Snippets

xxx The nine percent rise in UK card fraud over 2015, topped the previous peak set in 2008 after the introduction of chip and PIN. From Rise in online and mobile shopping drives card fraud transactions t... CNP fraud is now almost three-quarters of total card fraud, which is what you’d expect given the use of the chip and PIN.

xxx The PCI Security Standards Council, which comprises the five largest global credit card companies, is expected to green light the way Square captures PIN numbers through smartphones. From Square gets green light to take on banks with 'PIN on glass' mobile technology xxx

Well, that was fun. I was invited along to take part in the CSFI roundtable on “'Formal' digital cash: The currencies of the future?” along with Ben Dyson from the Bank of England and Hugh Halford-Thompson of BTL Group. The event, held at the London Capital Club, was hugely oversubscribed, which I took to be evidence of renewed City interest in the general topic of digital cash and the specific topic of digital currency. My good friend Andrew Hilton, long-stanfing captain of the good ship CSFI, framed the discussion in his invitation ask the basic “what if”. "What if some central bank issued a digital coin that was as widely accepted as a bank note? Or, if not a central bank, what if a group of banks or payments operators issued a similar digital coin?”. For me, the roundtable was both an opportunity to plug my new book (did I mention that I have a new book out by the way?) “Before Babylon, Beyond Bitcoin” and an opportunity to learn in the best possible way: by answerin...

David L. Yermack, the Albert Fingerhut Professor of Finance and Business Transformation at New York University Stern School of Business, wrote recently that: "Rather than printing greenbacks and circulating bills and notes, why doesn’t the Federal Reserve just put everything on a national blockchain and make all of the money electronic?   This is something that I think is probably going to happen. " "The Blockchain Is Going to Revolutionize Central Banking and Monetary Policy" - Well, I think it's probably going to happen too, but it depends what you mean by "national blockchain".

As my old friend Simon Leleiveldt points out... "One big difference between banks and payment institutions is that payment institutions are barred access from the RTGS-system of the ECB. The reasons is that the Settlement Finality Directive does not allow for PIs to become a direct member of designated systems. Even though already 5 years ago, the Dutch Ministry of Finance has made it clear that from a policy perspective the Settlement Finality Directive should change in this respect, no further action can be seen on the EU-level." Adyen: the new bank is not a bank any more xxx

20 years ago in June 1997 the Centre for the study of financial innovation published a report called the Internet and financial services. This report was the result of a series of working groups that had been set up to look at retail banking, personal finance, insurance, equity trading, regulation, payments, security and crime at the dawn of the Internet era. I was part of the team that created the input to the report (I was also part of the retail banking working group) and I’m eternally grateful to Andrew Hilton, the director of the centre, for having kicked off the process all the way back in 1996. I learned a lot from taking part in the working groups and from distilling input from a lot of different people in order to create input to the report. When I look at the things I wrote around that time, two things stand out to me. First of all, I was right about the likely impact of mobile phones because even in those far-off days with the first rudimentary SMS services in place, you co...

xxx Efforts by some Chinese cities to use facial recognition software to shame jaywalkers have been met with concerns that the practice may violate pedestrians’ privacy. From Privacy concerns as Chinese cities use facial recognition software to shame jaywalkers | Hong Kong Free Press HKFP xxx

xxx The futuristic store collects a shopper’s biometrics—most notably walking gait—as he or she scans the QR code and uses sensors on the shelves to detect removal of items. From Chinese store uses gait biometrics for payment | Planet Biometrics News xxx

xxx Most obviously, in using them to navigate, we become reliant on access to the network to accomplish ordinary goals. From A Sociology of the Smartphone xxx

xxx The smartphone as we know it is a complicated tangle of negotiations, compromises, hacks and forced fits, swaddled in a sleekly minimal envelope a few millimeters thick. From A Sociology of the Smartphone xxx

xxx Most of the artifacts we once used to convey identity are not long for this world, including among other things name cards, calling cards and business cards. Though more formal identity-authentication documents, notably driver’s licenses and passports, are among the few personal effects to have successfully resisted assimilation to the smartphone, it remains to be seen how much longer this is the case. From A Sociology of the Smartphone xxx

xxx Once each of the unremarkable acts we undertake in the course of the day—opening the front door, buying the groceries, hopping onto the bus—has been reconceived as a digital transaction, it tends to dematerialize. From A Sociology of the Smartphone xxx

xxx The smartphone is the signature artifact of our age. From A Sociology of the Smartphone xxx

