Worth a listen
Worth a listen
For some twenty plus years, I can remember hearing people speak of the dream of an economy without coin and paper money. A dream, driven by the desire to promote the use of electronic payments.
Over the last months, a number of articles focus on promoting the idea of a cashless society. They all speak to the advantages and attempt to promote the concept, arguing we can:
The business case for a merchant to eliminate cash seems to be beneficial. Many have tried and succeeded to no longer accept cash.
At the same time articles report on the new regulations; various cities and states are implementing and considering. These regulations are intent on outlawing merchants from going cashless. The argument often focuses on how eliminating cash disadvantage the underbanked.
Then there is a reality! As a consumer, I recently have been surprised at the need to carry cash and the unsettling pleasure of finding out I still had cash in my leather wallet.
The first wake up to this reality took place while driving from St Simons, GA to the Orlando International Airport. In the trusting hands of Google Maps, I traveled down I-95, across I-4 and was directed to the FL-417. Suddenly a road sign informed me that I was on one of the various Florida toll roads. Above my head was a road sign indicating which lane, based on my preferred method of payment, to move into. Driving a car that was not mine and knowing it did not possess a PeachPass, my only option was cash.
Fortunately, I had cash and was able to continue my journey.
The following Friday my father and I went to The Lodge to play Sniff, a dominoes game. The game was competitive and cash was the only method to settle. With a bit of cash in my pocket, I was able to pay the few dollars I lost.
One Saturday a street vendor in front of the local Harris Teeter was selling spare ribs. When I went to pay they informed me, they only accepted cash. Once again I was fortunate, I had enough cash and was able to buy those delicious ribs for dinner.
On various Sundays, when the collection plate came around, I’ve had a check or a bit of cash and was able to leave my tithing.
On a number of occasions, the valet, tour guide or other service individual deserved a tip and I’ve had a few dollars in my wallet.
Two more events brought the reality of how society does not want cash to disappear.
One morning, I wanted to enjoy a pastry. Not having $2.75 to pay for the Danish, Sweet Mama’s, a local baker, charged me $0.50, an eighteen percent surcharge, simply to use a credit card
Finally, yesterday as a guest for lunch at the local Rotary Club, I was confronted with a series of cash only events. This time I did not have any cash and was not in a position to contribute to various worthy causes.
We dream of a cashless society. Yet churches, valets, toll booths, street vendors and the Rotary all continue to desire or require cash. Some are not even willing to accept anything but cash.
Looking at our society from two different angles, we must accept the continuing need for cash. Be it the underbanked, unable to acquire a credit or debit card; or those who carry many credit cards, both need to use cash simply to eat or enjoy life.
Later today I will have to visit the ATM and make sure I have a bit of cash in my wallet.
Biometrics are probabilistic, therefore not 100% accurate every time
They should not be shared in central databases. If they are there must be safeguards and strict privacy policies associated with their use
The better approach is to use the biometric to unlock your device or prove you are present.
Your device should then be cryptographically authenticated by the relying party.
The relying party should maintain a list of devices (Authenticators) you register.
Active verification when the risk demands assurance of the individual who is authorizing or instructing.
As we think about the world we are living in and the world we want to live in. We must balance friction and convenience against the potential risks which will emerge as technology blossoms and expands to touch ever part of our lives. This morning I got a text informing me of the 200 million cameras the Chinese had watching their citizens. I immediately remember the CATV system in London and
what parts of the City it covers. Its goal record everyone’s movements to protect against terrorists. Airlines are talking about ticketless travel and some are speaking of passport-less and ticketless airports. We wonder if Alexa is recording our every word and we know our PC, Tablet, Baby monitor & mobile phone cameras and microphones can be used by: who knows who, to watch who knows what, whenever they so please?
Is this the world we want to live in? Or would we prefer our cities to enact laws like those recently enacted in San Francisco. This law is meant to ban the use of these various cameras and listening devices from being used to identify everyone they see or hear.
This conversation then immediately bleeds into the question of our right to privacy. With all that the internet offers for free and what all these devices are capable of sharing; we’ve given our privacy away.
How often do you wonder why the ads you see seem to attempt to sell you exactly what you recent read about? How often do you wonder why you no longer can easily find the site you are looking for? Instead you have to filter through the search list to get past all the ads. How many of us even understand the information people can glean from what we do and were we are; when we use or carry our devices around?
