Digital Money

Banks and operators announce peace settlement in mobile payments

[Dave Birch] OK, I just made that headline up. There's no prospect of such as far as I can see. We've all sat through countless conference presentations, panels and discussions about the potential for mobile proximity payments with nothing much happening. Apart from a few handsets in France and some 6131s used for transit in Austria, Europe seems to have ground to a halt. Nokia have withdrawn their SWP handset. So what's the problem? Patrick Gauthier's excellent piece on PYMNTS highlights three key roadblocks.

1. The economic buyers – i.e. the Mobile Operators and Issuers – have not solved their rivalry: Behind the scene a furious battle has raged on the ownership of the secure element used to secure transactions, a proxy for the question of who will own the customer relationship.
2. Consumers have good enough methods of payments as it is: Without prejudice for the vision behind NFC, the need for a new method of payment delivery based on handsets is tenuous... Absent a reason for consumers to want it and a business case for Issuers to support, standalone payments is an unlikely "killer application."
3. No good path has been proposed to reach a critical mass of users: If I had a penny for every time I have heard about "the-chicken-and-egg" problem, I would be retired by now.

[From NFC: Past, Present and Future - pymnts.com]

Patrick's analysis explains the paralysis in the operator-handset-bank domain. Yet the truth is that customers like NFC -- in fact, as Mark Ratcliffe said in one of our recent podcasts, the consumer response to NFC is very unusually positive in comparison to other new propositions -- and they want it: hence the action in the real marketplace is shifting from a consensual evolution at the interface between the mobile industry and the financial industry to a "screw you" revolution where more aggressive service providers (not only in payments) are using stickers (Bling Nation), microSD (Visa) and other technologies (China Mobile) to simply bypass Nokia and Telefonica, Apple and AT&T, RIM and Vodafone. Why? Well, because there is a genuine market drive for new solutions but the combination of banks and operators doesn't seem to be able to meet it.

Payments keep wanting to escape from antique form factors such as the business-size card (an artifact from the 1800’s), but all progress stops at the lack of cohesive revenue-share models between executives in the two sectors of financial services and telecommunications

[From Mobile: data use now outstrips voice - Javelin Strategy & Research Blog]

How will this change over the coming year or two? As the smartphone market continues to evolve, and as the proportion of smatphones in the user base continues to increase, the opportunity for conventional financial institutions and conventional telecommunications operators to extract value from the payments value network is surely vanishing. They’ve got no-one to blame but themselves: three or four years ago the MNOs could have added NFC to their device profiles and the handset manufacturers could have responded with a range of devices at a marginal additional cost. But just as the operators had a decade to build businesses based on music, applications, location and didn't (and then watched Apple come along and blow up the sector) because their real business is voice, text and data so some industry observers that I've spoken to are saying that the payments industry (and, for that matter, any other industry) doesn't want anything more than a reliable IP connection from the mobile operators: it doesn't want them involved in the business of providing services at all, not in the transactions, not in the provisioning, not in the management.

Will some of these new plays that go around the operators and the handset manufacturers succeed? I think they will: I've consistently said that the "coordination cost" for the complex telco-centric model for NFC has proved to be so high that it is a barrier to innovation, so simpler, less co-ordinated alternatives will prosper because they deliver popular services. So the complexity of the interface between the stakeholders has held the mobile proximity market back. So it's all the operator's fault? No. Forum friend Aneace Haddad points to a another problem on the payments front:

We are so far removed from solving significant pain, or even recognizing it when we see it, and so stuck in the nitty gritty technical whiz bang features that this technology can provide, that our industry just muddles along with little incremental improvements in payment systems that nobody gets really excited about other than ourselves.