xxx "The assassination of Caesar is part of the script of the play, which was written 418 years ago by William Shakespeare; the choice to depict the title character as akin to President Trump is part of a long history of productions of the play that have used the text to explore contemporary politics." (Via. Two Protesters Disrupt ‘Julius Caesar’ in Central Park - The New York Times ) xxx xxx As usual, the Guildford Shakespeare Company have produced a mind-blowing production. From  Review: Guildford Shakespeare Company's Julius Caesar - Essential Surrey xxx xxx To be in the audience for this production is to be very much part of the proceedings; From  Review of Julius Caesar - Guildford Shakespeare Company xxx xxx The audience are given placards and encouraged to chant their support for the dictator Caesar in a stage-managed rally where protestors are violently ejected. From  Julius Caesar review at Holy Trinity Church, Guildford xxx   xxx> ...

xxx "Most attacks require very little money, and terrorists tend to use a wide range of money-transfer and fundraising methods, many of which avoid the international financial system. Instead of continuing to look for needles in a haystack, governments should overhaul their approach to countering terrorist funding, shifting their focus" The Problem With the War on Terrorist Financing | Foreign Affairs xxx xxx "Most attacks require very little money, and terrorists tend to use a wide range of money-transfer and fundraising methods, many of which avoid the international financial system. Instead of continuing to look for needles in a haystack, governments should overhaul their approach to countering terrorist funding, shifting their focus" The Problem With the War on Terrorist Financing | Foreign Affairs xxx

xxx President George W. Bush signed Executive Order 13224 September 23, 2001… ‘Money is the lifeblood of terrorist operations,’ Bush said at the time. ‘We’re asking the world to stop payment.’ More than 15 years later, the war on terrorist financing has failed. Today, there are more terrorist organizations, with more money, than ever before" The Problem With the War on Terrorist Financing | Foreign Affairs xxx

xxx "A study of 1 million transactions in the United Kingdom found losses incurred through self-service technology payment systems totalled 3.97% of stock, compared to just 1.47% otherwise. " The economics of self-service checkouts xxx

xxx "According to a spokesman for Bank of Ireland, which operates the largest branch network in Ireland, just 3 per cent of customers’ total transactions are conducted over the counter today, with the rest taking place on mobile app, online banking and contact centres." Bank of Ireland to have 100 branches ‘cash free’ xxx

xxx "The Central Bank of Nigeria underscored the seriousness of this matter recently when it reported a N2.19 billion loss by the country’s commercial banks to e-fraud in the 2016 fiscal year. There were 19,531 recorded cases in 2016, compared with 10,743 in 2015. This is an 82 percent increase in e-fraud cases between 2015 and 2016. The figure may even be higher. The figure contained in the Nigeria Electronic Fraud Forum Annual Report unveiled last week by the CBN Governor, Godwin Emefiele, during a stakeholders’ workshop on cybercrime, showed different segments of the banks where the frauds were committed, and the value of losses recorded. A breakdown revealed that across the counter transactions accounted for the highest with a total value of N511.07 million. This was followed by Automated Teller Machine (ATM) transactions with N464.5m; Internet banking N320.66m and mobile banking transactions, N235.17m. Other losses came from e-commerce transactions, N132.25m; web transactio...

xxx "'You can't claim a machine is broken because you want it to be broken. Does that mean it wasn't inspected? Does it mean it wasn't maintained?,' Ripka told CNNMoney. 'And if so, does that mean that people that played there before [Bookman] had zero chance of winning?'" Woman sues casino that offered her steak dinner instead of $43 million jackpot - Jun. 15, 2017 This might actually be a genuine shared ledger use case. Think about it: the state of a gambling machine (the result of each “roll”) needs to be recorded. It needs to be recorded somewhere that is not under the control of the machine operator and it needs to be recorded somewhere that gambling regulators can access and than lawyers can discover. You could have every machine send its results into a big database somewhere, but then rival casinos would see how each others machines are doing. Consider an alternative scenario. After each roll, the machine state is encrypted using the r...

xxx “Almost 1 million UK bank customers will be forced to have to use new six-digit sort codes as the high street lenders implement rules intended to make the financial system safer, a Bank of England official has said… The change has been caused by the Vickers rules, which force banks to ringfence their high street operations from other banking activities.” Almost 1m UK bank customers will be forced to use new sort codes | Business | The Guardian It's time to put a stop to this yonks old nonsense about sort codes and account numbers and I think I know just the woman to do it: Andrea Leadsom , now Leader of the House of Commons, but formerly City Minister. I have to admit to had a very soft spot for her when she was Minister. In a letter to The Daily Telegraph back in September 2013, she noted that -- just as I had predicted -- the Current Account Switching Service (CASS) which launched that month was (I paraphrase) a bit of a waste of time and money. She then went on to say t...