On one side of the discussion is reality. As has been the case for as long as I can remember. TV, radio, newspaper, magazine, browser, social media, much web content and mobile app are funded by advertising dollars. Spent by those who want to convince some of us to buy what is on offer. It is these advertising dollars which pays for the content and ultimately decides what will survive the test of time. On the other side are the politicians, regulators, lobbyist and corporations who are focused on one thing. Helping people prosper or worse protecting some so they can continue to prosper.
The acquisition of wealth, the construction of infrastructure, the destruction of our enemies or the support for those without; is all about money.
If we seek to protect our privacy and be assured, we will not live in a surveillance state. We must be willing to read the fine print and be ready to pay for what is now free. We must be ready and willing to take the extra time to pull out our passport, enter our user name, present our boarding pass. We must insist on the necessary friction to protect our identity and our freedoms.
If convenience is what we insist on. Be assured, companies will happily build solutions to remove friction. Beware, removing friction, when it comes to your identity or privacy, means you will allow people and organizations to collect and store everything they can about you/ Their goal to identity you and without friction, with the purpose of serving you or better said profiting from your actions.
All of this is more than the Uber experience. Uber recognizes your phone and account not you.
This will be a world where the system behind the camera will see you, compare your face to all the faces on file and determines it is you. Therefore, knowing who you are, it can do what it is told to do; because it is you.
Cash is king let us never forget it. Cash has always been the primary form of payment. It was until very recently accepted everywhere. Most likely will once again be accepted everywhere especially given the need to make sure we do not disenfranchise the unbanked and underbanked will remain the default form of payment
This said, what always amazes me is how so many authors forget Apple Pay, Google Pay and the other NFC based mobile phone based payment solutions are simply another device capable of carrying your debit and / or credit card credentials.
What many of these authors are starting to remember is how much it costs a merchant to accept these alternate forms of payment. I wonder when they will also begin to appreciate how many if not all of these alternate forms of payment only work when the power is on. Our always on society assumes power never goes off. We dream of everything in our mobile phone and forget when we last could not use our phone because the battery was empty. Or the store clerk who could read your card because the power went down.
This is one of the redemining facts about cash. Cash exists without power and can be used whenever.
When I started to read this article, https://www.pymnts.com/news/b2b-payments/2019/wespay-corporate-faster-payment-adoption/ , my first thought, why would anyone in accounts payable want to pay a bill sooner than it is due. Clearly someone in accounts receivable, the CFO and the treasurer, is in need of a strong cash position. Therefore therefore, wants to bring cash in as fast as possible. This classic struggle between the buyer (accounts receivable) and the seller (accounts payable) begs the question – Who gains from faster payments and who loses?
Clearly the financial institutions are stuck in the middle.
If the competition offers the service, then, the financial institution simply must decide if faster Payments creates a competitive disadvantage.
The question is not if – it is when.
Do we the consumer care? Today we have credit and debit cards which allow us to pace the movement of money. In the case of debit – today. In the case of Credit – some number of days after we get the bill. We can set up autopay facilities for those every month payments. We can schedule money transfers to occur on the day we desire.
From a business and technical perspective the movement of funds immediately upon instruction, makes good sense. We the receiver are assured those funds are good funds. We the sender know the moneys have been sent and received. Therefore, whatever subsequent result can be expected, now!
365/7/24 seems to be what instant gratification is all about. We want everything now and have lost the excitement of expectation.
All this said, there are risks we must consider when deciding to employ faster payments. There is no recourse. Once the moneys have been authorized the moneys are in the hands of the party you transferred them to. Only if they so desire, will you be able to recover from a mistake.
Worse still, if someone is able to assume your identity then an even greater risk exists. The funds are gone. The party receiving them will have no interest in addressing your lose.
I ran into this site today and am happy to see how Josh has offered a listing of sites, across multiple verticals, who have and have not embraced Multi-Factor Authentication.
What the primary factor is, is the key to the strength of authentication.
“What You Know” could be extremely secure, except we depend on the human to make sure they protect it, make it unique and complex.
