Snippets

Policy Exchange, which calls itself Britain’s leading think-tank, has published a report called “ The Border Audit ” (written by David Goodhart and Dr. Richard Norrie) which has a number of recommendations for post-Brexit Britain. They include the introduction of ESTAs for visitors, just as they have in the US, and some form of ID system. The report comments on the ID card system being developed for the 3.6m EU citizens expected to remain in the UK after March 2019 and suggests that this system become a trial run for an "initially voluntary system for UK citizens”. Since ID cards are the hallmark of the continental superstate that Breixt Britain hopes to avoid, it seems quite unlikely that the British government will go down such a path. The report might, however, stimulate the revisiting of a much better idea and a much better vision for the independent UK. Commenting on the report for the BBC, David Goodhart said that “we strongly recommend reopening the debate about ID manag...

xxx "What’s the solution? While I’m a huge privacy advocate, I don’t think it should be possible for someone to deploy lethal force with no risk to themselves. At the very least, you should have to put your reputation on the line so that you can be held accountable." From "Reflections Upon a SWATting – Jameson Lopp – Medium" . xxx

xxx "Abraaj’s reliance on multiple levels of leverage created a ‘highly unstable’ business model that’s unusual for the private-equity industry, the court-appointed liquidators that are dismantling the firm said in a report dated July 11 and seen by Bloomberg. After analyzing the documents they could get their hands on—since some went missing—investigators at PricewaterhouseCoopers said Abraaj’s use of loans to cover operating expenses left it ‘sensitive to volatility and potential liquidity crises.’ They are now selling Abraaj assets to pay creditors and investigating allegations of ‘mismanagement, comingling of funds and misappropriation of assets.’" From "Behind the Spectacular Collapse of a Private Equity Titan - Bloomberg" . xxx

xxx Ultimately, the best option would be if the user did not need to choose between providing consent (or not, and being denied access) and making themselves vulnerable to privacy violations – if instead WebRTC could be used without any IP address leakage whatsoever. From Privacy and consent in the age of browsers: The question of WebRTC - ARTICLE 19 . xxx

xxx The global value of tradeable assets stood at more than $20tn at the end of 2017, according to DataLend. Of this, $2.3tn was loaned out, producing revenues of $9.2bn, a figure that includes $2.6bn from the European market. IHS Markit, another data provider, expects global revenues to top $10bn this year for the first time since the 2008 financial crisis. From New rules will shine a light on securities lending | Financial Times . xxx

xxx A quiet but lucrative corner of the asset management industry will be thrust into the spotlight as policymakers finalise rules that will make securities lending more transparent. The European Commission will soon release detail of the Securities Financing Transactions Regulation, which will force fund managers that loan out assets, such as stocks, bonds and cash, to disclose the deals in full. This global market covers $2.3tn assets and produces $9.2bn revenue. From New rules will shine a light on securities lending | Financial Times . xxx

xxx "‘Considering how many Chinese people pay for groceries, daily meals and entertaining with smartphones, that scale of data accumulation is beyond our imagination,’ says Ms Cai, who adds that despite her concerns about privacy, mobile payments are just too convenient to opt out from. But she is cautious, too, about where this path may be leading, adding: ‘Whether we are constructing a futurist society or a cage for ourselves, I cannot tell.’" From "Why millennials are driving cashless revolution in China | Financial Times" . xxx

China is making its e-money regulation more like the EU's. With an EU electronic money licence, the organisations holding the funds must keep them in Tier 1 capital and are not allowed to gamble the customer’s money, whereas in China there was no such restriction. Now the People’s Bank has said that in January 2019 the Chinese operators will have to hold a 100% reserve in non-interest bearing deposits at a commercial banks, a decision that will likely cost the main players (Tencent and Alipay) a billion dollars or so in revenue.

xxx "Lawmakers should authorise the creation of a ‘fintech’ charter allowing new entrants to do some things that only banks can do now. We need to break the banks’ monopoly. The Office of Comptroller of Currency has been considering such a charter, but its legal basis is shaky, and lobbying has stalled the effort." From "Fintech in the US is stymied by old-fashioned regulators | Financial Times" . xxx

xxx "That profitability is partly due to WeBank’s less capital-intensive model than Alipay’s. WeBank takes only 20 per cent of the loans it extends on to its own balance sheet, syndicating out the remaining 80 per cent to local banks where its borrowers are located. ‘We partner with banks that would otherwise not be able to access these borrowers,’ Mr Ma added. ‘They have no online capability. We are the middlemen.’" From "Alipay and WeBank competition heats up as China reins in leverage | Financial Times" . xxx