xxx " There are people for whom money is an overwhelmingly dominant motivation, and who are primarily self-interested and opportunistic, but they are defective as human beings, and generally not suitable for employment in senior positions in complex organisations." The concept of the corporation - John Kay xxx

xxx "Analogous to the claims of Soviet leaders to represent the dictatorship of the proletariat, the rhetoric of shareholder value served to paper over the limited degree of executive accountability to anyone at all." The concept of the corporation - John Kay xxx

xxx "The development of corporations like GM as the dominant forces in a modern economy changed fundamentally the nature of power in society. " The concept of the corporation - John Kay xxx

xxx " Paulson used ‘synthetic collateralised debt obligations’—securities whose value depended on a package of subprime mortgages he had identified as particularly likely to fail. He then bought credit default swaps linked to these obligations." Gambling is a feature of capitalism—not a bug | Prospect Magazine xxx

xxx "The case of Carlill vs Carbolic Smoke Ball Company and the concept of insurable interest became important again when the Credit Default Swap was invented in the 1990s. This is a security which commits the institution underwriting the ‘swap’ to make a payment in the event of default on a specified loan. If you, as the purchaser of a CDS, had made the loan yourself, you were buying insurance. If you hadn’t—a ‘naked’ swap—you were simply betting that the borrower would fail to repay. " Gambling is a feature of capitalism—not a bug | Prospect Magazine xxx

xxx " insurance contracts were legally binding, but wagers were not. An English gambling debt was a debt in honour only, enforceable only by social convention—or private force. Such provision remained part of English law until 2005—only then did bets at William Hill become legally binding." Gambling is a feature of capitalism—not a bug | Prospect Magazine xxx

xxx "when regulators perceive insurance when they should see wagering, their actions magnify a crisis rather than minimise it. Such destabilising speculation, mischaracterised by regulatory authorities as prudent risk assessment, is what caused the global financial crisis of 2008." Gambling is a feature of capitalism - not a bug - John Kay xxx

xxx Once each of the unremarkable acts we undertake in the course of the day—opening the front door, buying the groceries, hopping onto the bus—has been reconceived as a digital transaction, it tends to dematerialize. From A Sociology of the Smartphone xxx

xxx It found a striking degree of consistency in what Londoners, Angelenos and Tokyoites thought of as being necessary to the successful negotiation of the day’s challenges… Things we used to gain access of one sort or another: keys, identity cards, farecards and transit passes. Generally, a mobile phone, which at the time the research was conducted was just that, something used for voice communication and perhaps text messaging. And invariably, money in one or more of its various forms. From A Sociology of the Smartphone xxx

xxx Facebook put the safety of its content moderators at risk after inadvertently exposing their personal details to suspected terrorist users of the social network From Revealed: Facebook exposed identities of moderators to suspected terrorists | Technology | The Guardian xxx

I have to admit to having a soft spot for the Minister. In a letter to The Daily Telegraph back in September 2013, she noted that (just as I had predicted) that the Current Account Switching Service that launched that month was (I paraphrase) a bit of a waste of time and money. She then went on to say that customers should have account number portability and be able to switch banks as easily as they can switch mobile phone operators. As I have pointed out before, this is not the solution, because bank account numbers and mobile phone numbers are not the same thing at all. A phone number is an indirect reference to your phone (well, your SIM card actually) whereas the account number is the “target”. Thus, we shouldn’t really compare the account number to the phone number, but think of it more as the SIM [From  Could bank account numbers be portable like mobile numbers? ] I am not against the principle that the Minister espouses but the implementation. She formulates the problem as:...

xxx "Two years ago, the bank’s chief economist, Andy Haldane, proposed getting rid of cash in favour of a government-backed digital currency. But" via Cash is still king despite rise of contactless payment Now, Andy Haldane, who is a scholar, a gentleman and a man of exceeding wisdom (and, coincidentally, who wrote a foreword for my new book “Before Babylon, Beyond Bitcoin) did indeed write in favour of a government digital currency, an e£. I wonder, though, if we should make it emulate cash. In other words, should we allow anonymous holding of amounts up to £10,000. 

xxx "The value of Bank of England notes in circulation rose by 10 per cent last year, the fastest pace in a decade. The total value reached £70bn for the first time" via Cash is still king despite rise of contactless payment xxx

The wonderful people at Gemalto invited me along to their Digital Banking Summit in Paris on a lovely June day to talk about the opportunities for banks in the burgeoning digital identity space. Perhaps it was psychological only, but I thought I detected more urgency in the air. If I were to hazard a guess, based on animal spirits and conversations over coffee, I’d say that it was because of the realisation that new kinds of competition around the corner. Let me explain by beginning with a presentation that I unfortunately missed, because I arrived late at night. Patrick Gauthier from Amazon, someone I always take very seriously, was talking about the shift from wallets to identities. I took this to mean that whereas we currently thinking about loading payment products into wallets and then using them to purchase, in the future we will select our identity (e.g., work Dave, home Dave, hobby Dave) to interact with a service provider and then when it comes time for the payment, it will t...