“What You Are” can only be as secure as the quality and accuracy of the sensors and the algorithms used to match what is sensed now to what was registered then.
For me a “Restricted Operating Environment” capable of securing secret and private KEYS and use them to securely performing cryptographic functions, be they Symmetric and / or Asymmetric is the primary factor. The DEVICE(s) we use to access the service provided by the relying party simply needs to be registered, recognized and therefore the UNIQUE “What We Have” factor.
If we know the device is UNIQUE. Then the only outstanding question is, is the registered user using it, while not under duress. If the relying party is not comfortable with the presence of the registered user, then the Relying Party needs an additional factor to assure presence. Be it the “What You Know” and / or “What You Are” one adds to assure presence during the transaction or the authentication dialogue.
If the Relying party is comfortable the registered user is using their registered device, why add friction?
Prevention is what we need to focus on. Lock the door with strong keys . Detection is after the fact and necessary. Investigation helps to punish the evil doer and improve the quality of security.
We need to focus on making sure the methods used to allow someone onto the relying parties website or when they execute a transaction. Like in the physical world, it is about making sure the user’s KEY is unique and the right individual is in possession of the the key.
In other words. The user is present using a registered and recognized device.
Over the last couple of years the reality of fingerprint cards is a hot topic in conversation, white papers and press articles. It led me to think about the challenges and opportunities associated with this intriguing convergence of technologies.
My purpose is not to determine which solution is best or which companies are developing and selling them. My goal is simply to explore.
The first consideration begins when the card is constructed. Here we must ask the mechanical question relative to how the electronics are integrated into the strata of an ID-1 card. This then begs the question of making sure this new card conforms to the specifications dictated by Payment, Networks, Governments or other bodies who define the use of these branded cards. If we continue to think about the card manufacturing process we need to think about electronics and the use of heat in the typical lamination process or the inclusion of metallic materials used to create a particular look. One needs to think about the method of connecting the various internal components to the other electronic elements as the fingerprint scanner, antenna(s)m LEDs, batteries, the EMV chip or contact plate on the face of the card.
The second set of concerns must be related to the personalization of the card. First question is where will it be personalized? in a branch or within a bureau? How will it be personalized? With a thermal printer, laser engraver or embossing machine? Will any of the personalization processes adversely affect the electronic?. Similarly it will be appropriate to confirm whether any of the various card transport mechanisms will disrupt or damage the sensor and related electronics.
At some point in the processes the consumer must register their fingerprint and the resulting template must be instantiated into the card. How will this be done? Some speak of an in branch process. Others talk about some type of first time cardholder activation process performed when they receive the card in the mail.
Clearly there are a lot more questions the issuer, card manufacturer and personalization provider need to address. Let alone the method of making sure the cardholder knows how to use the card at the point of sale or ATM
The key question is the cost of the card, is it worth it?
Each morning I read trade articles on Blockchain, Faster Payments, Mobile Wallets, Authentication, Identity and other alerts & subjects of interest. Each day the writers leave me thinking about the future of society, howbwe will address cyber security, what we can do to funally eliminate fraud and which solutions will help us to mitigate risk. These then drives concern about where we will end up, as we drive to define effective means of identity and authentication, capable of supporting the individual desire for convenience and gratification.
Facial recognition deployed to speed up entry and exit to and from countries and through airports are here. The surveillance state is emerging at alarming speed. These same cabilities could potentially deliver a safer environment. Which will it be?
Physical and behavioral biometrics many feel should become the primary means of authentication. Yet, false acceptance and more importantly false rejection will result in inconvenience some expect the consumer to tolerate while other remember friction typically ends up with the consumer abandoning the journey.
The cost of payments, the escalating concern of the retail sector, remund us thatnpayments are sourcesnof revenue for some and friction for others.
Identity theft and the ability to create synthetic identifies are the fears of many. Consumers whose identity is stolen struggle to regain their standing.
In the end all we seek is:
When we consider our activity in cyber space and even in in person. The most important element is the relationships we develop.
If we consider the characteristics of a relationship, we need to think about the question from the perspective of each of the two parties.
A relationship can then either be enduring or can be that of a guest.
Being assured of these truths is what proofing or identity verification is all about. Data privacy and need to know then filter into the conversation. This then needs to be balanced against risks the relying party and the user are taking,
With all of this in mind each party can decide what level of identity verification is required. This task is all about how one balances privacy, convenience, security and risk.