xxx "Last year, the average British household spent about £900 more than it received in income — a collective overspend of over £25bn, much of it financed with borrowed money. This is the first time in 30 years there has been a deficit." From "What would it take for you to switch your bank account? | Financial Times" . xxx

xxx "Four in ten signatures written in the UK are now to sign for deliveries" From "Traditional signatures are dying out amid digital revolution" . xxx

xxx "Fears are growing that this is potentially leaving people open to the risk of identity theft and fraud as their signatures are more easily imitated." From "Traditional signatures are dying out amid digital revolution" . xxx

xxx "Mobile data analytics company Ogury carried out a study of just over 1.5m mobile users in the UK between April 9 and July 1 this year, and it found the top ten most-used ‘banking’ apps, which include the fintech hopefuls, were all traditional high-street banks." From "UK fintechs aren't eating the banks' lunch just yet | FT Alphaville" . xxx

xxx "The proposals aim to ban tickets sold at more than face value will apply to ‘designated venues’ which hold 1,000 or more people and will ban the use of ‘bots’ by resellers to purchase tickets on primary ticketing websites such as Ticketmaster." From "Ticket reselling ban is good news but will it stamp out touts?" . xxx

xxx launching a review into how to make data portability work best for all consumers in regulated markets as part of a ‘Smart Data’ review, building on the approach pioneered by Open Banking From Business Secretary unveils reforms to give consumers a better deal - GOV.UK . xxx

xxx For bankers seeking to understand digital currency, Dave Birch's Before Babylon, Beyond Bitcoin is an insightful, witty look at how money has changed over the ages. From 12 books for bankers this summer | American Banker . xxx

xxx "Snapcash ended up as a way to pay adult performers for private content over Snapchat, not just a way to split bills with friends. But Snapchat will abandon the peer-to-peer payment space on August 30th." From "Snapchat will shut down Snapcash, forfeiting to Venmo | TechCrunch" . xxx

xxx "very excited to be going to the Edinburgh Festival this August. My show is called Dominic Frisby’s Financial Gameshow. It’s at 5pm at the Gilded Balloon." From "Dominic Frisby's Financial gameshow | Dominic Frisby" . xxx

xxx Kromtech researchers found that the crooks were creating fake Apple ID accounts and then using the stolen cards to buy virtual goods on three games - Clash of Clans, Clash Royale, and Marvel Contest of Champions. They then sold what they'd bought on third party sites. From Crooks use mobile games to launder money from stolen credit cards . xxx

xxx A team of University College London (UCL) researchers recently found likely evidence of payments for those alleged exploits by examining transactions in Zcash, a privacy-focused cryptocurrency that the Shadow Brokers asked potential customers to use, and traced the movement of some of the coins to a specific cryptocurrency exchange. From Cryptocurrency Transactions May Uncover Sales of Shadow Broker Hacking Tools - Motherboard . xxx

xxx “Just because you followed the software requirements spec doesn’t mean you met the capability need,” From The U.S. Air Force learned to code—and saved the Pentagon millions . xxx

xxx "But Zuckerberg truly believes that stuff—that by connecting human beings we will all start behaving better. Thousands of years of human history to the contrary, he thinks that the mere act of connection contains some positive force, without anything else being present." From "The Zuckerberg Follies | Dave Denison" . xxx

xxx "Nick Abouzeid, a 21-year-old in San Francisco who works at a tech startup, received an unexpected $149 from a stranger along with the message ‘for a wonderful evening.’ Two minutes later, he got another message: ‘I again made a mistake (((.’ He decided to investigate. (The app allows users to view the transaction history of others, depending on their privacy settings.) The account, he found, was brand new. He ran the user’s profile picture through Google’s reverse image search engine and saw it used in other places. He also saw the user sent money to another person ‘for lesbian game,’ and a minute later wrote to that person: ‘wrong person, please refund.’" From "You Accidentally Sent $149 to a Stranger on Venmo? Good Luck Getting It Back - WSJ" . xxx

xxx "All Bitcoin transactions and wallets are recorded on a database known as the blockchain, by a network of computers that anyone can join." From "How Russian Spies Hid Behind Bitcoin in Hacking Campaign - The New York Times" . xxx

xxx "Users can search or scroll through lists of others who are on the service, but typing one wrong letter can pull up the wrong person with a similar handle or name." From "You Accidentally Sent $149 to a Stranger on Venmo? Good Luck Getting It Back - WSJ" . It sounds like Venmo needs an effective payee confirmation service just as much as FPS does.

