Remove Volatility

Today I was confronted with volatility. In a two week period gas prices had gone from 2.395 to 26795, quite a climb of less than 14 days.

Volatility, this is what we must remove from peoples lives. Stability and comfort are what is important. Having gameful activity to allows us to contribute to the whole. Being idle is unproductive and only benefits the traders who prey on short term activity to enjoy profits from volatility.

Our President must accept that the Wall Street lobby must be squelched for a while as volatility is banded from the marketplace. This will take an acceptance on the part of the wealthy that they cannot take it beyond the grave and before that excessive income is not acceptable to the healthy grow of civilization.

Set a maximum salary of say 2 million.

Foreign exchange markets are another area of concern. Volatility based on war and famine must the mitigated out of the civilization.

Our civilization is global and provisional limitations such as food subsidies need to be removed.

Remember they are simply subsidies paid by the tax payer. Government should be limited to a percent of the population; remembering its role is to only assure the the primitive functions of justice, liberty, freedom and security.

Regulation is something that must be removed and a new form of peer review established with responsibility to maintain quality, service, stewardship for the planet, and a judicious use of nature resources. Free enterprise is encouraged by remembering that it is the relationship between the customer and proffer that ultimately decides success.

The Future of Money

I took offence when I looked at the picture included in the article published on Wired.

http://www.wired.com/magazine/2010/02/ff_futureofmoney_move/

The arduous path that he has carved out for a card transaction assumes a lot of unnecessary intermediaries that have included themselves within the picture.

For me the story can be simplified.

Credit card processing involved a minimum of five parties. The Issuing bank and its technology arm, the acquirer and its network and the scheme (Visa, MasterCard … ). Everyone else is about the realities of the ISO marketplace and the proliferation of parties offering added value services along the transaction path.

Remember a credit card transaction is simply

Swipe/Tap/Dip/PIN.

Add transaction amount, time, merchant etc.

Ask Acquirer for approval.

Acquirer passed to scheme

Scheme routes to Issuer

Issuer approves and sends back the authorization.

then if necessary sign receipt

That night batches of requests for payment are sent from the acquirer to the Issuer with the Scheme, reconciled and settled.

Then there is ACH. Yes the technology needs a modernization the functionality must be stream lined and ubiquity must be embedded in the pricing model.

Electronic checks that are facsimiles of hand written checks cleared through the Check 21 system should not be eliminated, they are efficient and provide a great personal audit trail. handling the paper should be pushed as close to the original transaction as possible so that personal accountability is induced. The person I handed the check to has the check. So if there is a problem I have to deal with him.

Otherwise all the necessary transactions are possible and with the move to STP “straight through processing” the ability to assure availability of funds can be assured.

What are most of the other schemes. First like American Express they are three party solutions with a man in the middle holding funds on account in a pre-paid scenario or capable of submitting as your proxy transactions into the ACH and card systems.

Yes the three party system is the most efficient. Unfortunately it has one problem, it is not open.

Visa and MasterCard, although viewed as restrictive, are open systems. They accept; any properly sanctioned bank as a member willing to abide by the rules and maintain sufficient reserved. For a new system to acquire this status either means they become a bank and meet those incremental regulations or they focus on building critical mass as American Express has proven can be done.

So as this next article concludes, what is can improve and probably is better than something new.

http://www.wired.com/magazine/2010/02/ff_futureofmoney/all/1

The Future of Money: It’s Flexible, Frictionless and (Almost) Free

By Daniel Roth February 22, 2010 12:00 pm
Wired March 2010

This is what I have done as the following snapshot indicates:

www.andreae.com/presentations

Critical mass versus ubiquity the future of payments

In a paper recently published by the Federal Reserve they begin to consider what actions the FRB should take to drive the further adoption of P2P electronic payments and the reduction in paper checks.

http://www.bos.frb.org/economic/ppdp/2010/ppdp1001.pdf

Their introduction speaks to the differences in adoption of electronic payments in the USA and Europe. Intriguingly they include privacy concerns as a key issue. This being said, having lived in Europe for 15 years, I am not sure the desire for privacy is greater in America. What can be said is that the moment when the underlining infrastructure was developed defines the ideas and feature sets. Newer systems learned grew as other economies embraced and proved the viability of innovative ideas.

They go on to discuss the fate of eCash (Mondex, VisaCash) and the need to create ubiquity in order to assure success. Clearly, as they outline, the major adoption issue in the field of payments is achieving a density of merchants willing to accept a particular means of payment and simultaneously demonstrating a significant number of consumers willing to employ said means of payment.

Unfortunately for the inventors of neat solutions the reality is that without figuring out how to assure ubiquity the new idea they will not be a success. If we look at contactless, MasterCard clearly recognised this reality and funded the initial investment in equipment. Without this investment one wonders if PayPass would have reached the low levels it has.

The interesting thought that emerges from this paper is that the wide spread deployment of mobile phones means that an infrastructure that both merchants and consumers have is in place and if one can find an intuitive means of exploiting this installed base, part of the deployment problem is mitigated.

In my heart, I believe mobile will allow the establishment of new ways of paying, The next question can today’s infrastructure support P2P payment instructions and will the issuers and acquirers figure out how to make money without cannibalizing existing revenue streams.

An interesting story as we think about health care

I met a man with a deep understanding of the Red Words, who told me a little of his life and how he spent $180,000 resolving medical issues associated with a stoke. Little was done, given the amount spent and the available technology and medical sciences.

