Tuesday, 31 May 2016

Identity and inclusion, an ongoing case study

America is a strange country to foreigner such as myself. And one thing that is particularly strange about it is the constant demand for identification in a society that lacks an identity infrastructure. The most obvious manifestation of this, as I’ve written before, is that when I am asked for identification (in order to get into a building in America, for example) I can present documents that the security guard cannot conceivably verify or validate (e.g., my UK driving licence) or documents that are not identity documents at all (e.g., my expired building pass for our office in New York) and gain entry. This is, as is often remarked, security theatre not security. It’s like a play about security where we all say our lines and play our parts but there’s no actual security involved at all. When it comes to identity, there’s definitely something odd about America.

Buying an assault rifle is easy. You need not show formal identification… Opening even the most basic bank account is far more arduous. The process begins with a rigorous ID check…

From It’s easier to buy an assault weapon than open a bank account. Really. - The Washington Post

Now, I don’t want to get into the madness of KYC/AML here as that’s not the point I want to make, although I will flag up the fact that America has something in the region of a hundred million unbanked people. The point I’m making here is that I don’t understand why we can’t implement a universal risk-based approach for “small” accounts in order to get people into the financial system (not necessarily through a bank account, of course). In Europe, we have a very interesting case study unfolding in front of us right now.

When Anas Albasha arrived in Germany after fleeing Syria in late 2014, one of the first things he tried to do was open a bank account. “In Germany you need a bank account for everything,” he says.

From Without German bank accounts, refugees are stuck in limbo - FT.com

Indeed. Rich Germans might and people smugglers might well keep their cash in 500 euro notes, but poorer law-abiding Germans use debit cards and direct debits. If you don’t have an account, you have no access to the infrastructure of daily life. And, in my opinion, if you keep everyone out because one or two of them might be terrorists, then you don’t get to track, trace and monitor the terrorists anyway. Hence the German plan to give refugees a sort of provisional identity so that they can enter the financial system makes complete sense.

But it has been a struggle to persuade banks, which have to verify their customers’ identities, to open accounts for refugees. The heart of the problem is documentation. “Many refugees arrive in Germany without a passport or ID card; that’s just the way it is after the journeys they have been through,” says Katharina Stamm, an expert on migration law at the charity Diakonie.

From Without German bank accounts, refugees are stuck in limbo - FT.com

In September 2015, the Federal Financial Supervisory Authority (“BaFin”) relaxed the KYC requirements for refugees so that they could gain access to formal financial services.

With immediate effect and for a transition period, refugees will be able to open a basic account even if they cannot produce a document satisfying the passport and ID requirements in Germany.

From BaFin - News - BaFin makes opening bank accounts easier for refugees

Later last year, in October, the German government went further and passed a law requiring banks to offer these basic bank accounts to refugees. Unfortunately, and despite that law coming into effect in June of this year, "

Germany’s anti money laundering law still contains a clause that effectively requires a passport or ID card to open an account.

From Without German bank accounts, refugees are stuck in limbo - FT.com

Incidentally, we have the same problem here in the UK because the only ID document that refugees have is the Biometric Residence Permit (BRP) and many bank staff refuse to accept this as an ID document for opening an account. As the British Banking Association point out, “banks have to undertake thorough checks before opening accounts in order to comply with strict anti-money laundering rules”. Once again, as in Germany, it is AML rules trumping KYC rules. And I don’t want to point the finger as to the origin of the problematic AML rules, but the Centre for Financial Inclusion do note that it might be better for society to have people inside a system where they can be monitored and risk managed.

 

Lower [KYC] requirements also means that governments concerned with international security (particularly the U.S.) must determine how they will mitigate the risk of new financial services innovations.

From Financial Inclusion and Immigration in Europe – Disrupting Identity Norms | Center for Financial Inclusion blog

 

I’m in Ivory Coast for the International Finance Corporation (IFC) and MasterCard Foundation conference on “Partnership for Financial Inclusion”. I’m here to talk about risk management (and how “fintech” and “regtech” can help) but I’ll definitely be hoping to learn more about the relationship between identity and inclusion from the experts here. 