[From Op-Ed: Why There Is No Real Progress in the Search for an NFC Alternative for Mobile Phones - pymnts.com]

Indeed. When you delve into the results of the pilots that have been going on in Europe, you can see that while consumers did like using their phones to pay -- there's no doubt about that -- it was other functionality that got them more excited: transport and transit ticketing, value-added services, loyalty and so on. It's worth noting that in Japan, where now 73% of mobile phones have NFC built in and there are more than 10m mobile proximity credit cards in use, transit is still the most popular use (as I wrote yesterday). The payments propositions are not, in themselves, innovative enough to generate excitement because they are just the same payment products that we have now, but on the phone. So having had a moan about the mobile operators, let's also have a moan about the banks, because they haven't brought any new payments services into the sector (where's the mobile front-end to the Faster Payments Service, for example?).

The banks, who aren’t trusted, and the mobile operators, who aren’t particularly interested in payments, at least not in the rich world. It seems likely that the market will need its own ‘iTunes’ moment, when an outsider steps in to create a decisive disruptive change.

[From The future of payments | Energy Bulletin]

What's the cool stuff going on in payments that is enabled or energised by the mobile? Is it banks taking existing payment services and moving them to the mobile platform? Well, probably not any more. Now it's Square and Blippy, it's Starbucks and Eagle Eye, it's multi-retailer loyalty (such as Aneace's own venture, Taggo), it's Bling Nation and Tape a l'Oeil. Time for the banks to step up to the plate, if you ask me.

banking, contactless and nfc, innovation, payments, prize, stickers

Japanese notes

[Dave Birch] I had to take a look at some aspects of the Japanese payments market for some work I'm doing for a customer at the moment and thought I would share some of the up-to-date data I found. Naturally, I'm very interested in the spread of contactless pre-paid payment products (which I'll call "e-purses" for the purposes of this post) because of the extent to which they displace cash. So how are the e-purses doing? Many thanks to our good friend Dan Balaban for putting together this up-to-date table of Japanese e-purse cards (we're only looking at cards here and not the chips integrated into mobile handsets).

Contactless e-Money in Japan (FeliCa chips)

Operator	Scheme	Cards	Monthly Transactions	POS Terminals
bitWallet	Edy	52.2	26	175,000
JR East	Suica	28.4	28.5	80,800
PASMO	PASMO	14.2	12.3	68,000
Seven & i (7-11)	nanaco	9.5	32	27,700
Aeon	WAON	13	32.9	47,000
JR West	ICOCA	5.1	1.27	68,000
Cards and monthly transactions are in millions. Card figures include applications on contactless mobile phones. Transactions for Suica, PASMO and ICOCA do not include fare collection. Contactless credit services, such as iD and QUICPay, are not included. Source: Sony Corp., Nikkei (1/10).

I also looked up the latest consumer responses on "What Japan Thinks" and found that (2/10) some 58% of Japanese consumers carry at least one of these cards and that their three main reasons for using them are:

1. Speed, as you might imagine.
2. Points! It turns out that many of the e-purse schemes offer rewards, presumably funded by the float and/or cash displacement at the retailer POS.
3. Coin replacement, because consumers don't want pockets full of small change.

As to where they use these products, the top two usage points are transit and convenience stores, just as you might expect. Hopefully, in a couple of years' time, this will be the same in London. One thing that did strike me as off the curve was that only a quarter of consumers reported using their e-purses at vending machines. I would have expected this to be higher, but perhaps that's reflecting my own spending patterns: maybe other people don't buy as many chocolate bars and Cokes on the Underground as I do. What do all of these numbers mean? Well, if you exclude transit, they mean that usage is still low.

The Japanese market is often cited as a success story by proponents of contactless and mobile contactless solutions, where consumers are estimated to make 1.8 contactless retail transactions per month per contactless device, and 4.7 customers make a contactless transaction on each contactless point of sale (POS) per day.