Today, he believes, based on sound medical opinion, that exercise, surgery or medication could eliminate the de-habilitating impact on his sight, mobility and hearing.

After spending his life, saving, my friend lives comfortably in a 250 square foot home with nothing but the bible and his spirit.

Where is the VA for a VIET NAM vet; there were provisions made under Nixon for long-term medical care?

What should a more balanced system do to afford my friend a comfortable retirement?

today on CNN – What about this idea

http://newsroom.blogs.cnn.com/2009/10/05/unemployment-what%e2%80%99s-to-blame/

Unemployment: What’s to Blame?

Posted: 08:44 AM ET

Former Federal Reserve Chairman Alan Greenspan predicts U.S. unemployment could hit 10%. Currently the nation’s unemployment rate is at 9.8%.

So, what do you think is most responsible from the worsening employment picture: a failed stimulus package, an economy much worse than we knew, employers cutting deeper and hiring more slowly than expected, or something else all together.

Leave us a comment. We’ll share some of them on air in the CNN Newsroom, 11am ET — 1pm ET

So there we are. A picture and a set of points on why we are where we are with unemployment. Now what about this idea.

First, there is an issue of Greed. A small percentage of the global population has accumulated a massive amount of wealth. I am not here to judge the right or wrong of how they or their ancestors acquired the wealth. I am here to suggest looking forward.

100 million dollars a year as a salary to hedge the price of gasoline and contribute to raising the profits and consumer costs associated with oil.
$17.2 million to successful sell Visa inc, to the market, earning bankers a significant return.
Numerous excesses that programs like Nip/Tuck mimic for Wall Street millionaires.
A stock market that has a curve that simply should not have been allowed. Long term prudent economic management is essential.

Ponder this. If equities is suppose to represent the inherent stability of the corporations that employ our neighbors; what happened starting in 2000 and culminating in the bear Stearns collapse in 2007. Is Wall Street unravelling the growth that began in 1982 and went into a hyperactive phase in 1995, and simply correcting itself.

What next should represent a step change in how we think about governance, compensation, risk, responsibility and morality.

What I think a lot of us forget is that our society evolved over millennium and here we are thinking we are so important. What is important, is being faithful to a common morality, and making sure that we leave something better for our children.

I agree with the Dali Lama, all we want is peace and happiness.

So what next?

Cap salaries for the rich at 2 million per year.
Institute a managed health system that still uses the concept of insurance and hedging risk to fund our healthcare system.
Introduce a health management system, with a basement for those that cannot afford even the most basic plan.
Re-introduce exercise in the school system and subsidize community gyms and recreational facilities.
Re-introduce the luxury tax for non essentials over $30,000 and on things that are not good for you or are excessive. Say anything not associated with your food, transportation and housing.
Focus on better educating the family practitioners, gynecologists, internist and pediatricians so that they do a much better triage and assessment of appropriate care given available resources with fear of reprisal for taking risks. If necessary, require an additional year of service at a teaching hospital earning a reasonable income say $120,000.
Do a lot of what Congress is already talking about
1. Strengthen the VA hospital and medical care system
2. Do not mess with Medicare or Medicaid, until the new system is in place. Let the people move to the free market approach.
3. Do not create a Government run insurance system. Yes to creating a open market, knock down state borders and promote re-introduction of the original Blue Cross Blue Shield concept of a co-operative not for profit solution
Focus on regulating the quality of care with a no one left behind principle.
Keep the insurance companies out of setting fees. Manage thje cost of the healthcare system by focusing on competition. The patient is the client and is to be saught after without offensive advertising.
Mandate a National Id card keying off the social insurance number. Combine it on the Drivers license, as a day one requirement.
Focus as a corporate priority on employment being the key indicator of success. Begin discussions on Right to Work legislation and stimulating more humane approach to managing down costs in a period of economic recession. Reduce executive wages well before the first person can be let go, without cause.
Merge all the work in the fields of governance, risk and regulation into a replacement bill.
I could go on.

From Nothing Something

In an apologetics I was asked to question the idea that something came from nothing.

This is what I have to believe if I am going to listen to the Atheists and ACLU.

Then I thought about Creation and Intelligent Design. Oh how much simpler it is to believe than these Macro Environmental facts that cannot be backed up with data explains it all. There is much to accept if you are going to believe out of the Big Bang and Chaos; time would produce a single cell. Then from that single cell produce the abundance of life forms that have and do exist.

255 proteins must magically appear in one place at the exact right time,

Before we can start thinking about things like DNA

What next for Smart Card and Mobile Phone

Why not start implementing EMV in the USA. It is the right thing to do. One global standard.

“Chip and PIN”, EMV … ISO 7614

The New York Times, in the previous post, looks at the issue from the obvious perspective. The result is as one would expect. Remember when France first introduced smart cards 1984or mandated then back in 1992 and the acceptance nightmare.

In the past I have written on the idea –

Push PCI/EMV into one coherent electronic and secure smart card reader and PIN Pad.

Mandate all new 1 July 2010; with the understanding that the reality – every piece of equipment will be replaced in a reasonable period, say 7 to 10 years.

VARs should easily be able to do that.

The incremental ($8/device) on the device side goes down over time, as equipment becomes more affordable.

On the system side, most international providers have a solid EMV implementation they can port over to the US platform over that same 7 year time frame.

At the Network switches, gateways and IPSPs; data formats should be changed sooner, say three years from day one.

