Digital Money Forum

Security matters, but why?

[Dave Birch] At the M-Payments and M-Banking conference in Madrid there was a super presentation by Karin Huber on Mobicom's experiences with mobile payments, ticketing and related value-added services in Austria. One thing that Karin mentioned in passing was that, in the Austrian market, it seemed as if consumers were using fears about security as a means to rationalise their concerns about mobile in general: they didn’t like registration and other aspects of the service. In a way, they weren’t really concerned about security at all. This factors in with something else I'd been thinking, which is that consumers don't really understand security and they certainly don't understand risk (all poll evidence confirms this in spades). Therefore, what consumers want is for their bank, payments providers and merchant to give the appearance of security, which is something different.

I had to phone up to activate a credit card recently, and when I called the activation "hotline" advertised by the sticker on the card, I was put through to someone who tried to sell me identity theft insurance. "Are you concerned about identity theft" they asked me. I said that I wasn't, and the reason that I wanted a credit card was precisely so that if anything went wrong, it was the bank's problem and not mine. This, incidentally, is why I never use my debit card except at ATMs. But after I hung up, I wondered if that is the right image to deliver to credit card customers. Isn't reminding them that card fraud is massive going to drive them away from using their cards rather than reassuring them? Are there any psychologists out there who can help? If people don't, indeed, understand security but are using it is a placeholder for all sorts of other concerns, then it is possible that the payments industry may be making some bad decisions about how much security to implement and how to implement it. Perhaps people might feel more comfortable using their mobile phones (which are perceived as personal devices) rather than dongles, widgets, passwords and PINs and so even if the actual security might be lower than in another device, the overall security of the system goes up because more people use them rather than wholly insecure means such as passwords.

As an aside, for m-payment nerds, Karin also said some very interesting things about Mobilcom's decision to fold TSM functionality into the infrastructure. But that's another story.

Bruce Davis, the social life of money

[Dave Birch] Bruce is has been a pioneer of ethnographic approaches and insights in the development of new brands and businesses. His work on the social life of money was the basis for the creation and launch of www.zopa.com which was named internet innovation of 2006 at the CNET Network awards. A personal favourite is his “ethnographically inspired” whisky www.monkeyshoulder.com, created for William Grant & Sons which is following up its success in the UK with the aim of becoming a global brand.

By carrying out several major ethnographic studies in the UK over the last 9 years, he has built up a detailed and powerful picture of the trends and behaviours that are shaping the UK in the Noughties and into the “Teens” – told from the perspective of different individuals and communities. He has been ‘deep hanging out’ in many corners of our society including looking at issues of maintaining family life for single parents, working behind the counter of independent shopkeepers, what it’s like to be an anarchist on May Day, and the impacts of changing social attitudes to money and finance. He is a regular writer and speaker on the subject of branding, innovation and social trends and has started an excellent blog on the social life of money at Oikonomics.

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

Sterling service

[Dave Birch] Well this is rather exciting. The writer Bruce Sterling had a tremendous influence on me: his anthology Mirrorshades was one of those books that makes you think about things in a different way. It was one of the key texts in the history of cyberpunk fiction that has ended up shaping some of our collective thinking about the relationship between technology and society. This is why I was so excited to discover that I will be sharing a platform with Bruce Sterling at LIFT 08 in South Korea later this year. We will be speaking in a session on virtual money, where I imagine he will have far more interesting things to say about it than I will.

Microebb and microflows

[Dave Birch] The subject of micropayments seems to ebb and flow. I've just been putting together some review comments for a European Commission report on some stuff, one part of which asks whether there is a new need for new micropayment systems or not. I've posted an edited version of my response below because I'd like your opinions too. You might want to read "The Case for Micropayments" and "The Case against Micropayments" first! If you do, you may conclude that the mobile phone model of pricing seems right: you pay a fixed subscription for a bundle of services, but if you want more you pay extra, and you pay extra for stuff like ringtones. Seems reasonable: I don't want to be bothered about paying-per-page, but on the other hand I would like a simple way to buy content, just like I do on iTunes. In fact, one of the reasons why I buy music on iTunes and nowhere else is because on iTunes it's easy. Click. Done, One euro.