[From Finextra: Gartner takes a swipe at Citi mobile trial data]

Two transactions per consumer per month on average? They're not going to replace cash any time soon with that kind of penetration. What's the problem? Well, the POS terminals are expensive (we'll come back to that below) and, more of a barrier I think, there's no equivalent of "Square", so you can't use e-purses to pay each other. We can learn from this and do better in other markets that are moving to contactless, I'm sure.

contactless and nfc, mobile, retail, transit, tv

More than a blip

[Dave Birch] Part of my job is to mess about with new stuff and try to figure out what it means for the industry in general and for our customers in particular, so I've been having fun with Blippy. For those of you in the know, Blippy is a bit like Facebook but for your money.

On the site, which launched last week, people enter their credit card information and Blippy automatically sends out short, public "blips" of information about what people are buying -- including the prices of the items and where they were bought.

[From Blippy tells the world what you buy - CNN.com]

Basically, you sign up and hand over the login details for your various accounts.

Then, whenever you buy something, all of your friends will get a "blip" telling them how much you spent and where. And, of course, you get a feed of what all of your friends are buying:

Why would anyone do this? Well, put that to one side for the moment and just make a mental note that transparency is the new black and that they do. This introduces some fascinating dynamics into the payment space, as people exchange and share information about purchases and use to change their own purchasing decisions. By the way, I know what you're thinking and, yes, there is a filter so that your patronage of sex shops, Aldi or Fungal Footcreme Direct can be hidden. Anyway, I was so interested in this (and the fact that it plays to the "glass bank" transparency meme that I've been pushing with our customers for a couple years) that I went along to Blippy founder and CEO Ashvin Kumar's session at SXSW to see what the buzz was. It wasn't a huge audience, but they were generally positive about the service and (I thought) pitched in a number of excellent ideas during the session. My favourite, which I credited on my twitter feed to the chap with the "wooly hat", was to create a Blippy gift card so that you can see what your giftee spent the money on, a wonderful opportunity to create a new feedback loop.

In the new tradition of web 2.0, mashups, transparency and sharing, this will only be the first of an entire range of new services that will take Blippy and use it to do some great stuff. Of course, banks have all this data anyway, so their services will be the most compelling and excellent of all. Oh, wait...

Now, bear in mind that when I last wanted to query a credit card transaction I logged into my provider's web site and basically found myself looking at a paper statement, but on the screen. I automatically doubled-clicked on the transaction I was interested in and, of course, nothing happened.

[From Digital Money: Information rules OK]

I'm sure they're working on it right now.

legal and regulatory, payments, SEPA and PSD

Complacent or short-sighted?

[Dave Birch] I was in a "Chatham House" session recently (naturally, I can't say where or why) when one of the regulators present said that he thought that banks were being complacent about their future in retail payments because the Payment Services Directive (PSD) was opening the market up to other kinds of organisations (he specifically flagged up the technology-driven service providers) whereas banks' strategic plans are still founded on inter-bank competition over essentially unchanging basic services. This is why the European approach to regulation looks good: precisely because it opens up the market by bringing non-banks on board with light touch regulation around payments. We discussed this sort of thing a few times at the Visa/CSFI roundtables and I was excited to see that one of the companies that I'd invited along, VoiceCommerce, has already obtained a Payment Institution licence.

London-based payments group Voice Commerce has become one of the first fully authorized Payment Institutions (PIs) under the EU's new Payment Services Directive (PSD)... The license also means Voice Commerce can apply for Visa and MasterCard card scheme membership to start providing its own branded payment services including issuing cards to businesses and consumers and acquiring payment transactions.

[From Voice Commerce Receives Payment Institution License by Bank Systems & Technology]

In fact they have already gone on to become a full member of Visa Europe. The point is that you don't get competition by having unregulated non-banks, so it is in everyone's interest (including the non-banks) that there is a good regulatory framework. I think Europe has led the way here. The US will follow, I'm sure. There continuing calls for more harmonised regulation of the non-bank financial services sector and I honestly think that a model that opens up payment services while tightening up banking services is well worth considering.