Saturday, 28 May 2016

Putting "identity" on the "blockchain". Part 3: Define the transactions

Now onto part three of our week of thinking out loud about putting identity on the blockchain. In part one we found a problem that could be solved using some kind of identity infrastructure. In part two we came up with a model of digital identity that we could use to explore a potential solution to this problem. Now, we are going to think about how that model could connect with some kind of shared ledger in general and with a blockchain or, indeed, the blockchain.

Our starting point is to observe, as my colleague StevePannifer said in his presentation at the Cloud Identity Summit in New Orleans this week, a ledger is a record of transactions. Therefore, we must think about the identity transactions implied by the model that we looked at in part two before we start to think about how to store them in a shared ledger. We start by observing that identity transactions are the “CRUD” (that is the Creation, Reading, Updating and Deleting) of identities. Since our model includes three kinds of identities it admits the possibility of three distinct sets of CRUD transactions that might be stored in the shared ledger as shown in the picture below.

 3D Domain ID Blockchain

The first category relates to the mundane identity CRUD of people, things and organisations. We could take some physical characteristic of these such as a fingerprint, a photograph or a serial number and store these in a shared ledger. This may be a good thing to do, but my first thought about this is that actually we probably want to avoid storing such things in the ledger or at the very minimum storing them in unencrypted form. I have to spend some time thinking this through, but it’s not immediately obvious to me that storing the binding between the digital identity and the mundane identity on the ledger moves us forwards.

The second category relates to the digital identity CRUD. Remember from part two that I am imagining the digital identity as being, essentially, a key pair. We need to store the private key somewhere safe and provide an authentication mechanism so that control over the digital identity can be asserted. Then we need to provide the public key for a variety of uses. Now, a key pair sounds very much like a wallet on a block chain and it is certainly a plausible hypothesis that this could be an implementation of digital identity. However it suffers from the same general category of problem as does cryptocurrency, which is the problem of the storage and protection of the private key. Either you have to look after the private key yourself, which is a degree of responsibility that I for one am most unwilling to accept, or you have to trust somebody else to look after the private key for you (e.g. your bank).

In practice, this would mean that the key pair is held by some third-party and while the idea of having sovereign control of your digital identity in some sort of blockchain is an appealing prospect if you are a 20-year-old computer science major MIT, I remain unconvinced that is a mass-market solution especially in developing countries. Here, I feel that the example of M-PESA (as we were discussing on Twitter yesterday) is illustrative. M-PESA, which was launched remember by a telco not by a bank, stores cryptographic keys in the tamper-resistant SIM in a mobile phone and this strikes me as being the plausible mass-market solution. In an M-PESA-like system, the SIM generates the key pair and gives up the public key but the private key is never disclosed. Uunfortunately this means that if you lose your SIM you may have messages that you can no longer read so we need a more sophisticated mechanism for a workable mass-market infrastructure! 

The third category relates to the virtual identity CRUD. Remember in the model that I sketched out in part two, I made the assumption that all transactions are between virtual identities. Now the transactions associated with a virtual identity, if they were to be stored in a shared ledger, would then provide a record of that virtual identity’s activities. Those virtual identities need not identify the binding between the digital identity and the mundane identity. So, I could have a digital identity that I use for work and one for home and one for play. I use my play identity to obtain an adult identity from some grown-up website and that identity might well contain attributes that it has obtained from other credentials (that I am over 18, for example) but not my name.

Then the history of that virtual identity is in effect a kind of reputation. If you ask me for my reputation on some sharing economy platform, I can point you to a entry in the shared ledger. This gives you a public key. You can do two things with this key right away. First of all, you can use it to encrypt a challenge for me (because in order to answer the challenge I must have control over the corresponding private key). Secondly, you can look through the ledger to find transactions associated with that public key (to find out, for example, when the virtual identity was created) and whether is has been deleted.