Issuers can then decide, when to embrace one global two factor authentication solution; using contact and contact-less EMV cards to support card authentication [Factor 1] and card holder verification processes (eg. Chip and PIN) [Factor 2] .

Biometrics were understood when EMV was created. The mechanisms are in place to introduce an agreed, more secure, biometric verification process [Factor 3].

The NYTimes understands what EMV is

So why not go ahead, do contact ISO7614 and contactless cards ISO14442 for 1.75 a piece. then merge 15+ cards to a few. Save 11*$.025 = 2.75 per person. or 1.100 Billion less cards as pollutants

Could U.S. consumers spur adoption of EMV in U.S.?

Tracy Kitten

• 01 Oct 2009

As the rest of the world wraps its migration to EMV/chip-and-PIN technology, Americans traveling overseas are running into mag-stripe disadvantages.

This week, travel reporter Michelle Higgins of The New York Times writes that U.S. cardholders traveling abroad are getting turned away by some merchants, since mag-stripe readers are quickly becoming things of the past in every corner of the globe except the United States.

Though EMVCo., which oversees and spearheaded the EMV shift, has said from the beginning that all chip cards and readers would continue to also read mag-stripes, many merchants are reluctant to accept mag-stripes, since they can be held liable if card information is skimmed or compromised. And because magnetic stripes are relatively easy to copy compared with chip-and-PIN technology, accepting mag-stripe transactions potentially opens the door for fraud.

The problem is that most U.S. consumers have not been informed by their financial institutions about potential transaction problems when traveling overseas. Most, in fact, have no idea what EMV or chip-and-PIN technology is.

Twenty-two countries, including most of Europe, Mexico, Brazil and Japan, have adopted EMV technology, according to the Smart Card Alliance. About 50 other countries, including China, India and most of Latin America, are in various stages of migrating over the next two years.

Last year Canada began rolling out chip-and-PIN cards and plans to stop accepting mag-stripe cards at ATMs after 2012 and at POS terminals after 2015.

The Red Words

Someone once said
Read-only his words

My adaptations of the translation used, to keep you on track to accompany a lot of cut and paste. Not for anyone’s adulation. It is my work available for me to see and refer to.

Jesus Christ

Jesus’ Red Words

Matthew Mark Luke John

Extracted from the NIV

Time passes and we must be reminded to think back to how it was

2009 September Philip lived on an island during the flood

False Prophets and False Profits

Last night, 11 September 2009, I watched hours of material on 9/11.

I saw the planes as the flaming arrow of the False Prophet.

I saw the two towers as the symbol of the moral decay of the False Profit.

Both clashed in a period of 102 minutes we will long remember.

The terrorist is acknowledged and the false prophet stands accused.

Yet the False Profit continues to bring harm to many and shame to those of us who seek to know God and the work Jesus’ expects of us.

When will the False Prophet “Profit” finally be recognized as the work of the devil?

American Banker Reports

Europe to Eye Mag-Stripe Ban

Cardline Global | Friday, June 26, 2009

European banks may consider banning the use of magnetic stripe credit and debit cards, according to Gerard Hartsink, the chairman of the European Payments Council.

Hartsink, who is also a senior executive vice president at ABN Amro in Holland, said that European financial companies will have largely completed the transition to the EMV Integrated Circuit Card Specification by 2011, and the council, which is driving the transition to the Single Euro Payments Area, could then advise its members to stop accepting magnetic stripe cards, which are considered less secure than those that use EMV.

“My feeling is, although it has not yet been decided, the [council] will take a decision in 2011, maybe 2010, to only use chip cards,” he said in comments during a presentation this week at the Contactless Cards and Payments conference in London.

The council has no enforcement power, but if banks in Europe went along with such a decision, it could leave U.S. cardholders in the lurch when they traveled to Europe and tried to use cards for purchases or ATM withdrawals.

“If [Americans] visit Europe, it’s not such a problem; their institution could issue an EMV card,” Hartsink said.

Payments council members will probably debate the issue in 2010 or 2011, he said.

Hartsink is not the only person suggesting a ban on magnetic stripe cards, according to Dave Birch, a director at the U.K. research company Consult Hyperion. In a recent blog post, he cited comments from a financial regulator in Singapore pressing for a “concerted, global effort to phase out magnetic stripe technology entirely.”

The time grows near for the merging of leather and electronics

Recently I came across an article that spoke to an idea that i had back in 1996 when I envisioned a personal device that allowed the consumer to merge their leather wallet, Filofax, mobile phone, walkman and PDA into a single light weight device.

http://www.andreae.com/presentation/Wallet_Pockets/my_dream_Start.htm

The author of this article talks to the need to create a secure mechanism to authenticate, identify and as appropriate verify that it is I. When we looked to smart cards that was what we where looking to do and the SIM that is inserted into a GSM capable mobile phone is able to offer the security that Kurt Marko seeks.

Has the time come to move forward with my dream?

That was part of the dream that drove the creation of EMV.

Personal Portable Security Devices

Are Pocket-Sized, All-In-One Security Devices Ready For Prime Time?

Key Points

• Personal portable security devices integrate cryptographically strong user authentication, such as OTPs (one-time passwords) and public key certificates with ample hardware-encrypted flash storage, all housed in a compact USB device.

• The functional integration enables new usage models for secure mobile computing, such as standalone portable applications, browsers, or complete desktop environments.