The federal government spends at least 15 times more on consumer compliance and enforcement for banks and credit unions than for nonbanks — even though there are at least five times as many nonbanks as there are banks and credit unions,”

[From Consumer Groups Urge Regulation of Nonbank Financial Institutions - NYTimes.com]

Of course, you might ask why non-banks should be regulated at all if they are only providing payment services, but I would have thought it clear that a payments "wild west" doesn't help anyone, least of all those actually in the wild west, because businesses need regulatory certainty in order to invest in a field, and if there is no regulation there is no certainty..

The Federal Deposit Insurance Corp. (FDIC) released a report last week concluding that 7.7 percent of U.S. households, containing at least 17 million adults, are unbanked (i.e. those who do not have bank accounts), and an "estimated 17.9 percent of U.S. households, roughly 21 million, are underbanked" (i.e., those who rely heavily on nonbank institutions, such as check cashing and money transmitting services).

[From New underground economy - Washington Times]

Are all these people really going to be served by new banking services, especially at a time when the regulatory burden on banks is going to increase and make low-margin low-end products even more unattractive? Surely a better alternative is to provide basic payment services to them in a regulated fashion but with a very light touch and low entry barriers. Other developed markets are going in this direction. Taiwan has also decided to bring non-banks in.

The law, which took effect Jan. 23, allows companies with a capital investment over NT$300 million (US$9 million) to issue smart cards for cross-industry applications. This means a single card may soon be all consumers need to pay for most small purchases islandwide. Under the previous rule, businesses in non-banking sectors could issue prepaid cards for transactions at their own points of sales only. Dozens of such cards have been issued on the island, including President Chain Store Corp.'s icash cards that can be used at 7-Eleven convenience stores, and the ETC cards launched by Far Eastern Electronic Toll Collection Co. Ltd. for drivers traveling on the country's highways.

[From Taiwan Journal]

Now all of these cards launched into separate sectors can be used across sectors (as in Singapore, where you can now use EZ-Link in shops and Nets on the MTA). So in many places, non-bank competitors are coming in to payment services and providing so great new products. What bank, or group of banks, would ever introduce something like the PayPal Bump integration that we're all having fun with at the moment?

PayPal, which made its initial splash in 1999 by letting Palm Pilot owners beam each other money — only to abruptly drop the feature — has returned to its roots. The latest upgrade to the PayPal iPhone app lets you pay (and be paid) by bumping fists.

[From PayPal Fist Bumps Square | Epicenter | Wired.com]

If you look at this short video "The Bank of Facebook" from Thomas Power, you can see how more of this kind of thinking. I don't agree with Thomas about Facebook becoming a bank -- that is, a heavily regulated credit institution -- but I do agree that it can become a payment institution and, as Thomas point out, a facilitator of peer-to-peer finance. You can see, for example, that it might make sense for Facebook to buy Zopa. But getting a banking licence? What's the point. Apart from anything else buying a bank is cheaper than employing lawyers to get you a banking licence.

Virgin Money is acquiring private bank, Church House Trust, for £12.3 million plus an injection of capital into the business of £37.3 million.

[From Virgin Money acquires private bank]

I think it is entirely plausible to imagine a Facebook payment system that people find convenient and easy to use gaining instant scale, and I think it is entirely plausible that Facebook might put together some group-based finance plays (buying Blippy, who knows?) and I think all of this is really exciting. Is it fair to call incumbent banks "complacent" though? I truly don't want to annoy our customers, but I know they appreciate honesty, so I'll point out that one the other panelists called them short-sighted, which I think is a better description because it's a more accurate representation of the institutional business model involved in retail banking.

legal and regulatory, payments, SEPA and PSD

Harry Leinonen, Bank of Finland

[Dave Birch] Harry Leinonen is Advisor to the Board of the Bank of Finland and is in charge of payment and settlement system policy issues in the central bank. He is the Finnish representative on the payment and settlement system committee (PSSC) within the Eurosystem and has over the years participated in several other domestic and international authorities' working groups. For most of the past 30 years he has been active in developing interbank payment systems and standards within the Finnish banking community. In this podcast he talks about different e-payment markets within Europe, transparent pricing and the role of cash.