You can also check the digital signature on the virtual identity to confirm who created it (i.e., was it really Barclays Bank or AirBnB or whoever).

 The ability to check the reputation of a counterparty in this way seems to me to one of the fundamental benefits of such an identity infrastructure and central to a functioning online economy.

If I find a seller labelled as John Doe, I really have no interest in discovering their underlying identity: that takes time and effort. If there are positive comments about them from people whose opinion I value then I will do business with John Doe. If there are negative comments, then I won’t. And it won’t matter to me whether John Doe has badge from the local council, the government or some other body’s approval. My decision will be based not on what anyone thinks, but on what everyone thinks.

This comes from an article I wrote for “The Guardian” a fair few years ago (“Reputation not Regulation”, 2nd Nov. 2000, sadly longer online but  you can download a PDF here). On this, I don’t think my opinion has changed much. The ideas that I was putting forward back then we constructed to support economic activity with both security and privacy as priorities. If anything, my views about building security and privacy into the identity infrastructure have become more entrenched since then.

In the model we’ve been building up this week, then, reputation can be interpreted as the history of a virtual identity, the complete list of “CRUD” transactions stored in the shared ledger. Does this seem like a reasonable model to proceed? If so, tomorrow I’ll think out loud about how to implement the shared ledger for identity.

What the European Parliament vote on cryptocurrency regulation really means

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Yesterday it was reported that members of the European Parliament voted in favour of creating a cryptocurrency "watchdog" to combat money laundering and terrorist financing.

This is misleading. In fact two parallel initiatives have been conflated in the press announcement: one is the creation of a Virtual Currency Task Force, and the other is the inclusion of virtual currency exchanges within the ambit of the European Anti-Money Laundering Directive.

From What the European Parliament vote on cryptocurrency regulation really means

Indeed. Along with many other people I gave evidence to the European Parliament in their hearings on this subject, and I agree with Si├ón Jones, of the European Digital Currency and Blockchain Technology Forum, one of the other people who gave evidence and who is quoted in that article as saying "why would you say that casinos have to have all these things, or estate agents, but not virtual currency exchanges"? 

Fraudsters posing as HMRC hijack iTunes :: Contractor UK

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A taxpayer who bought and handed over £15,000 in Apple iTunes gift card vouchers is one of “hundreds” of HMRC customers to be defrauded in the past month, a scam bulletin says.

From Fraudsters posing as HMRC hijack iTunes :: Contractor UK

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Thursday, 26 May 2016

CVS Pharmacy Says "So Long, Long Receipts," Announces Arrival of Digital Receipts for Customers | CVS Health

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CVS Pharmacy today announced the company will launch digital receipts as a new option for all members of its ExtraCare Rewards program. The new option for digital receipts will roll out in early June and eventually be available in 7,900 retail locations. Customers will have the opportunity to opt-out of receiving paper receipts for all in-store purchases when completing their transactions in the front of the store. Once the one-time process is completed, customers will receive receipts digitally, along with their coupons and rewards, each time they shop at CVS Pharmacy.

From CVS Pharmacy Says "So Long, Long Receipts," Announces Arrival of Digital Receipts for Customers | CVS Health

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In-app in-app in-app

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the primary way most Americans are currently experiencing the great fintech boom isn’t through Apple or Android Pay at all, but through proprietary payment apps from chains such as Target, Walmart, and Starbucks

From What The Mark Of The Beast Taught Me About The Future Of Money - BuzzFeed News

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In strategic terms, my strawman assumption is that retailers are going to get rid of payments at POS and shift to payments inside their own apps, apps that they use to deliver better customer services. Or, in the bumper-sticker version, “we’re going from check-out to check-in”.