The FCA Fourth Money Laundering Directive and Fund Transfer Regulation Implementation (DEPP and EG) This risk-based approach requires firms: low value e-money products, but also allows them to apply such measures in other cases that they assess as low risk; and o apply enhanced due diligence measures in higher risk cases  xxx

xxx "The Berlin Group, a-European payments interoperability coalition of banks and payment processors, is pushing a single standard for API access to bank accounts to comply with new regulations on freeing up customer data under PSD2." Berlin Group to publish single API standard for PSD2 They plan to publish their framework around the end of the year.

xxx "A central bank that provides deposits will not supply this full set of services, but it will have to offer accounting, payments system access, liquidity, and the tracking of information. As a consequence, the central bank will need to have compliance and risk management functions—including systems that prevent money laundering, tax evasion and other illegal activities potentially aided by finance. Like banks, they must know their customer. This brings us to the first conclusion: the cost of providing these services is significant, averaging between 2 and 3 percent of assets for U.S. banks" Fintech, Central Banking and Digital Currency — Money, Banking and Financial Markets xxx

Why would a central bank be messing around with a blockchain? Not for creating a cryptocurrency, that’s for sure. As I have written at exhausting length before, it makes absolutely no sense for a central bank to create a cryptocurrency. However, that is an entirely different topic as to whether a central bank might want to create a “blockchain” (i.e., some for of shared ledge) in order to manage transactions in a central bank digital currency (CBDC, as as I call it, e£). This is restated in the latest Bank of England blog. "I explain that it may not be necessary to use DLT for a CBDC, but I also consider some of the reasons why it could still be desirable." Central Bank Digital Currency: DLT, or not DLT? That is the question | Bank Underground The precisely echoes my thoughts on the same topic. It makes sense to have a BritPESA rather than a BritCoin, but it make well make sense to implement BritPESA using a shared ledger rather than a central database as M-PESA does. An...

xxx "I explain that it may not be necessary to use DLT for a CBDC, but I also consider some of the reasons why it could still be desirable." Central Bank Digital Currency: DLT, or not DLT? That is the question | Bank Underground The precisely echoes my thoughts on the same topic. It makes sense to have a BritPESA rather than a BritCoin, but it make well make sense to implement BritPESA using a shared ledger rather than a central database as M-PESA does. And one of the obvious reasons why is that if there is a central database, then it can go down. As M-PESA has done.    British Airways   RTGS

xxx The number of people making a mobile purchase in the UK increased by 39 percent in 2016, comprising 86 percent of UK digital shoppers. Retail m-commerce sales will total £31.42 billion in 2017. From 86 PERCENT OF UK SHOPPERS HAVE MADE A MOBILE PURCHASE - Payments Cards & Mobile xxx

xxx Office for National Statistics figures show that e-commerce accounted for 15.5 percent of total UK retail spending in March 2017. From 86 PERCENT OF UK SHOPPERS HAVE MADE A MOBILE PURCHASE - Payments Cards & Mobile xxx

Guardian politics tweeted this lovely picture from last Thursday’s general election under “British democracy” with the comment “not sure how to explain this to our non-British followers”.     Indeed. This brought back some happy memories for me, starting with the 1983 general election. At that time,    because the first time that I came across Lord Buckethead was shortly after 

xxx "Banks face a raft of new regulation over the next 2-3 years with identification and verification at their heart. This includes the second Payment Services Directive (PSD2), the fourth EU Anti-Money Laundering Directive, the General Data Protection Regulation (GDPR) and provisions around open banking." via DIGITAL IDENTITY: AN OPPORTUNITY FOR FINANCIAL SERVICES? - Payments Cards & Mobile xxx

xxx "Banks are well-placed to capitalise on the identity opportunity. They are regulated institutions and established, trusted intermediaries. They already verify identities for commercial and regulatory purposes. " via DIGITAL IDENTITY: AN OPPORTUNITY FOR FINANCIAL SERVICES? - Payments Cards & Mobile xxx

xxx Why tout a private, distributed-ledger currency as an agent of liberation when it amounts to a complicated, software-backed, company-town store? From Cryptocurrency Might be a Path to Authoritarianism - The Atlantic xxx