Listen here in either [Podcast MPEG4] or [Sound-only MP3] format.

podcast

Information rules OK

[Dave Birch] Forum friend Bob Hettinga sent me a copy of a paper on Computer-Mediated Transactions (18th January 2010) by Hal Varian of Google and I enjoyed reading it on a recent train ride. One of the points that Hal (who you may remember from the early days of cyberspace with the book "Information Rules" written by Hal and Carl Shapiro) makes is that computer-mediated transactions generate information that manual transactions do not and he suggests that using this information might be one of the key areas of competition in the future. I think this is spot on (which is why I am drawing your attention to it, obviously) and I have mentioned before about the opportunity to use payment-related information to generate additional value for customers and merchants alike.

This was echoed a couple of days later at an Evershed's "Thought Leadership Dinner" that I was invited to. Shashi Verma from Transport for London gave a very interesting after-dinner talk in which he mentioned that the use of information had not been part of the business case for migrating from cardboard tickets to Oyster cards, yet analysis of Oyster information is now a crucial process that saves literally hundreds of millions of pounds every year by directing expenditure more efficiently. Very small changes made to train timetables, for example, using the anonymised journey data from Oyster, can reduce average journey times or overcrowding in ways that simply could not have been predicted.

A day after this, I was in conversation about removing cash from festival sites (music festivals are very popular in the UK and a very big business) but this time the use of the data generated was very much part of the business case: once people are buying the vegetarian curry, real ale and organic cotton T-shirts using contactless wristband or mobile phones then the merchants have access to real-time sales data that will make a big difference to their bottom line.

Now, bear in mind that when I last wanted to query a credit card transaction I logged into my provider's web site and basically found myself looking at a paper statement, but on the screen. I automatically doubled-clicked on the transaction I was interested in and, of course, nothing happened. So I called them up to ask for more information about the transaction, and they couldn't give me any, saying that I would have to call the hotel in question. The problem was that the charge was for a hotel in France, and I hadn't been in France. So ended up having to call and spend considerable time on the phone to discover that the charge was through a French company but was for a hotel stay in Spain. Everyone's time (and money) was wasted because I couldn't get to information that the participants had but couldn't even access themselves. But I digress.

banking, currency, mobile, payments

Talent

[Dave Birch] Wow. The feedback that I've been getting about the Consult Hyperion Digital Money Forum is fantastic. I'd like to claim all the credit, but I just can't. So for those of you who weren't able to join us, I thought I'd try and explain why it worked so well and to give credit where it is due.

I'm always very clear and honest about our motives for running the Forum. Consult Hyperion is a consultancy, not a conference company. We run it as a not-for-profit event (which this year supported BUFFER, Action Medical Research, Jubilee Action and the Prostate Cancer charity) to reinforce this point. As a consultancy, we have a reputation for helping our customers -- who range from Transport for London and the Bill and Melinda Gates Foundation to Barclaycard and First Data -- to deliver new products and services using new technology for secure electronic transactions. We can't generate all of these new ideas ourselves, so we use the Forum to explore, to question, to connect, to understand and to play with the boundary between new technology and business, and I think we succeed in doing all of these things and having fun at the same time. But why was it so good?

First of all, it's the sponsors. Visa Europe have been supporters of the Forum for some years and they share our commitment to genuine discussion and debate, genuine learning about the future. They're not interested in a bunch of marketing slides any more than we are, and as the main sponsor they provided not only money but encouragement and ideas. I can't thank them enough. Our supporting sponsors, ACI Worldwide (who paid for the entertaining pub quiz, drinks and prizes) and Olswang (who paid for the speakers' dinner and the books we gave out) were fantastic and enthusiastic. ACI Worldwide have been with us for many years and their forward-looking attitude is much appreciated. Our content partner CGAP not only suggested some speakers and panelists who delivered outstanding input but helped us to develop an important part of our thinking about the role of electronic payments in attacked financial (and therefore social) exclusion. Thanks to all of them: their support gave the event a head start.