• PPSDs are a relatively new and evolving technology that suffers from hardware costs substantially higher than those of point products, such as encrypted storage or OTP tokens, complex deployment processes, and necessary additional management software.

USB thumb drives have become the sneakernet’s backbone, the result of plummeting prices and burgeoning capacities for flash memory. These tiny wonders are spacious enough to store an OS installation with room to spare for user data; however, they are also inherently insecure. Although vendors have addressed this shortcoming with drives incorporating hardware encryption chips, these haven’t yet achieved mass acceptance. Small USB devices have also become a common vehicle for delivering secure, two-factor user authentication.

Wouldn’t it be nice if secure storage and authentication features were combined into a compact Swiss Army knife of security? A relatively new class of products, PPSDs (personal portable security devices) “combine the flash storage of universal serial bus thumb drives with the access control and secure storage capabilities of the smart card,” says Burton Group Senior Analyst Mark Diodati. “PPSDs leverage the USB form factor, use hardware cryptographic processing to provide smart card and one-time password device services, have secure storage capabilities, and reside in a tamper-resistant container.”

The real security magic comes from the synergistic integration of the two sets of capabilities; for example, users cannot access the flash memory without first providing strong authentication. Diodati adds, “The PPSD overcomes two issue— the limited storage capability of smart cards and the relative insecurity of USB flash drives. Larry Hamid, CTO of MXI Security, says the combination allows “a device that serves multiple security functions.”

PPSD Features

Furthering the theme of convergence, PPSDs also incorporate several strong authentication technologies. Like traditional USB tokens, PPSDs embed a certificate-based smart card in hardware; however, they add a software-based OTP (one-time password) generator. Unlike SecurID tokens, most PPSDs don’t sport a display; thus, to generate and view the password, users must plug into a PC’s USB port and run an embedded application. This makes PPSDs problematic for use on public kiosk PCs where the ports are usually disabled. Like USB security tokens or smart cards, PPSDs can hold any number of certificate-based credentials for Windows login or PKI (public key infrastructure).

PPSDs pair their strong authentication features with gigabytes of flash storage. Hardware-based encryption is accomplished via a symmetric algorithm such as AES, and, while standard USB flash drives can be encrypted with software, they are arguably less secure. In addition, PPSDs are tamper-resistant because they use their internal smart card to store encryption keys and an embedded chip to execute the encryption. Some PPSDs also support biometric authentication via an integrated fingerprint reader for added security.

Advantages & Usage Scenarios

Like plain-vanilla flash drives, PPSDs have benefitted from dramatic increases in flash memory density and are available in capacities from 1 to 16GB. Such abundant storage enables some intriguing applications, according to Diodati. He sees PPSDs as an ideal way to protect mobile professionals via solutions such as hosting a complete virtual desktop OS, “hardened” business applications, Web browsers, or SSO (single sign-on) systems.

For example, using software, users can carry a fully customized Windows Desktop environment on a USB stick. Similarly, some let users install and run individual applications directly from a USB drive while leaving no traces behind on the host PC. PPSDs enhance these portable application environments by running them within a much more secure framework.

PPSDs look like the perfect security multitool, so what’s not to like? Unfortunately, according to Diodati, “the functionality of the PPSD comes with a price.” He explains that extensive processes are required to initialize devices for a particular organization, customize and personalize them for users, and bind their security credentials to internal directories. Although vendors provide administrative tools to automate these tasks, Diodati notes these often aren’t the end of the story. “Additionally, a smart card management system is required for most deployments, adding to the cost of the PPSD deployment.”

Cost vs. Alternatives

Aside from the administrative overhead and costs of ancillary software such as a CMS and OTP system, PPSDs themselves aren’t cheap. For instance, 2GB devices run around $150 with 4GB devices pushing $200. Compare that to a 4GB flash drive bundled with software encryption for less than $30, and it’s tough to justify the PPSD’s six-to-one price disadvantage if all one needs is secure storage.

The mobility of today’s workforce opens enterprises up to more security risks, according to Hamid. “You either have to compromise security [or] compromise functionality.” He sees PPSDs as a technology that can make security simpler, more portable, and less burdensome. Hamid believes carrying applications or entire desktop environments on a secure PPSD could emerge as an important new security model for mobile users.

Diodati is equally enthusiastic about the market potential of PPSDs but believes they need further development. “While the PPSD has the opportunity to be a stronger authentication market disruptor, the price must come down.” He’s also concerned about the complexity of PPSD deployment. “The orchestration of smart card management systems, key management/recovery, Active Directory, and PKI will remain a daunting task for most enterprises in the foreseeable future.” Hamid agrees that costs are a problem but promises new product lines “with drastically reduced pricing.”

Although the integration of strong authentication credentials and copious encrypted storage in a key fob-sized device promises to enhance and simplify mobile security while giving new meaning to the notion of a “mobile desktop,” the nascent state of PPSD technology means that it’s more appropriate for evaluation and prototyping than large-scale deployment. As hardware costs continue to plummet and management software matures, PPSDs could revolutionize the mobile security landscape.

by Kurt Marko

Key Features Of PPSDs

• Strong authentication via public key certificates or one-time passwords

• Native, hardware-based file encryption

• Portable single sign-on via the ability to carry both a user’s SSO credentials and an on-demand enterprise SSO system

• Ability to securely host a complete portable desktop environment

• Ability to securely carry portable applications, particularly a hardened browser with a restricted operating environment and secure configuration

Source: “Postcards from the Enterprise: The Authentication Experience”; Mark Diodati; Burton Group

Pondering Mother and Daughters

“Honor your father and mother. Then you will live a long time in the land the LORD your God is giving you. [Exodus 20:12].