xxx "The eyes of the world are on one of history's largest cash withdrawals ever. Earlier this week, the Central Bank of Iran ordered its European banker, Hamburg-based Europaeisch-Iranische Handelsbank AG, to process a €300 million cash withdrawal. Germany's central bank, the Bundesbank, is being asked to provide the notes. If the transaction is approved, these euros will be counted up, stacked, and sent via plane back to Iran. German authorities are still reviewing the details of the request." From "Moneyness: The €300 million cash withdrawal" . xxx

Listening to Manuela Saragosa's interesting BBC Business Daily episode about “ fraud in the food chain ” (I wouldn’t listen to it while you are eating, incidentally) I was reminded how long and complex the supply chains are in the food industry. That’s great for producers and consumers, but it has risks. How do you trust the food that ends up on your plate? How can you tell, to give one of the examples used in the episode (which included an interview with Jesse Baker of Provenance ) that your tuna is sustainable? Fortunately, the blockchain is going to fix this problem. As Michael Casey and his co-author Pindar Wong explained in their Harvard Business Review piece on this topic last year , blockchain technology allows computers from different organisations to collaborate and validate entries in a blockchain. This removes the need for error prone reconciliation between the different organisation’s internal records and therefore allows stakeholders better and timelier visibility of ...

In his new book " Digital Human ", Chris Skinner sets out a straightforward vision of the bank of the future. He says (I paraphrase slightly) that the back office is about analytics, the middle office is about APIs and the front office is moving to smart apps on smart devices. Here's the three part model that Chris describe.  I’ve invented the word “packaging” to describe the additional essential process that is needed to complete what we call the “Amazonisation" of banking, whereby products are manufactured as API services and distributed throughout the consumption of API services. What we don’t know, of course, is how this model will redistribute ROE. How will banks non-banks and neo-banks respond to the split of manufacturing and distribution that the new “packaging” layer (again, not sure if that’s the right term, I just couldn’t think of a better one) brings? That’s obviously a key question and one that is pretty important for organisations who are planning an...

The Deutsche Bank report is not all doom and gloom though. It goes on to make the point that banks can themselves Of course, the beneficiaries will be the new financial service providers such as FinTechs or other software suppliers, who can now seamlessly attach their innovative services to the existing (banking) infrastructure. For BigTechs and retailers with a large customer base, the free-of-charge technical interfaces also open up new opportunities with respect to payment services, retail financing or other tailored products. But – somewhat surprisingly, perhaps – individual banks can also benefit. They, too, can act as third-party providers vis-à-vis other account servicing banks and offer an array of new or extended services to their customers, which will intensify competition among all providers.     In

Ajay Bhalla is chief enterprise security solutions officer for Mastercard . He leads the team that develops product solutions to ensure safety and security for consumers, merchants, partners and governments in their global network. (He serves on the company's management committee.) So when he talks about digital identity, he is worth listening to. "What we need instead is a verified identity that is accepted globally and across multiple digital touchpoints." From "The future of digital identity verification will be as simple as saying 'Hi, it's me' | City A.M." . Ajay is right about this, as you might expect. But I disagree that we need “a verified identity”. What we need, of course, are “verified identities” that we can choose from on a per transaction basis. To illustrate the point, an anecdote. I was reading Ajay’s article.

xxx "The Cities for Financial Empowerment Fund works with Bank on DC and other groups to provide low-cost checkings accounts. ‘If someone is buying a salad or something, and it’s $6, and they need to swipe instead of using cash, the real underlying issue is they don’t have a bank account with debit-card functionality,’ said David Rothstein a principal with the fund. ‘That’s where the real problem is. It’s less about the use of cash, and it’s more about financial inclusion.’" From "Do cashless restaurants discriminate against the poor? D.C. lawmakers think so. - The Washington Post" . xxx

xxx "‘While we prefer digital methods of payment, we will of course accept your cash.’" From "Do cashless restaurants discriminate against the poor? D.C. lawmakers think so. - The Washington Post" . They why not offer either a discount for not paying in cash or add a quarter surcharge to people who want to hold the line up and waste employees time and company money by paying with cash?