Tesco's move makes it the latest grocer to develop its own technology to bypass the costly Android and Apple systems. Sainsbury's for instance is trialling its SmartShop app which allows users to create their own shopping lists, navigate stores and make payments at dedicated kiosks, while Walmart has launched its own system in the US to expand customer payment options and increase the speed of checkouts in its stores.

From Tesco takes on Apple with own mobile payment system - IGD Retail Analysis

A Comscore survey in April 2016 found that 55% of American consumers would be happy to have four or more retailer apps on their phone. Now, I don’t remember the figures exactly, and a quick search on my laptop can’t find them, but I remember something I looked at for a UK client a couple of years ago where it turned out that something like 90% of household disposable income in the UK goes to five retailers per household. In my house, for example, a Waitrose app, a BP app, a Martins’ the newsagent app, a Boots app and a Tesco Metro app would pretty much take care of things.

In the in-app vision of the future, consumers wouldn’t have hundreds of apps for every retailer. For the retailers they visit frequently (e.g., Starbucks) they will have the retailer app and use it. In other cases they will just use their bank app or some third-party payment app (e.g., Venmo). Actually, Venmo is a good example, since they have already made it plain that they see in-app payments are the future.

[Venmo] noted that it just doesn’t have the resources to support the API anymore, as it’s too busy working on its new peer-to-peer platform and its in-app payment service

From Mobile App Reviews: Venmo Kills Off API for New Developers

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Apple CEO Tim Cook explains the benefits of Apple Pay in apps.

From For Apple Pay, the future is apps - Quartz

So I’m hardly reading the tea leaves by saying that tap and paying with mobile phones may not, in the great scheme of things, be that important.

Dutch to abolish cash payments for public transport | International Railway Journal

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Public transport companies in the Netherlands are planning to abolish cash payment for bus and tram tickets, following a significant rise in robberies. By 2018 it will only be possible to pay for travel using the national OV Chipkaart contactless smartcard, a smartphone, or a contactless bank card.

From Dutch to abolish cash payments for public transport | International Railway Journal

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Eliminating cash payments will require significant investment - each tram and bus will need to be equipped with a payment terminal at an estimated cost of €1500 per vehicle.

From Dutch to abolish cash payments for public transport | International Railway Journal

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Wednesday, 25 May 2016

Cash Is King: Swiss Defend Huge 1,000-Franc Bank Note - ABC News

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the government said authorities know of no money laundering cases in which the huge bill was a relevant factor

From Cash Is King: Swiss Defend Huge 1,000-Franc Bank Note - ABC News

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Should Faster Payments Be, Well, Slower? | Bank Think

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Will instant payments exacerbate existing societal problems? Will they place already vulnerable people in harm's way? And if so, whose problem is this to address: the bank, the regulator, the operator of a scheme? Or perhaps the onus falls squarely on the consumer alone?

From Should Faster Payments Be, Well, Slower? | Bank Think

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Banks dump small businesses, charities and fintech firms to save on red tape costs

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This puts the FCA in a difficult position as it wants Britain to be “a hostile sector for money launderers” but also to ensure “the unintended consequences of anti-money laundering (AML) regulation are minimised.”

From Banks dump small businesses, charities and fintech firms to save on red tape costs

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Banks dump small businesses, charities and fintech firms to save on red tape costs

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British banks are increasingly willing to scrap the accounts of charities, small businesses and fintech firms in a bid to cut the cost of regulatory compliance and anti-money laundering controls, according to a report commissioned by the Financial Conduct Authority.

From Banks dump small businesses, charities and fintech firms to save on red tape costs

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What The Mark Of The Beast Taught Me About The Future Of Money - BuzzFeed News

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Paying by phone was commonplace [in Stockholm], and I didn’t even get a weird look when I scanned a QR code at a grocery store checkout and wordlessly strolled away with my basket of smoked meats.