These articles cause me to think about the future and how the consumer will ultimately respond to the changes now taking place to how we Log-in to a website. Yesterday, or better said 10 years ago, we all understood that simple User Name password. A single screen with a reasonably consistent user interface. Sometime we might have to put up with two screens, One for the User name and the next for the password.
Today we are being confronted with a variety of methods to authenticate ourselves to the websites we frequent. Many register cookies on your machine and when your told they needs to be deleted, we are confronted with a second or even third layer of security and identity proofing. Often times we are then told to wait for an email sent to some email address we once registered or asked to enter the number we will receive in a text message to a mobile phone number we once registered. Some websites are using one of the various authenticators our mobile phones may now be hosting.
In my case, ignoring the various authenticators I have already deleted, I am using:
What is clear is there are start-ups and legacy technology companies busy trying to profit from authentication.
My concern is the consumer will be confronted with more and more as everyone claims they have a better widget capable of securing our digital world.
Why not come to consensus on a common approach to authentication?
The week of March 25, 2019 I had the opportunity to visit with a room full of community banks with assets in the 100 million to billion range. Organization with 25 to maybe 300 staff.
The presentations taught me more about the difference between what large International Organizations worry about and what these small community banks need to learn. Faster Payments, Zelle, same day ACH all new services these organizations must integrate into their organization, both technically and procedurally.
Things I have been exposed to are new challenges for these small town banks.
Words like liquidity risk clearly top of mind. Yet, as we move from over night settlement to real time settlement.
Phone fraud, risk mitigation all greater challenges not necessarily appreciated yet alone understood.
In the end what is clear these community banks exist because of the small towns they understand and work within. Do those of us exposed to a larger world understand what drives these communities banks, at least not I.
Another article published by PYMNTS.COM causes me to reflect on a discussion I had last we at the Payment Summit organized by the Secure Technology Alliance. When the US Faster Payments work groups where stood up on e of the working groups focuses on security, yet no particular drive exists to protect the consumer of the corporate treasure from their account being hacked into by some phishing, vishing or other criminal act. Account takeover will become a much more interesting attack vector. Moneys will irrevocably flow out of the hacked account and to whatever account the criminal so directs them.
Key word real time gross settlement and faster payments depend on the irrefutability of the funds. once executed they instantaneously transfer to the receiving party. What is required is a concerted effort to implement strong multi-factor authentication, at least at the time the transaction is authorized by the sending party. Some will say the risk is no greater than what exists today when a consumer or treasurer executes a Wire Transfer or any form of transfer between two financial institutions. This maybe true. the availability and assumed convenience will as the article described lead to heightened risk.
As I have written in other blogs we need to embrace strong Multi-Factor Authentication. The standards exist, the security of the device in many case is present. Relaying parties need to decide security is worth the investment. They need to recognize the value of satisfying the consumers’ need to have access to their funds properly protected.
As I skimmed through this article I was reminded of the reality of biometrics. It is a statistical algorithm designed to compare what was registered to that was just sensed. It is an imprecise process. The author reminds us of the importance of our identity in each and every interaction we engage in. She further ponders the question, of the potential threats to the biometric solutions that countries, people and enterprises are embracing, as we work to address the questions of Authentication and Identification in our complex digital and physical world.
The article asks the questions:
Finally there is the question of the accuracy of biometric matching. It is interesting to observe the comparison of the accuracy of biometric matching to PIN or password matching. We all recognize the challenges of PIN and password. It is not the concept it is the question of how many complex PIN or passwords is the human mind capable of retaining without writing them down or storing them someplace that can be compromised.
As I have argued in other blogs, the answer must be in the possess of something unique which has a False Reject Rate FRR and a False Accept FAR Rate, both approaching zero. Clearly the PIN or password has such a characteristic the challenge is in remembering so many. An object or a thing “Something You Have”, be it a card, phone, watch or bracelet with a Restricted Operating Environment inside e.g. secure element, TEE or TPM, secured using strong cryptography, paired with a biometric makes the most sense.