Thursday, I was in the unfortunate position to hear read the email to David. I was taken aback and wanted to defend myself. Then, the next morning, as per their Mother’s instruction, David forwarded said email to my address.

It is with a sad heart to email you on Mother’s Day to let you know that we are starting down a very scary similar path with Mom….I know that i do not have POA and that I signed papers saying I can never take her to court again so I know that I do not have much power nor do I believe I am up for it again.
The reason I am emailing you is to give a heads up to watch her accounts…I know she has the conservator, Arthur, and I am hoping we can keep him in place so that she does not spend all her money or give it away.

I asked her to go to her counselor here in Atlanta and she said she has an apt as well as with the weird one down on SSI , Dr Devazio (?).

She has started dating a creep – Gae and Dr Andreae’s (the people who live on Sea Island and said she was just eccentric and not bipolar) son named Philip. He is an unemployed international business man that lives in a Fleetwood on Lake Allatoona…not sure of much more and do not really want to know more, but I have an uneasy feeling and my gut says not such a good guy – plus he must know her finances from his parents or at least her history a little…mom does not need to fund him – I realize it is her money and am happy for her to spend it but when it is gone, I am not taking responsibility – I sound harsh but I am talking from my heart.

Not meaning to unload but want you to put whatever legal parameters in that you can and to be prepared for the drama…..

Once again, I wanted to take action!

Throughout the day the following words kept creeping to the front of my head:

“She has started dating a creep – Gae and Dr Andreae’s (the people who live on Sea Island and said she was just eccentric and not bipolar) son named Philip.”

“… I have an uneasy feeling and my gut says not such a good guy – plus he must know her finances from his parents or at least her history a little…mom does not need to fund him …”

Each time these words come into my mind my first reaction is spring to attack. Clearly the author has no idea who their Mother is. They do not have enough trust or respect to believe she knows what she is doing.

Furthermore my father is a very successful Doctor. The author is unaware that he is renowned for his diagnostic abilities. If he as a physician believes someone is eccentric and not bipolar, then, why would a lay person consider impugning the integrity of his assessment?

Through all of this, two teaching brought me back down to earth:

“Suppose someone hits you on your right cheek. Turn your other cheek to him also.”

“How can you say to your friend, ‘Let me take the bit of sawdust out of your eye’? How can you say this while there is a piece of wood in your own eye?”

Finally, one last teaching reminded me that I am not in a position to offer advice, I must remember to be humble, accept life as it comes and always remember these words:

“… You pretender! First take the piece of wood out of your own eye. Then you will be able to see clearly to take the bit of sawdust out of your friend’s eye.”

The only statement I will make on my own behalf is that I will support myself. I will care for those I love and I will always be faithful and true.

THIS IS TO BE DELETED WHEN YOUR MOTHER ASKS ME TO.

America needs to embrace the Future

Back in 1993 I had the opportunity to help in forming the working group who developed and ultimately published the EMV Smart Card Specifications for Credit and Debit Cards. Since then, as a member of the Europay and Visa Canada executive teams I promoted the virtues of smart cards and the business case for EMV.

As a consultant, one of the focuses of my practice is EMV. In both Europe and Canada I counseled executives on the what, how, when, business value and future opportunities of EMV, smartcards. mobile payments and internet payments

One question has always been asked of this American – “when will the USA migrate”. Up until recently I was stuck, giving bland answers. I suggested that we would have to wait until after fraud migrated to the USA, away from EMV protected countries. I tried to explain to people, committing comparable sums of money, that the size of the investment required of US Issuers, Acquirers and Merchants is enormous and frankly cannot be justified.

Why they ask, simple economics I answered. I explained that when one looks at the quality of the fraud management systems in place, the level of on-line authorization and the losses incurred; it simply does not make sense.

Debit is the real reason to Migrate to EMV

In 2007 I was working with “The Exchange”, a Canadian network that supports sharing of ATM services such as deposit, bill pay and account to account transfers. The focus of my work was to help them to understand the implications of EMV and to work with them to develop their go forward strategy.

Part of the research led me to talk with the Fiserv, the Brand owner and their strategic partner. While discussing what the Canadian entity needed to do with the America responsible for the USA Exchange and Accel network; the conversation drifted to when will the USA move to EMV.

What sat front and center inour discussion is the American banks that issue PIN Based Debit Cards have a much stronger rational to migrate to EMV than the credit card and signature based Debit issuers. In the PIN Based Debit arena the “reputational risk” has and will continue to be the real justificationfor the migrate from magnetic stripe to Chip and PIN.

Why you may ask. My answer is simple. The cost to a criminal to install a fascia and PIN hole camera on an ATM, capture the magnetic stripe and PIN; offers these international criminals a very rewarding business case. They are also funding aggressive operations that embed people into factories that produce magnetic stripe and PIN Pads with the imbedded capability of capturing and transmitting the magnetic stripe and associated PIN to the Mafia

Reputational Risk is the catalyst

So how does this affect “Reputational Risk”?