From What The Mark Of The Beast Taught Me About The Future Of Money - BuzzFeed News

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What The Mark Of The Beast Taught Me About The Future Of Money - BuzzFeed News

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M-Pesa has effectively invented a new form of credit that’s based on a history of reliable transactions from phone to phone

From What The Mark Of The Beast Taught Me About The Future Of Money - BuzzFeed News

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Tuesday, 24 May 2016

POST War by another means

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A political battle between the UN-recognised Tripoli government led by Fayez Sarraj and the Tobruk-based parliament loyal to General Khalifa Haftar in the east has led to parallel splits in the country’s financial institutions, with two central banks threatening to circulate rival Libyan dinar banknotes in the country.

From Battle of the banknotes as rival currencies are set to be issued in Libya | World news | The Guardian

Apparently there’s going to be one lot of good old British-sourced banknotes and another lot of dastardly Russian-sourced banknotes duking it out across the desert. Fascinatingly, while I was reading this piece, Benjamin Cohen’s “Currency Power” was on my bedside table!

The rise of APIs | TechCrunch

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Releasing software as an API allows those companies to pursue a number of different adoption routes. Rather than trying to sell specific industry verticals or use cases, often the customer is a developer, leading to an extremely low-friction sales process.

From The rise of APIs | TechCrunch

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Friday, 20 May 2016

Why M-Pesa is a successful story in Kenya | News24 Nigeria

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Dr Francis Wangusi, Director General of the Communications Authority of Kenya, said… “The requirements for opening a bank account were and still are stringent and unfavourable to low income earners".

From Why M-Pesa is a successful story in Kenya | News24 Nigeria

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Registration was very simple and the costs were cheap. Also unlike traditional banks, there were many access points called "agents" all over the country.

From Why M-Pesa is a successful story in Kenya | News24 Nigeria

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Contactless cards are on borrowed time - they're just an interim for phones

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In the UK, the proportion is two-thirds. Here, around 59pc of smartphones run on Android, while another 35pc are iPhones, according to Kantar Worldpanel ComTech, both of which offer m-pay options. Mobile payments are going to be far more ubiquitous than their plastic counterparts, relegating contactless cards to being an offline backup in dire phone battery situations. 

From Contactless cards are on borrowed time - they're just an interim for phones

Actually, if the smartphones implement the standard properly (Apple don’t) then you should be able to use to your phone to pay even when the battery is dead because the microchips that do the payments get their energy from the electro-magnetic field of the reader, just as the microchips in a contactless card do.

Wednesday, 18 May 2016

Porn is a serious issue, and so is identity | Consult Hyperion

Back in 2014, I wrote about how stupid the idea of making people very their age with credit cards for access to adult content.

Forcing people to give their credit card details out willy-nilly will inevitably leading to an explosion in card fraud,

From Porn is a serious issue, and so is identity | Consult Hyperion

So things like the Ashley Madison data leak were entirely predictable. Entirely predicted, in fact.

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At the seminar Helen said the “The gap between real-world identity and online identity is at the root of [the problem of cyberbullying]”. So let’s close that gap. Not by requiring (and policing) “real” names, but by implementing pseudonymity correctly.

From We can contribute to childhood e-safety | Consult Hyperion

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On Blockchain Disillusionment and Bitcoin's Big Bad Wolves - CoinDesk

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The idea that permissioned blockchain startups are now up against substantial challenges can be seen in the shifting strategies at startups R3 and Digital Asset Holdings.

Greenspan noted that both are working less on distributed ledgers, and more on "contract description languages".

From On Blockchain Disillusionment and Bitcoin's Big Bad Wolves - CoinDesk

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Introducing the Digital Asset Modeling Language - Digital Asset

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unlike Smart Contract platforms, agreements written using DAML do not need to be shared across multiple, often completely public, nodes in a network. Parties do not need to reveal the terms of their agreement to any undesirable third parties and it can be safely processed and authorized by only the relevant participants. All data is revealed on a need to know basis and even the distributed ledger, which only contains references to the agreement, is encrypted so other entities cannot detect even its existence on the ledger, let alone the terms.