A decade ago I remember writing that one of the problems with QR codes is that there is no security. Some years later I wrote an article pointing out that NFC ought to be safer than QR codes because NFC included a standard for digitally-signing tags (although I did also note that no-one used it) whereas anyone could easily create bogus QR codes. Well, I might not go so far as to call [QR codes] evil, but they certainly have the potential to enable person or persons unknown to act with evil intent. From  A quick response to the problem | Consult Hyperion I suggested, in connection with a couple of projects we were working on at the time, that the mobile operators do something about this by creating a digital signature standard for QR codes so that phones could be set by default to ignore unsigned codes. None of this happened, as I’m sure you are aware and QR codes became popular precisely because any app could read any code anywhere. The security problem never went away though. I...

xxx "Apple Pay Cash will be slow to take off for next 5 yrs (under $20M TPV 2018). The REAL Apple Pay future will be in app, and in browser." Apple Pay Cash - Get A+ - Noyes Payments Blog xxx

xxx "On April 19, Guangzhou police unveiled an identity authentication app that enables citizens to prove their identities via their mobile phones. To date, the city has authorized 20 offices to help citizens register for the service. Once they register, they can use facial recognition technology, available via the app, to prove their identities whenever and wherever necessary." Guangdong police release nation's first ID authentication app xxx

xxx "Clarence Barron, owner of the Wall Street Journal and founder of the financial magazine that bears his name, realized Ponzi must have been a huckster and went on the offensive. While Barron conceded that there probably was a way for a person to make a small amount of quick cash on the postal reply coupon scheme, he figured that Ponzi would have to be moving 160 million coupons around to raise the cash he needed to support the business. Since there were only 27,000 postal reply coupons circulating in the world, Ponzi's story didn't check out." Who Was Ponzi & What Was His Scheme? | Mental Floss xxx

banning cryptography didn't stop the bad guys (i.e., us) when they had cod, it’s not going to stop them now they have chips British Trawler Coventry City passes Icelandic Coast Guard vessel Albert off the Westfjords in 1958 during the 1st Cod War. Given British Prime Minister Theresa May ’s remarks about the “internet giants” allowing safe harbour for terrorists and the British Home Secretary Amber Rudd ’s remarks about needing the ability to access terrorist communications, there is a debate raging between technologists who understand encryption and politicians who don’t. So I thought I’d try to help both of them to communicate more effectively by updating something I wrote back in 2008 to explain the issue. I used the “Cod Wars” between Britain and Iceland as a backdrop. It is diverting to remember those Cod Wars and the key contribution of the Icelandic people to the story of cryptography. I was reminded of that story when I read a splendid book by Mark Kurlansky called “ ...

xxx "Say you’re driving down the road and see a car crash. Of course you look. Everyone looks. The internet interprets behavior like this to mean everyone is asking for car crashes, so it tries to supply them." ‘The Internet Is Broken’: @ev Is Trying to Salvage It - The New York Times xxx

xxx "Scams of this type are becoming fairly common on [Venmo], leading others on Twitter to question its reliability as a payment method, especially when other online transaction routes exist—like cryptocurrencies such as bitcoin, for instance." Bitcoin vs Venmo: Lessons Learned from ‘Craigslist Jeff’ | Bank Innovation xxx

xxx "While the blockchain originally sought a foothold in financial services, and digital currencies attracted early attention from investors, now interest in using the technology in the public sector is growing." Land grab: Governments may be big backers of the blockchain | The Economist xxx

xxx "I really wish that PayPal had been bought by Amazon instead of eBay, otherwise we could have had an Ant Financial version in the U.S" Ant Financial seen becoming world's top consumer bank- Nikkei Asian Review xxx

xxx "Alipay now controls 70% of China's mobile payment market, while Yu'e Bao, which serves as a repository for cash leftover from online spending, emerged as the world's largest money market fund this year with $165.6 billion of assets under management." Ant Financial seen becoming world's top consumer bank- Nikkei Asian Review xxx

xxx "In all, applicants that the government deems suspicious would be required to disclose (PDF) their previous passport numbers, five years of social media handles, telephone numbers, and e-mail addresses." Trump administration rolls out social media vetting of visa applicants | Ars Technica How will the US government know that the Lord Tantamount Horseposture who kept posting abuse about the Chancellor of the Exchequer in The Daily Telegraph is actually me? Conversely, how will they know I was joking when I told Watson that I wanted overthrow the US government and replace it with a workers and peasants’ collective? Surely any sane terrorist will maintain a social media account with pictures that will go down well at US immigration? If they ask to disclose social media handles,