1. When the criminal perpetrates debit card fraud, they focus the attack at ATMs the cardholder would probably visit. The Issuers’ fraud management systems are finding it hard to differentiate between a valid transaction and a fraudulent transaction, so out pops the cash, 100% fungible no need to fence the goods and cheaper and more profitable than robbing the bank

2. Weeks later the cardholder notices that there is not as much money in their checking account as they expect and they call the Bank’s call center. The argument follows – But only people who know your PIN can withdraw funds from your account, who did you tell your PIN to, your ex, your children …

3. Eventually after a lot of time explaining, crying, shouting and generally getting on each other’s nerves; the Bank’s customer service agent will final accept that the cardholder did everything to protect the PIN and card; so the bank will reluctantly restore the funds to the cardholders account.

4. Bottom line the cardholder feels that the bank does not care; their systems are not safe and the cardholder is now afraid to use their debit card. The Bank and its ATM network are now at “Risk”.

No one should be surprised at this form of attack. I knew and teh media presented the realtities of such attacks back in 1994. As the size cost of the equipment shrinks and the capabilities of technology expands the incidence simply increase and proportional to the rewards.

To put a point on my analysis; when most countries decide to migrate to EMV it is not the Credit side of the cardholder relationship that seals the deal for the CEO and senior executives. It is the Debit side that pushes the bankers to say yes we must migrate to EMV. MasterCard and Visa, who participant in both credit and debit, want the publicity. Whereas the debit networks would prefer to not talk about the problem. End result we are left thinking credit cards drive the migration to EMV. Compounded by the reality that for credit cards in the USA, there is simply not a business case.

For the US banks to come together to decide that EMV is the right thing to do; there must be a place where the Issuers and Acquirers can come to terms with the cost and agree on an equitable way to fund the investment required. For the debit card side of the Banks there is not an obvious place to have this discussion. Most PIN Debit networks are either regional or owned by publicly traded organizations. There does not appear to be a common forum capable of bringing the executives together to agree and commit.

Migration to EMV is expensive – YET really it is not

Everyone talks about how expensive it would be for America to migrate to EMV.

Yes if we are to approach the migration with the Big Bang theory it will be ridiculously expensive. Instead what the powers that be should agree is that all cards and terminals will be EMV by say 2019, ten years.

Let’s acknowledge that most of the major acquirers and processors have already implemented EMV on their international platforms; so the implications are understood and if they where intelligent when upgrading for Canada, England, Europe, Latin America, Middle East and Asia, they should have considerted how to cost effective assure the inclusion of EMV on their American platforms, someday.

So now they simply have to add it to the list of requirements that will be included in one of the yearly upgrades, or, as part of their technology replacement plans. Remember we are saying EMV in 10 years.

Ten years is a long time when we think about technology. Therefore they have no justification to argue it is punitive to force them to implement EMV.

On the terminal side we must remember that for the merchant there are only intangible benefits to implementing EMV. Yes, like MasterCard Visa etc, EMV can be positioned as the cost of doing business and included in one of the compliance upgrades.

Or, if we are intelligent, we say to the ATM operators, merchants, ISOs and acquirers, the next time you upgrade your point of sale system – buy an EMV compliant PIN pad and include EMV as one of the requirement for the systems that drives the device and transmits the approval requests and clearing records to the acquirer.

Any ATM/POS supplier who sells outside the USA has EMV devices in their catalogue. All the Value Added Resellers who sell international have support for EMV within their software. NCR, Wincor-Nixdorf, IBM, EFunds, ACI, S1 … all support EMV.

With this plan in place, over time EMV will progressively be enabled at the point of sale. with minimal cost impact. Yes the vendors will have to be told to play nice and not exploit the opportunity. Yes for merchants that attact significant International clientele they should migrate sooner. Yes, locations that are known to be high risk merchants they should be made to implement EMV sooner.

This leaves the Issuer with an easy question to answer, when do I add an EMV chip to my card. Well the answer is easy and it is complex. On the simple side, when they think there are enough terminals to achieve the fraud saving then do it. Or, we can add the contactless and mobile payment dimension and start talking about Combi cards, embedding EMV into the handset, considering Multi-application opportunities. I’ll talk about that another day.

Agree to move and give people enough time so that there is no pain

Bottom line my message to the US market is the question is no longer about who will pay it is simply about how much time should we allow everyone, so that the incremental cost is irrelevant.

This Blog was driven by reading a recent review from CTST

U.S. getting squeezed by EMV Wednesday, May 6, 2009 in News

http://www.contactlessnews.com/2009/05/06/u-s-getting-squeezed-my-emv

With Canada and Mexico both going to EMV and most of the rest of the world doing the same it may be a matter of time before U.S. card issuers are forced to go to chip and PIN. EMV in the U.S. was the topic of a panel at the CTST Conference in New Orleans.

Good, Bad or indifferent. The Good has it.

Voices Reflect Rising Sense of Racial Optimism

Kristen Luce for The New York Times

Shel Harris of Brooklyn said the election changed his attitude.

By SUSAN SAULNY Published: May 2, 2009 the New York Times

Optimism. What a powerful word, emotion and focus to help us rise from the ashes. This morning as I scan the New York Times I am encouraged. Tears come to my eyes and the possibility that President Obama may be good for this country appears like a Phoenix on the horizon.

The idea that simply because We the People took that unimaginable step and elected a Black man at this time in history, says to me that people are demonstrating, with real actions, that we are all equal, is simply fantastic.