As I sat to write, I was drawn to the Wikipedia’ Bitcoin article. As I read the story of how it all happened memories and concerns once again flowed through the neurons of my mind. Silk Road and their involvement and the evolution of the value of a Bitcoin, struck me as a magical mystery tour through a world of mathematicians, anarchists, profiteers and speculators.
I then remember reading
an element of a report from the Bank of International Settlement on crypto currency. The picture above is intriguing for those of us who appreciate the complexity of payments. The article gets ever so intriguing when one continues to read and finds this interesting illustration of
the difference between what we all are familiar with and what those who understand DLT and Bitcoin appreciate. The central focus of this new technology is to address one and only one concern. Trust in the intermediary.
I must admit this particular article is not the one I originally intended to speak to. I do though recommend reading it.
The article I had intended to reflect on is Central Bank Cryptocurrencies. In this document they speak to the possibility of the banks issuing a stablecoin. The recent announcement of JPMorgan Chase is one example of such.
This then causes me to reflect on the various use cases and conversations with people about the potential of DLT. I wonder why, at least here in the USA with our judicial and regulatory framework and the rule of law; we would seek to replace the existing intermediaries with a permissionless distributed ledger and the associated consensus mechanisms of a public ledger. There is enormous and growing cost in consensus built on “Proof of Work” and massive duplication of the ledger or as most call it the chain. Be it the electrical cost, the cost of a data center or the specialized computers necessary. The people and companies, the nodes and miners, will expect a reward for their effort.
Which is cheaper, if a reasonable level of trust exists?
This is the question. There are those that believe Block-chain and all of the other distributed ledger technologies are the answer to everything. I would suggest one much consider:
This then begs the question of a permissioned or a permissionless ledger. Which then begs the question of governance and who is responsible to establish the rules.
It is clear there is value in the idea of a distributed ledger. I would suggest caution in deciding if it makes sense for your use case.
Helping you to understand the answers to these questions is what we do.
Often times I have wondered why everyone is so enamored with Tokens and Tokenization. Some time ago I begged the question of the broken token in a presentation to the Smart Card Alliance.
My premise is simple.
Identifiers are not authenticators. Replacing the identifier with a token as a result of turning an Identifier, the PAN, Social Security Number or other identifying index value, is a bandage on a festering mistake.
What we need to do is address the challenge of authentication in a convenient and frictionless way. Having to protect an identifier was the issue that created PCI and the whole issue of PII data. The Identifier should not need to be protected. It was and still should be an index and means of recognizing the relationship the relying party has with you. The authentication function is to make sure the person linked to that identifier is you!
User name: Identifier
Was not a bad start. Single factor authentication “what you know”.
Given the number of relying parties we all maintain relationships with, it is time to retire the password; Introducing “what you have” a secure thing (be it a chip card, Fob, Mobile Phone or Personal computer) and exploit the power of cryptography. Then add a second factor, a password or PIN, is a great first step. Changing the PIN or Password to a Biometric is a great leap into a truly secure environment.
The Key is to embrace the first factor “What You Have” a true token.SCA Workshop Tokenization - 2015
We are here to help you figure out the right approach for your organization.
CEO, Market Platform Dynamics
Last week in your publication I read the article Deep Dive: Security In The Time Of Faster Payments and I had to offer the following thoughts:
The concept of Multi-Factor Authentication is based on the idea of layering multiple authentication techniques on top of each other.
We typically speak of three factors “What You Have”, “What You Know” and “What You Are”.
When we think of “What You Have” we think of a “Thing”. An object that cannot be replicated or cannot be counterfeited.
An object “a secure computer” that can be upgraded and made more secure as threats like Quantum emerge.
A unique object with a False Reject Rate FRR and a False Accept Rate FAR approaching zero.
In the physical world “the thing” is a card or passport. You will remember our first discussion, we came to agree the “secure computer” embedded inside provides a future proof mechanism. In the digital world, we depend on Cryptography. This Thing, inside our computers, mobile phones and other technologies; many refer to as a ROE “Restricted Operating Environment”. Technology people may call it a Secure Element, a SIM, an eSIM, a TPM, a TEE, an eUICC or even Security in Chip. Companies like ARM specialize in creating the design of these things and silicon manufacturers embrace and license their designs.