If we put nanopayments (ie, payments below, let's say, a few cents) to one side, and we assume that payments over ten quid will be dealt with through other channels, there's still a ten pence to ten pounds sweet spot that really ought to be filled by pre-paid offline contactless solutions in the physical world and some sort of equivalent in the virtual world. What that equivalent will be is not clear at all. Just to illustrate with a couple of examples that relate to the two different subsectors (ie, paid content and P2P) that I refer to in my response, I had a couple of e-mails about new micropayment targeting different environments. One of these was sparechange, a Facebook application for sending small amounts P2P between friends, and Znak it!, which is "coin" scheme for the web. In Znak it!, the consumer prepays for coins of predetermined amounts (as they did for Digicash, Millicent and so on) and then spends the coins on paid content at web sites. I'll give it a try when it's up and running. In sparechange the customers load a pre-paid wallet that is then used to fund P2P transactions. Unfortunately, I couldn't try it out because when I tried to load it using PayPal, this happened:

Just when I was complaining about contactless the other day, I found it really annoying to have the transaction declined but not to be told why. Anyway, I gave up, as any normal person (such as all the people who don't read this blog!) would.

Nymity vs. anonymity

[Dave Birch] In The Future of Money by Benjamin Cohen, the author says that one of factors that may make it difficult for e-money to substitute for physical notes and coins ("p-money") is that e-money cannot reproduce the anonymity of p-money. I said that I would come back to this subject when I ad some time to think about. Having done so, it led me to reflect on my experiences in the early days of e-cash, the age of Mondex, VisaCash, DigiCash, CyberCoin and all the others. I had certainly had that opinion in the early days: When I first began working around these schemes, I assumed that anonymity was a key requirement for cash replacement. For one thing, that's what customers said in market research, which was music to Mondex's ears. (Note that consumers also said that they wanted the ability to "lock" Mondex cards with a PIN, a feature that I never once saw used in the live service.) But after some time, I began to realise that I was misunderstanding the customers' desire for anonymity. For the most part, it wasn't a real requirement at all, but a kind of comfort factor introduced into the portfolio of cash-like features. To use the post-modern visualisation of Umberto Eco, we shouldn't have been designing virtual cash, but hypercash: Not an electronic version of cash as it is, but an electronic version of cash as it should be. I'm not advocating the construction of fantasy money that disconnects from the real world (Eco warns of the dangers of feeling "homesick for Disneyland" in "Travels in Hyperreality", whioh was one of those books you enjoy reading, but at the end realise that you haven't understood it) but more of an inclusive approach. We should be able to at least categorise the requirements of the various stakeholders (I don't propose to do that here) to get a better idea of what digital money ought to be aiming for, rather than raise the bar no higher than than an electronic simulation of the plastic simulation of the paper simulation of money that we have now.

(This, incidentally, is going to be my rallying cry: No more e-money, it's time for h-money! More on this later.)

Greens back

[Dave Birch] Payments, just like every other business, are acquiring a green tinge as the marketing folk get to grips with the low carbon economy. There have been some efforts before -- some of you may remember that "Visa Swap" earlier in the year -- and I'm sure there will be more of these (rather limited) initiatives to come. It's not transparently obvious to me that this sort of thing makes much of a difference to consumer behaviour but I'm sure every little helps. Consumer research from PricewaterhouseCoopers found that more than half of respondents would be likely to replace their existing credit card with a 'green' credit card if it helped them tackle their carbon footprint and two in five said they would give up an existing loyalty programme or cash reward card in favour of a green alternative. I know consumers' revealed preferences may be at variance with their environmental aspirations but you can see the trend building. Surely, a truly green credit card would be one that allowed you to buy organic tomatoes but not a flight to Spain. We haven't got that far yet, but Barclays has launched a carbon-offset corporate card. Barclaycard Business manages the process on behalf of corporate customers by providing them with commission-free access to the Certified Emission Reduction Market via Barclays Capital’s Emissions Trading Desk. So Barclaycard tell you how much your employees have been spending on air travel and then you can buy carbon offsets to match them and assuage your environmental guilt at allowing them to fly so much.

Technorati Tags: cashless, green, payments

The e-selfish gene

[Dave Birch] It looks like more of our attitude to money may be down to DNA than we might think.  I rather enjoyed the story in many of the papers yesterday concerning the discovery that the experience of losing money is processed by the brain in a similar fashion to pain and fear, which may well explain the reasonably well-known phenomenon that people dread financial misfortune more deeply than they value gains.  Perhaps it's time to add a new category to the blog, "neuroscience.

Technorati Tags: money