Yet, hidden under the surface is the risk that hatred and the white underclass, those that call them supremacists and style themselves on the belief that we are better than you, are still out there. Words that ring of the worst days of Hitlers reign ferment.

Geithner – Architect of the House of Cards?

http://www.nytimes.com/2009/04/27/business/27geithner.html?8au=&emc=au&pagewanted=all

Geithner, Member and Overseer of Finance Club

I am reading William D. Cohan’s book “House of Cards” and then I read this extremely long article on the Secretary of the Treasury and his culpability!!!! 🙁

As discussed in an earlier post our President says and I quote

“We cannot go back to an economy that is built on a pile of sand — on inflated home prices and maxed-out credit cards, on over leveraged banks and outdated regulations that allowed the recklessness of a few to threaten the prosperity of us all,”

One of the key-members of the executive branch of our Government was sitting in the fortress down on Wall Street, deep into discussions with everyone that mattered and is responsible for the abyss, crisis, depression that has taken the world into uncharted waters.

How can our President, that does not want to “go back to an economy built on a pile of sand, hire, support and continue to seek advice from Mr Geithner. this man was there there, saw the crisis brewing and helped to make it worse. Now we expect the leopard to change his spots and fix it. He had his chance when he was president of the NYC Federal Reserve. If the book I’m reading and this article are accurate he has had his chance and failed.

Please Mr. Obama find someone who is risk adverse, intelligent and not part of the club.

Do as you say

Today in a New York Times Article reviewing President Obama’s press conference, held Wednesday April 30th 2009, he is quoted to have said:

“We cannot go back to an economy that is built on a pile of sand — on inflated home prices and maxed-out credit cards, on over leveraged banks and outdated regulations that allowed the recklessness of a few to threaten the prosperity of us all,”

Reading these words all I can say is YES. Yet, I remain troubled. We’ve all read about the various programs our government is implementing to “fix” our economy. Too often these programs are simply a mechanism to take money from Honest Tax Payers and distribute it to those that over-leveraged themselves and where reckless. President Obama that is not what those word would suggest your policy is.

We seem to think that whatever we do the Government will bail us out.

Build on the Mississippi flood plane and when the river does what it has always done help those who built where the water has always been supreme.
Live on the cliffs in California. When the rain comes, and it will, the land will be washed out from under the foundation. Washington will come to the rescue.
Build on a fault line and when the earth shakes don’t worry too much papa will rescue you.
Run up your credit card debt, buy a home you can”t afford and daddy will punish the lender and protect the reckless.
Leverage yourself as Bear Stearns did and we will make it all better
…

Nature is and has been since God set the universe in motion. Moses in his dialogue with God learned of the beginning and in Genesis he recorded those first days of Adam’s life and how easy it would have been to follow the rules.

The LORD God put the man in the Garden of Eden. He put him there to work its ground and to take care of it.

The LORD God gave the man a command. He said, “You can eat the fruit of any tree that is in the garden. But you must not eat the fruit of the tree of the knowledge of good and evil. If you do, you can be sure that you will die.”

He gave us the chance to live in paradise for eternity. He gave us plenty. All he asked is that we work the ground, take care of it and not eat of the fruit of the Tree of Knowledge of …

I do not mean to look at original sin nor do I want to talk about how the serpent beguiled woman and man simply ate with her.

What I am concerned with is that Obama is saying all the right things. Yet, when we look to the results we see money flowing into the pockets of those that took us into the abysm. We tell credit card companies that they should reduce interest charges and not protect themselves. We simply seem to be protecting those that are reckless.

So President Obama, please do as you say,

Don’t bail out the banks and investment company, then let them skirt the rules.
Don’t fix it so people with maxed out Credit Cards can get themselves back in trouble.
Don’t help people and mortgage lenders who agreed to mortgages that could not be sustained by the home-owner.

This idea that some companies are just to big to let fail sounds smart. Yet, unless they are also made to appreciate their failings we will simply see it happen all over again.

They personally must feel the pain not simply do as Merrill, AIG and all the CEOs want to and do do, get a government hand out and still get the big bonus. They need to be held accountable and made to put their money where their mistakes are.

It is one thing to allow them protection under the law it is another to marry them

http://www.nytimes.com/2009/04/28/us/28marriage.html?th&emc=th

A Quiet Day in Iowa as Same-Sex Couples Line Up to Marry

New york Times 28 July 2009

It is one thing to offer same sex couples rights and protections under the law, call it common-law. It is another thing to allow them to Marry; which is a religiuously rooted event that should adhere to the laws God so long ago defined and have worked so well for so many years.

Same Sex couples are people and we should love them as we love our nieghbor, YET!

Is the UAW focusing on helping or simply being greedy

http://www.nytimes.com/2009/04/28/business/28auto.html?th&emc=th

G.M.’s Latest Plan Envisions a Much Smaller Automaker

By BILL VLASIC and NICK BUNKLEY Published: April 27, 2009 New York Times

Over the last months countless articles and news commentaries have discussed the plight of the US auto makers. Bankruptcy, restructuring and foreign buyouts are all on the table as the US Government pushes Chrysler and General Motors to fix itself or get fixed.

One item that keeps appearing and as I think back over the last years, starting when Asian auto makers built factories here in America, I am constantly amazed to see that the UAW is not part of the solution. I appreciate that their role is to protect the interests of their members. Yet they simply focus on protecting the lavish pensions (developed when Detroit was ever so profitable) that these individuals are “entitled” to.

