called Fingopay, uses a scanner at POS to recognise customers in pubs and bars by the pattern of veins in their finger and then charges a linked payment account. I did remark on the overuse of “new”, as the first time that Consult Hyperion blogged about this technology was more than a decade ago,  talking about mass market uses of biometrics and looking in the particular case study of Japanese banking, and it wasn’t new then! The technology has reappeared as a “new” solution to these same problems a great many times since then. It seems like every couple of years or so some stories about this new technology and new way to pay reappear. For example…

The BBC were kind enough to invite me on to their lunchtime “You and Yours” magazine programme to discuss this innovation. I think they were a tiny bit surprised, to be honest, when I told them that the technology was eight years old! I also told them, in the spirit of openness and integrity that is associated with the good name of Consult Hyperion throughout the civilised world, that we had been retained by Hitachi some years ago to carry out a study on the security of this product and its suitability for certain financial services applications.

From We’ll be giving Barclays the finger next year | Consult Hyperion

The truth is that the idea of using fingers instead of cards goes back a long way (I can remember Piggly Wiggly exploring it in 2004) and reappears with regularity. So what’s different this time? Well, for one thing, we now have open banking. With strong customer authentication (SCA), risk-based authentication at POS and standard APIs for third-party access to accounts, retailers and other will soon be able to process payments themselves by obtaining payment institution (PI) licences and obtaining consumer consent for access to their bank accounts. Thus, putting your finger on a reader in store and having the retailer instruct an immediate instant payment transfer from your account to the retailer account looks like a more promising model this time around.

It’s the combination of technology (convenient biometric authentication), business (non-bank third party services) and regulation (open access) that means that the payments world is going to see more change in this space in the next year than in the previous ten. Almost every payment conference in that decade has highlighted the “identity problem” yet no-one was going anything about it. Now we have mass market solutions just around the corner.

Anyway, all of this is a roundabout way of saying how excited I am to be chairing the Money2020 workshop “Identity is Fundamental” in Las Vegas next week. We’re going to be talking about the latest trends in identification technology, authentication in the mass market and much more. And we have a detailed case study from Canada, as we have Toronto Dominion and SecureKey talking about the Canadian banks’ ambitious project to fix the identity problem with, amongst other things, the blockchain. You’d be mad to miss it, so look forward to seeing you in the Titian Room on Level 2 of the Venetian next Wednesday at 8.30am. Oh, and if you want to say hi to me or any of the Consult Hyperion team in Las Vegas next week, just email, tweet or message me on LinkedIn.

Estonia, fake news and digital identity

Estonia. Land of saunas, shepherds and song festivals. I keep hearing about Estonia all of a sudden and not for any of these reasons but because of the blockchain. At meetings and conferences, I keep hearing people talking about the Estonian national identity scheme that uses a blockchain. Only this week, for example, in the Harvard Business Review, I read that…

“since 2007 Estonia has been operating a universal national digital identity scheme using blockchain.”

via Blockchain Will Help Us Prove Our Identities in a Digital World

I think this is a misinterpretation of the technical infrastructure of our neighbour to the north. The Estonian national digital identity scheme launched in 2002. Way back in 2007, my colleague Margaret Ford interviewed Mart Parve from the Estonian “Look@World” Foundation in Consult Hyperion’s long standing “Tomorrow’s Transactions” podcast series (available here). Mart was responsible for using the smart ID service (both online and offline) to help Estonia develop its e-society. If you listen carefully to them talking, you will notice that they never mention the blockchain, which is unsurprising since Satoshi’s Nakamoto’s paper on the subject was not published until October 2008. This only the most recent example of what I see to be a virulent strain of blockchainitis though.

Another Estonian outbreak of the same disease occurred just before Christmas when I was invited along to a blockchain breakfast (seriously) at the Mother of Parliaments.

After a while, the discussion moved on to the Estonian electronic identity system. I expressed some scepticism as to whether the Estonian electronic identity system was on a blockchain. The conversation continued. Then to my shame I lost it and began babbling “it’s not a blockchain” until the chairman, in an appropriate and gentlemanly manner, told me to shut up

From House of Blockchain | Consult Hyperion

As it happens, a few days ago I had breakfast with the new CIO of Estonia, Siim Sikkut. What a nice guy!

sikkut17

 

I asked him where this “Estonian blockchain ID” myth came from, since I find it absolutely baffling that this urban legend has obtained such traction.  He said that it might be something to do with people misunderstanding the use of hashes to protect the integrity of data in the Estonian system. Aha! Then I remembered something… More than decade ago I edited the book “Digital Identity Management” and Taarvi Martens (one of the architects of the Estonian scheme) was kind enough submit a case study for it. Here is an extract from that very case study:

Long-time validity of these [digitally-signed] documents is secured by logging of issued validity confirmations by the Validation Authority. This log is cryptographically secured by one-way hash-function and newspaper-publication to prevent back-dating and carefully backed up to preserve digital history of mankind.

Mystery solved! It looks as if the mention of the record of document hashes has triggered an inappropriate correlation amongst less technical observers and as Siim observed, it may indeed be the origin of the fake news about Estonia’s non-existent digital identity blockchain.

So there we have it as far as I can see. If there are any other crypto-sleuths out there with alternative theories, I’d love to hear from them.


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