Living abroad, with tokens
Living abroad, with tokens.
I have just completed a three-month stint building our business in Australia, and expect to return for a similar period in the near future. How were payments, for me? The first thing to note (to coin a phrase) is that I used no cash whatsoever and don’t recall seeing anyone else either. All retail payments, including transport payments (don’t knock commuting if you’ve never travelled to work on the Manly ferry), were via my Apple Watch, so no PINs, either. (Australia is online PIN, so if you do use an old-fashioned card, you’re unlikely to ever have to insert it into a reader.)
Of course, virtual cards, as wielded by (for example) Apple Pay and Google Pay, present tokens (Device PANs) as an alias for the Primary Account Number (PAN). This ensures that the issuer is able to block fraudulent transactions that could present the Device PAN from somewhere other than the relevant wallet (for example, during a standard e-commerce checkout).
Living and working abroad for three months requires payments for things beyond the usual touristic or business travel items—for example, rent and utility bills. Credit cards are not particularly well suited to many of these payments, with the requirement for recurring (and, sometimes, variable) payments, returnable deposits and so forth. Further, in Australia, it is standard practice for credit card payments for these kind of transactions to attract hefty surcharges. And, of course, forex charges and spreads apply.
What would have been better, would have been to have an Australian bank account and use all the domestic money transfer facilities. The trouble was, I didn’t have much idea of eligibility criteria (such as long-term residency) or how long KYC checks would take (especially without an Australian Tax File Number or driving licence, etc). Fortunately, there is a partial solution.
A number of fintechs (I used Wise) enable you to set up an account in your home country and then create (or have created, automatically) linked accounts in many other countries. Thus, I acquired an Australian BSB (Bank-State-Branch, equivalent to UK Sort Code or US/CAN Routing Number) and Account Number, exactly as any long-term resident.
In essence, the BSB/Account Number combination is a token representing my (UK-based) relationship with Wise. Just like a Device PAN, it enables a class of transactions, using a convenient digital representation; and also limits the scope of transactions; e.g. preventing anyone misusing the token from raiding my Sterling or US dollar funds.
One current limitation is that I cannot use the Australian bank details to set up a further level of indirection, that is, to use an Australian PayID, which would enable me to use a convenient handle, such as my mobile number, in place of hard-to-remember bank details (and, in fact, enable account portability). As well as providing more convenience, like other forms of token, this improves security, by making it less likely that someone impersonating me, and requesting payment, can pass off bank details which they control.
It would be nice to go one further step, which would be to use PayTo, the service set up by Australian Payments Plus, using the New Payments Platform (NPP), to manage payment relationships via mobile apps provided by banks and fintechs. I hope Wise (and others) are working on that. Then, a digital nomad could truly fit in!
Finally, a related grouch: I was frustrated, on a number of occasions, by useful apps not being available to people, demonstrably present in the relevant country, with an Apple ID associated with a different country. One example was my mobile provider; the obvious way to top up an account would be via their app, on a phone carrying their SIM, one would have thought. It was not to be, unfortunately. The same issue occurred with a government app and a newspaper app. Conceivably, I could have created an additional Apple ID or temporarily changed my residence details on the existing Apple ID. You’ve got to me braver than me to do that!
CBDCs – wallets, liability and acceptance
CBDCs are everywhere – and nowhere. Everyone is discussing them, but almost no one is actually deploying them. Sure, this is in part due to the early stage thinking that is going into working out what is actually required but it’s also due to the tricky business of actually working out how they would be implemented. Developing a retail payment solution is a lot harder than creating a Central Bank backed payment instrument.
Will 2022 start to drive the future of Interoperability and Inclusion?
Our overriding theme of this year’s Live5 is interoperability which will lead to inclusion. Whether this is in payments or transit, identity or as a generalised trend what we’re seeing is a collapsing of the barriers between silos. In some areas this is happening more quickly than in others.
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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.
Point of Sale cyberattacks – is certification enough?
The biggest news in payments security in the last month concerns allegations that point of sale terminals supplied by PAX Technology have been subverted to have the capability of launching cyberattacks. Details of the allegations can be found at Krebs and Bloomberg; in response, PAX Technology has published a rebuttal.
QR – codes the comeback (they never really went away)
Payments are hard. That’s why the world’s leading payment organisations come to us.
CONSULT HYPERION ANNOUNCES NEW BOARDROOM APPOINTMENTS TO DRIVE NEXT PHASE OF GROWTH
The changing face of payments
EMV is at the heart of global payment card processing. As a specification it governs the processing of billions of transactions globally, with the vast majority of those flowing through the international payment schemes. As a technology it has been incredibly successful, reducing fraud levels everywhere it’s been introduced and its extension into contactless payments is now the fastest growing area of face-to-face payments. The idea that EMV might soon be obsolescent seems far-fetched, to put it mildly, but there are reasons to believe that its hegemony is under threat.