Secondly, it's the speakers and panelists. I try very hard to choose people that I personally respect and I also try very hard to bring together people who can help to make us all think by their combination or juxtaposition in order to exploit the nature of the event. Since it is always limited to a hundred people, there is plenty of scope for interaction and discussion once the speakers have set the tone.

Sometimes, though, even I am surprised by how well this works. I'll give you two examples from this year.

The kick-off session that was a launchpad for the event so good that people were still talking to me about it two days later. It made us at look like geniuses for the brilliant juxtaposition of Tom Levenson and James Allan, but the truth of the matter is that James was due to present at last year's Forum after I'd blogged about him back in 2008 but was unfortunately ill on the day, which was why he was speaking this year instead! However it happened, though, it was an outstanding session. Novelist Martin Baker as chair and two speakers, with no Powerpoint, keeping an audience engrossed, entertained and stimulated for 90 minutes.

Tom told the wonderful story that I touched on back in January, laden with resonance for these troubled times, of the collapse of England's medium of exchange and the subsequent revolution at the Mint under Sir Isaac Newton, a short period in our history where the framework for today was laid down: the industrial Mint and the Bank of England. Commerce was crippled because there was no cash, but by the time Newton died the City was on incredible trajectory. James Allan's decision to try and live in London with no cash, using electronic payments only, was voluntary but no less illuminating. Personally, I found the most surprising part of his story was that fact that one transaction in two years that he was forced to conduct in cash was not the desperate purchase of £1 bottle of water at a pop concert or the fiver to a desperate mate but the UKP2,000 deposit for apartment rental to landlords who didn't trust e-banking (so they said: many in the audience voiced the suspicion that this was all about tax evasion).

The second example was the expert panel on innovating out of poverty: with CGAP's help I had brought together DD Dedo, the largest branchless banking agent network in Columbia, easypaisa in Pakistan, Ghana's main mobile operator, a key regulator from the Philippines and (again by utter chance) an expert researching London's migrant communities. Together they provided such a comprehensive, fascinating and inspirational perspective on the incredible impact of new technology on financial services for the poor that you really could have heard a pin drop while they were talking and the questions could have gone on for days. Again, it was the different perspectives that made the session.

I won't go through the entire programme, suffice to say that I, along with many other attendees, came away with a raft of new ideas to think about from smart banknotes through mobile-owned banks to energy-based currencies. Joe Di Vanna's helicopter view of the impact of digital money, Ignacio Mas' passionate exposition of the Financial Services for the Poor programme, Michael Salmony's defence of cash all played their part. Enough from me: here's what other people actually said about it:

• "Thank you so much for the absolutely wonderful two day experience of the Digital Money Forum 2010."
• "A huge thank you for including me in the forum, I met some really interesting people."
• "An eclectic mix of speakers ensured there was no room for boredom and it was a really thought provoking and enjoyable day."
• "Your fantastic Digital Money Forum."

The final piece of the jigsaw was everyone who came along. We have a very well-informed audience from a very wide spectrum of interests and they played their part too: if you scan the delegate list you'll see banks, telcos, non-bank payment organisations, business people, charities and NGOs, inventors, entrepreneurs, lawyers, consultancies and even the IMF. It's this mix that generates the energy clearly visible in the room and makes the coffee, lunch, tea and drinks breaks so pleasant. I'm passionate about the potential from cross-fertilization and I'm convinced to provides a direct benefit to our customers.

I've already been asked if there will be a 14th Forum next year and the answer is, of course, yes.

banking and finance, cashless, crime and fraud, EMV, id and authentication, innovation, money, money transfer, notes and coins, payments, smart cards, social and community

Ugo Bechis, EAPS

[Dave Birch] Ugo Bechis is the head of SEPA payments at UBI Banca and the chairman of the board of the Euro Alliance of Payment Schemes (EAPS). This is a pan-European debit card "scheme of schemes" that aims, rather like Monnet and Payfair, to be the European Commission's desired "third scheme" for debit cards across the eurozone. In this podcast Ugo explains the rationale behind EAPS and talks about the future of European payments.