From Introducing the Digital Asset Modeling Language - Digital Asset

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Mobile enewsletter

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Tencent would want to hope most WeChat users aren't like Cai Jiami. The 31-year-old hastily transferred the balance in her WeChat "wallet" – roughly 7,000 yuan ($1070) – to her personal bank account before the Tencent-backed mobile messaging app could charge her for doing so. "It's not a lot of money but I just don't like to be charged," Jiami, a wedding planner based in China's southwestern Chengdu city, told CNBC. "I have Alipay on my phone, which is free and working well. Why would I waste money on WeChat?" From March 1 WeChat will charge users a fee of 0.1 percent when they transfer money from the app's built-in digital wallet to their personal bank account. According to an announcement by Tencent, the charge will be levied on withdrawals of more than 1,000 yuan ($153), with the minimum fee per transfer set at 0.1 yuan. WeChat also said it would scrap an existing monthly charge on large cash transfers; it currently charges users a 0.1 percent fee on total monthly transfers in excess of 20,000 yuan ($3,058). The new policies are an attempt to cover WeChat's banking costs, as well as to keep users' money in the WeChat Wallet, according to analysts.

From Mobile enewsletter

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Monday, 16 May 2016

Money20/20 Europe: Android Pay Handsfree is Easier Than Tapping

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A trial in the Bay Area involving 50 small businesses and 50  McDonald’s restaurants is allowing Google to hide payments in the background of retail transactions. It’s called Handsfree, it was announced at Google’s developer conference last month, and while this technology is admittedly in its “early days” as Spinnell puts it, it’s indicative of a future we’re heading toward where your identity matters more than your phone.

From Money20/20 Europe: Android Pay Handsfree is Easier Than Tapping

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Sunday, 15 May 2016

Researchers can accurately identify people using their brain waves

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Future applications of this technology will in all probability not be used to unlock smartphones, thought that cannot be ruled out. The group behind the work sees loads of potential for it when it comes to high-security settings, where a restricted number of authorized users need ultra high-level access.

From Researchers can accurately identify people using their brain waves

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Friday, 13 May 2016

Local Government Approves ‘Covert’ Spying On Citizen 'Mischief'

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A Scottish Council has given local government workers the power to create fake Facebook accounts, befriend citizens and spy on them for the prevention of “disorder” and “perceived mischief”.

From Local Government Approves ‘Covert’ Spying On Citizen 'Mischief'

As I am very fond of repeating, yes in cyberspace no-one knows you’re a dog but on the other hand no-one knows you’re from the FBI either.

Wednesday, 11 May 2016

Payment competition and banking in a post-PSD2 world

I happened to be talking about APIs at a client event today, and got involved in a discussion about how the fintechs might begin to work with banks in the new world of PSD2 and mandatory APIs. This has been subject of great interest to me at the recent Money 2020 Europe (with top, top players like Shamir Karkal from BBCA and Alex Mifsud from Ixaris explaining why the move to APIs will mean a big shift in the delivery of banking services) and other recent events. Generally speaking, and this is a sweeping generalisation, I think there has been a shift in European bank thinking in recent times. They well understand that if they do nothing, then in the instant payments, API-centric, PSD2 world they stand to lose significant income. The outsourcing company Accenture, for example…

estimates that the new new breed of payment initiation service providers will erode 33% of online debit card transaction volumes and 10% of online credit card transaction volumes resulting in a total market share of 16% of online retail payment volume by 2020.