xxx "Heeding these concerns, several lawmakers in the District have introduced a bill to require retailers to accept cash. ‘By denying the ability to use cash as a payment, businesses are effectively telling lower-income and younger patrons that they are not welcome,’ said D.C. Council member David Grosso (I-At Large)." From "Do cashless restaurants discriminate against the poor? D.C. lawmakers think so. - The Washington Post" . xxx

xxx "Washington restaurateur Bo Blair, whose company Georgetown Events operates eight fast-casual and three sit-down restaurants in the District, decided to experiment going cashless when opening Surfside in Dupont Circle in 2015. Usually, cost-conscious small businesses operate cash-only to avoid card processing fees. But cash also has hidden costs, Blair said: Armored vehicles taking money to banks. An extra hour for workers to close out the register. Employees swiping money from the till. And some of his places had been robbed." From "Do cashless restaurants discriminate against the poor? D.C. lawmakers think so. - The Washington Post" . xxx

Today is a very important day for us payments nerds. It’s the 60th anniversary of the “ Fresno Drop ”, the birth of the modern credit card industry. On 18th September 1958, Bank of America officially launched its first 60,000 credit cards in Fresno, California, setting in motion an experiment that changed the American way of borrowing, paying and budgeting . And, in time, changed everyone else’s way of doing those too. If you want a good introduction to the history of the credit card, from the Fresno Drop up to the Internet, I’d recommend Joe Nocera’s “ A Piece of the Action “, which I read many years ago and still pick up from time to time. If you want to spend five minutes having a quick look at where the modern credit card business comes from, here’s the short version (courtesy of CNN Money) :  The most extraordinary episode in credit card history is the great Fresno Drop of 1958. The brainchild of a Bank of America middle manager named Joe Williams, the “drop” (which is marketin...

xxx If the past is any predictor for the future, the future of cards is very clear: there won’t be any of them, and we’ll be using our mobile phones as a mass market payment mechanism before 2012. From 50 not out | Consult Hyperion . Interestingly, I go this wrong. Because what actually happened was that the contactless card technology which was taken up by the banks proved so successful, not only for transit in London (where 

xxx It’s no exaggeration to say that TfL’s technology has transformed the payments industry, and contactless is quickly becoming ubiquitous From Digital Currencies And Credit Cards Have Subways To Thank For Their Existence . xxx

xxx So by my “I have seen the future, and it is the London mass transit system” theory of payments, we should look at what they are doing to see what banks will be doing in a couple of years time. What they have been doing is contactless. From 50 not out | Consult Hyperion . xxx

xxx What changed everything was technology: the introduction of the magnetic stripe and Visa’s BASE I online authorisation system. This changed the customer experience, transformed the risk management and cut costs dramatically. Everything changed. I can’t resist pointing out that it was the London transit system that pioneered the use of magnetic stripes on the back of cardboard cards in a mass market product (seven years earlier, in 1964). From 50 not out | Consult Hyperion . xxx

xxx The nightmare for the U.S. financial industry is that a technology company—whether from China or a homegrown juggernaut such as Amazon.com Inc. or Facebook Inc.—replicates the success of Alipay and WeChat in America. The stakes are enormous, potentially carving away billions of dollars in annual revenue from major banks and other firms. From Why China’s Payment Apps Give U.S. Bankers Nightmares . xxx

xxx if a bank fails to perform a critical verification step, then you might have a problem From Shimmers and Skimmers: Fraudsters Find Opportunity in EMV Chip Cards - PaymentsJournal . Hello. What are they talking about? What is this “critical verification step” that banks might fail to perform (or, at least, banks not advised by Consult Hyperion might fail to perform)? To understand what they are talking about here, you have to understand that you cannot create a counterfeit chip card in the same way that you can create a counterfeit magnetic stripe card. The chips contain a private key that is never revealed, so if you capture all of the data that is on a card or exchanged with a terminal during the process of a transaction, you will obtain the card number and expiry date and so on (these things are not encrypted between the card and the terminal) but so what? You cannot make a fake chip stripe card with these details because you don’t have that pesky private key so you can’t ad...

This was one of the elements of the EBA’s PSD2 Guidelines that the FCA highlighted. ASPSPs must avoid imposing unnecessary requirements (such as additional consent checks) when designing and implementing their dedicated interfaces From FCA statement on EBA’s draft PSD2 Guidelines and Opinion for banks and others involved in open banking | FCA . xxx

xxx Police believe the gang had been selling fake identification documents to help people gain work or services illegally, and open bank accounts to launder money. From Inside fake passport factory 'where counterfeit documents were made' | Metro News . xxx