I have a profound respect for much of the work the union movement has done to protect the American worker and to assure them that they are paid a fair wage, work in reasonably safe conditions and various other initiatives that escape my mind.

What disturbs me these days is that we complain about Outsourcing and the migration of jobs to India, Malaysia, in years past Ireland and countless other countries willing to work for less than the American worker and do those jobs that are “Beneath Us”. Why we have the human resources, just look at the current rate of unemployment. When it is zero then OK let’s outsource.

As the spokesperson for American workers and hoping they are aware that we cannot practice isolationist policies and impose tariffs and taxes to protect American jobs. I worry that they are not out there working with business and the government to protect those jobs or better yet grow the n umber of jobs while still exploiting the virtues of technology and the goal to reduce the end cost to the consumer, their members.

Instead they slow down progress. They do not take the lead in driving for quality and do not help to make sure what we build or do with American hands and minds is the best that can be made or provided anywhere.

In the article, what I am once again reminded of is the fact that they insist that the “Pensions” be protected 9screw the stockholders and debit holders. i do not see them thinking about the fact that the future of our children is at risk. Jobs will continue to go to where it is less expensive to produce and where equally skilled people demonstrate a willingness to work to put food on their tables.

The unions are one of the great strengths of America. At this time of economic turmoil, where greed is at the core of our housing crisis, the introduction of high risk derivatives and a truly expensive health care system. They should be leading the workforce to understand that the American dream never was intended to guarantee anyone everything and that the American dream was built on hard-work, prudent investment and quality.

If we can return to these roots and focus on quality, hard-work and assuring the future of America for our children, then we will see an upturn in the market and a return to full employment where immigrants are seen as a positive influence and not illegals stealing American jobs.

At the same time Management is equally responsible for our plight. Sub-prime mortgages, derivatives, short sighted corporate planning and yes greed leads them also to be UN-American. They are to focused on the next analyst briefing and their quarterly results and make sure they could sell more for less. So they purchase materials produced by non Americans. They do not insist on an equitable balance between pay, quality and work. Then to make matters worse they insist that they are paid millions of dollars, the Government then bail them out when they make stupid decisions; for what?

We are all in this together and although we know that communism and socialism does not work. Capitalism only works when we do right by everyone and devise a fair distribution of wealth: based on ability, hard work and ingenuity.

In God We Trust

More Atheists Shout It From the Rooftops

By LAURIE GOODSTEIN Published: April 26, 2009 New York Times

Not often am I driven to comment on other people opinions, especially when it has to do with Religion. Yes, I am happy to discuss my own beliefs and to shoot from the Rooftops – there is a creator and God did come down to earth in the form of a man to lead us into the light.

When the New York Times has such a headline I cannot resist wondering what these people believe and how they can be so sure that they are right and there is no God.

Once I was an agnostic. I was willing to wonder if he existed. Bottom line I was not willing to totally deny his existence.

In my quest to understand, I took the time to read the bible, read various authors discussions looking at the question from both sides of the table and eventually came to realize no matter how deep we go in exploring our Universe and how knowledgeable we become about the subatomic particles and the structure of DNA, we always seem to find that there is still more to learn and that we come to a point where when we turn the next page in our scientific exploration, there are still mysteries out there that with all of our science we cannot explain.

Chaos, so many believe that out of disorder will come order; well, when I look to the microcosm and I look out to the universe what astounds me is the beauty, the majesty and the order of it all. Only an artist could create the Star Nebula, only a composer could compose the symphony of sounds we hear deep in the words at night, only a master craftsman could form such a beautiful universe and build our planet.

What concerns me even more is that without what God taught us through Moses, who first wrote down the ten commandments; and then when Jesus condensed these down to two very simple one – love god and love your neighbor then what?. If we do not believe in God then we are also saying we do not accept that we all must live to a common set of moral standards. Anarchy would rein and the evil would overpower those that have the sense to figure out what God is said to have taught us.

Darwin wrote of evolution. Yet he did not say that all things emerged from the ooze. He simply postulated that species could evolve. With evolution as an understood reality I looked to the first chapter of Genesis and came to accept three things. First the day that is written is not our day. How could it be, the earth did not have day and night until the fourth day? The day that is described in Genesis is not our daysbut God’s day.

In a previous post I spoke to these seven days described in Genesis and found that even evolution is of Gods making. Only someone with his power could set in motion the mechanisms that would allow a bird to evolve and embrace its environment.

Finally, I accept and want everyone to have a voice. What I would also hope is that their voice is what it is. That it is the voice of a minority. Let them speal and be heard, let the majority ultimately decide. let us all remember that we are taught to love our neighbor therefore we must and will love everyone and help them to live with their beliefs in peace as long as they respect the peace.

All I suggest is that the Athiest study history, that they truly understand and listen to the greatest of scientists and are open to change. Stephen Hawkins, probably one of the greatest thinkers of our time recognized that even though he identified that “This Universe” emerged from the “Big Bang” he knew that without a creator, someone to have caused the light. that explosion of matter and energy, could not have been and without someone to establish the constants and help the dust to form planets. Without his intervention there would still be an expanding universe of dust. energy and nothingness.

When the Atheist can finally explain everything then and only then will they are able to say there is not God. Until then as long as we cannot move from that which Newton found, to those principles that Einstein understood, to the new learns that our great scientists reveal then there is only one plausible answer. Our universe, the cosmos and all that we known, don’t know and will never understand are God’s work.