From Banks set to lose 43% of retail payments revenue under PSD2

So the Payment Initiation Service Providers (PISPs) stand to capitalise on the new arrangements (if the banks do nothing, of course). What kind of services might they provide? Well, an obvious example is integration with social media. If you look at the use of instant payment applications in the UK (PingIt and PayM) it is far less than the use of, for example, Venmo in the USA. And Venmo doesn’t deliver immediate settlement (it works through the debit card networks). In the last quarter of 2015, Venmo transferred $2.5 billion. In January 2016 alone it transferred $1 billion. So why is it so popular? It’s the integration with social media. Just over half the users are 18-24 and half the payments relate to food and drink sharing! On a US college campus, “I’ll Venmo you” has entered the lexicon. In the UK, “I’ll PingIt you” has not. Paym is growing steadily, but it is still only transferring about £12 million per month.

So now imagine, post-PSD2, a combination of the immediate availability of funds like PingIt and Paym with the social media integration of Venmo. It will be a wholly different payment experience. I’ll give you an obvious example. My wife and some of her friends are planning a weekend break in August. They do this through a Facebook chat group. But when it comes to settling up for hotels and air fares, everyone has to log out, e-mail everyone for their bank details and log in to home banking and set them up as payees, then make the payments. Then everyone else has to log in to their bank accounts to see if the money has arrived and that it is the right amount. In 2018, however, it will all be different. Facebook will be integrated with instant payments through APIs so that it can function as a PISP. When my wife gets a message to say that she owes her friend £100 for her air ticket, or £25 for her share of the dinner, or £10 for the tickets to a show, then she will put money into her return message just as she adds emoticons today. Under the hood, Facebook (which of course knows the bank account of the person you are sending a message to) will initiate an instant payment and within a second or so her friend will get a message to tell that the money has arrived. Remember, Facebook already do this is in the US through debit cards (like Venmo).

It’s not all about payments though. The other category of organisation with direct access to the bank account, the Account Initiation Service Providers (AISPs) also stand to benefit from bank inertia. The row about “screen scraping” in the US adumbrates similar pressure for bank strategies in Europe.

JP Morgan Chase CEO Jamie Dimon is incensed about fintech startups like Mint, Acorn and Bloom “scraping” his customers’ data

From Banking App Competition; Why OTT "Skinny Bundles" Fail | AdExchanger

I’m sure his experienced strategists will be quick to reassure him that third-party access to bank accounts (the data is the customers, not the banks, of course) ought to be seen to be an opportunity for JP Morgan Chase to develop some terrific new products and services. The reason why customers of JP Morgan Chase use Mint is because JP Morgan Chase do not provide a suitable, better product for them to use instead. Mr. Dimon, as a champion of free enterprise, would surely object to organisations building walled gardens and using regulatory barriers to defend them. If Facebook or Amazon provide a better financial services app for customers to manage their JP Morgan Chase accounts, then good for them.

In fact, it seems to me, that this is a very likely outcome of rational market evolution. I buy my electricity from whichever supplier offers the best deal for our household. When I change suppliers, I don’t need to change my TV. When I change banks, why should I change my digital wallet if I don’t want to? With a standard API, might personal finance management (PFM) app and my wallet app and my social networks will all access my bank account, whatever my bank. And if I change banks, whatever.

So… what makes sense for banks? Why bother making the wallet or PFM apps? Why not instead provide the best possible API to people who are better at making these apps. Why bother with PingIt and PayM? Why not instead provide the best possible API for PISPs to use. Why bother with fancy applications at all? Why not instead provide the identification and authentication services that all of these other apps will depend on. After all, if I’m going to give Facebook access to my bank account then Facebook need to be pretty sure that it’s actually me and I need to be pretty sure that it’s actually Facebook.

 

Saturday, 7 May 2016

Woman Gets 3 Years for Role in $200M Credit Card Fraud Scam - ABC News

The rigorous KYC procedures at US banks

the New Jersey-based crime ring created more than 7,000 fake identities to get tens of thousands of credit cards

From Woman Gets 3 Years for Role in $200M Credit Card Fraud Scam - ABC News

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Friday, 6 May 2016

The 'worthless' 100 trillion dollar bank note - CNN.com

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The U.S. dollar is the preferred currency in Zimbabwe at present, but others are welcome. "We are saying that since you can import/export goods from South Africa you can use the rand. If you are importing from China you can use the yuan. The U.S. dollar is our reserve currency," explained Mangudya.