Listen here in either [Podcast MPEG4] or [Sound-only MP3] format.

debit cards, EMV, payments, SEPA and PSD, smart cards

New Zealots

[Dave Birch] Never mind why, but I was reading about card surcharging in New Zealand. In particular, credit card transaction surcharging. Now, given my generally optimistic bent, I'm against this sort of surcharging, believing that the market should sort things out. Why pick on credit cards?

Commerce Commission general counsel Peter Taylor claimed that the introduction of surcharges meant greater transparency for consumers. Now the customers will be made aware of the cost of credit-card transactions to retailers.

[From More Retailer Introducing Credit Card Surcharges | TopNews New Zealand]

How does making consumers aware of the cost of one option lead to transparency? My argument is that we should either price all of the payment methods available to consumers, or none of them. If you have this weird sort of partial surcharging then you may misalign private and social costs.

Here's what I mean. Suppose it costs a retailer 1p to accept cash, 5p to accept a debit card and 10p to accept a credit card when someone buys a pair of shoes. So the retailer decides to apply a 10p surcharge to credit card transactions, a 5p surcharge to debit card transactions and nothing for cash. You would then expect customers to switch their payment method (as, indeed, the recent discussion about IKEA proved). Let's imagine that they all use cash instead. The retailer has saved money.

But the bank next door has to put more "dead" money in the ATM, which means another armoured truck and some more security guards. So the bank decides to charge people 50p to get money out of the ATM, but the people complain to the newspapers and their politicians (they want to charge me to get my own money out of the bank! it's an outrage!) so the bank is forced to back down and absorb the cost.

What is the net effect of all of this? The retailer has saved money at the expense of the bank, and to some people that might seem fair enough, but now bank charges have gone up for poorer people, there are more armed robberies and time and money is wasted counting, bagging and depositing the coins. Why is this a good outcome? I would prefer a much more explicit debate, since I really dislike behind the scenes lobbying for transfer payments, which is not capitalism at all but corporatism and (in some cases) cronyism.

costs and interchange, payment cards, retail

We're on, what, 3.1?

[Dave Birch] if you have a few minutes to spare, you might enjoy this YouTube video of Douglas Rushkoff talking in New York in November 2009. He says that the "operating system for money is obsolete" and gives a rabble-rousing (I mean this in the best possible way) call for monetary revolution to which I am not at all unsympathetic. He says that money is broken and that we need a more local, more distributed future. I won't spoil it for you, nor will I mention that I regard some of the monetary history as a little vague. Douglas' theory that current monetary arrangements date from the renaissance when local currencies were eradicated in favour of the "King's currency" by which the rulers obtained indirect tax revenues through seigniorage might be disputed by monetary historians -- King Alfred had a working system of mints up and running in the ninth century, and our very own Guildford had a mint by 975). In fact, when Alfred re-founded London in 886, it was the home of one of about 30 mints in England and by the time of Ethlered II (978-1016) there were more than 70 mints in towns across England, all minting silver pennies, the only English coin of the time. But that's nit-picking. The spirit of Mr. Rushkoff's complaint is surely correct. Just as the transition to an agricultural society saw the invention of coins for circulation instead of bullion and the transition to an industrial age saw the invention of central banking and credit money, so the transition to an information age will surely result in the invention of some new and novel monetary arrangement, whether Edward de Bono's "IBM Dollar" (in David Boyle's splendid "The Money Changers") or anything else.

I've been reading "trendspotter" Marian Salzman again, and she says that hyperlocalisation is a marketing buzzword for 2010 as people organise themselves into communities -- I don't think she means only in the geographic sense: my son's guild in World of Warcraft is as real to him as a community as the soccer team he plays in -- and I wonder if this is at least a pointer towards the shape of the next monetary system?

innovation, money, social and community, virtual worlds