Today these connected devices (be they: personal computers, identity & payment cards, FOBs, mobiles phones, bracelets, watches and hopefully every IoT device) need to be secured. This array of cheap ~$1 security circuitry provides a place to create and/or store private keys & secrets keys, perform cryptographic functions and assure the integrity of the BIOS and software being loaded or currently running in these computers.
Think Bitcoin for a second. The key to its architecture is the Private Key associated with your store of coins. Lose it and they are lost. Many people store these in hardware, based on the use of a ROE.
The second factor is all about proving that you are present. Behavior, location, PIN, fingerprint or passwords are second or even third factors, be they something you know or something you are.
This is what FIDO and what WebAuthN is all about. Especially since they introducing the security certification regime. This is what the Apple Secure Enclave is and Samsung and others embed into their devices. This is what we put into payment cards, government identity cards and the Yubico keys we see various enterprises embracing. This is what Bill Gates started talking about in 2002. BILL GATES: TRUSTWORTHY COMPUTING
As we move to Faster Payments we must move to Secure payments. Immutability and irrefutably become key requirements. To achieve this goal I suggest we need to understand one fundamental security principle.
This week the following title caught my eye Why Authentication Needs to Simplified for Users and Organizations. As one of those users who wants authentication to be easier, I was driven to reflect back on what companies have offered as mechanisms to secure this amazing landscape called the World Wide Web or the Internet. Each of the four devices on the right are samples of the primary factor “What You Have”. They date back over 25 years and each included a Secure Element currently referred to as a Restricted Operating Environment ROE. The one with the keyboard was issued to me by my european bank in the 90’s. It was used as step up authentication to secure the transfer of funds.
Cumbersome to say the least. I had to enter a PIN, a number displayed on the screen then type the number displayed on LCD into a field on my personal computer. What I always asked myself, why can’t they integrate that thing inside my keyboard or laptop.
Reflecting forward and thinking about what we have to do today to authenticate ourselves. We are confronted with a myriad of solutions each different each claiming to be the right answer to the wider question. Secret questions, PINs, patterns, passwords, an SMS or email with one time passcode, the Google authenticator, the Microsoft authenticator, the FIDO U2F keys, the Fingerprint sensor on my phone, the camera on my desk top, how I use my mouse, where I am located, is there a cookie in my machine.
On top of all of those commercial solutions, there are numerous demo authenticators clients and prospects have asked me to look at.
Each requiring the user to appreciate when and how to use it.
What is the answer. First we must agree on the requirements.
Starting with secure it must be able to offer a unique method of authentication that cannot be spoofed, counterfeit or otherwise compromised. It must have a false accept rate approaching zero and a false reject rate also approaching zero.
As it relates to easy to integrate the people who manage identity & access management systems IAM, computers and applications need to be able to quickly and with a minimum of effort, replace what is now used to identify and authenticate the user, with something new.
Intuitive this is the real challenge. There is the variety of users that must be considered. Are they their willing to learn or capable to make the leap, we hope they will?
Finally convenient which demands fast, easy, memorable and even something that is device independent.
How did we get here? Nobility provided individuals letters of introduction, sealed with wax and a signet ring to confirm the origin. This letter assured the attributes, capabilities and identity of the carrier. We trusted because of the seal we recognized
We, one of 7 billion people on this planet, have more contacts on LinkedIn, Facebook and a myriad of other social networks than many towns and cities when a ring and wax was an effective means of authentication.
Today we carry a number of documents. Each designed to provide proof of our identity. We simultaneously expect schools, employers, friends and other agents to be ready to offer proof of our claims. Did we graduate? Did we work there? Are we of good character? Did we received particular certificate?
Insurance companies, airlines, merchants, hotel and banks all provide cards and other means of identity. Each designed to inform someone of our rights, privileges or capabilities.
But, and this is a big but. We do not have an effective and convenient way of sharing these rights, attributes, and privileges on the internet. We let people identify themselves with user Ids and passwords. As the number of digital relations grow the challenge of maintaining secure passwords gets worse. As the challenges of phishing and vishing attacks got more sophisticated the risks, fraud and loses escalated.
We understand these challenges helped to secure card payment systems, were involved in defining new authentication standards and have seen and been exposed to way more ideas than necessary. Happy to help your organization’s secure your consumer and employee relationships.