Implementing cashless systems in Africa 04:03 Zimbabwe seems years away from reintroducing its own currency. In the meantime, it has coins called bonds. For each coin in circulation there's an equivalent U.S. dollar coin held in reserves. There are over $13 million worth of these coins in the country, CNN was told, but recently banks have started printing "bond notes" representing U.S. dollar values up to $20, due to a cash shortage.

From The 'worthless' 100 trillion dollar bank note - CNN.com

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What is The Next Big Thing in Payments? | Let's Talk Payments

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According to some other forecasts, wearable payment transaction volume will grow from $3.1 billion in 2015 to $501.1 billion worldwide by 2020. By that time, wearable payments will represent approximately 20% of the total mobile proximity transaction volume and about 1% of total cashless transactions in retail.

From What is The Next Big Thing in Payments? | Let's Talk Payments

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Bitcoin and the costs of consumption - Dr. Craig Wright BlogDr. Craig Wright Blog

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The mining of bitcoin is a security service that alone creates no wealth

From Bitcoin and the costs of consumption - Dr. Craig Wright

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Thursday, 5 May 2016

ECB ends production and issuance of €500 banknote

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ECB has decided to discontinue production and issuance of €500 banknote

From ECB ends production and issuance of €500 banknote

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POST Whatever bitcoin is, it isn't money

My good friend Wendy Goodman was kind enough to write about her experiences at Tomorrow’s Transactions this year (our 19th annual Forum!!) referring to it as

Tomorrow's Transactions Forum, Dave Birch's quirky annual event where ideas about the future of money are smashed together like particles to see what happens.

From net.wars: The blockchain menu

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Monday, 2 May 2016

First and last central banks

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there is no reason why, in principle, central banks could not offer online digital money accounts for the public

From MacroMania: Monetary policy implications of blockchain technology

This is, essentially, what the first central bank did. The Bank of Amsterdam (the Amsterdamsche Wisselbank, founded in 1609) was, essentially, a municipal bank that provided a reliable and trusted payment mechanism. It did not lend money: it was there to make account-to-account ledger transfers. It had an important difference to previous experiments in the same direction: legal restrictions on settlement outside of the bank. The Amsterdam merchants were forced to open accounts there because of the law demanding that commercial payments had to be through the bank. They could deposit all sorts of different coins to credit their accounts and then make payments by instructing account-to-account transfers. The result was that Amsterdam supported a vibrant commercial marketplace with access to safe, efficient and cost-effective payments. This in turn supported the evolution of the Amsterdam bourse and helped to make the Netherlands rich.

So we are back the “big problem of small change”. How can private companies provide a circulating medium of exchange and still make a profit on it? It’s possible that they can because of new business models. But suppose they can’t? Suppose it falls to the central banks to provide the digital money for everyday use. As we discussed before, one of the objections to this 

Sunday, 1 May 2016

Turkey launches national payments system

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Turkey has gone live with its own card payment system, dubbed Troy, as it seeks to boost electronic money and usher in a cashless society by 2023.

From Turkey launches national payments system

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'Banking as a Service' for Fintechs Seeking Scale | American Banker

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solarisBank, formed by the fintech startup incubator FinLeap, announced it had been granted a banking license by regulators in Germany, enabling it to offer fintech companies things like account and transaction services, compliance and trust solutions, working capital financing and online loans. It is essentially banking as a service

From 'Banking as a Service' for Fintechs Seeking Scale | American Banker

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What Airbnb’s blockchain proposal means for privacy

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the company’s co-founder and chief technology officer revealed that in 2016 Airbnb would be looking into blockchain integration, or a similar distributed ledger system, to authenticate a user’s reputation and establish trust on the platform.

From What Airbnb’s blockchain proposal means for privacy

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