24/01/2011 - The end of credit cards is coming

The end of credit cards is coming

 

Mobile payments are expected to hit $214 billion by 2015. Transactions made by scanning a mobile phone at the register are forecast to reach $22 billion -- up from "practically none" last year.
 

By Blake Ellis, staff reporterJanuary 24, 2011: 11:00 AM ET

NEW YORK (CNNMoney) -- Credit cards may soon be as outdated as vinyl records. (Remember those?) And this is the year that the slow, steady march to oblivion begins.

You can already use your iPhone, Droid or BlackBerry to buy a hotdog at the ballgame, buy your Starbucks latté, or give a friend a few bucks by Bumping phones. But by the end of the year you may not even think twice about reaching for your phone to pay at the register instead of fumbling for your credit card. 

"Your plastic card hasn't changed since the age of the vinyl records," said Michael Abbott, CEO of Isis, a new mobile payment network. "This is the chance to bring payments forward from the plastic age and the vinyl records age to the digital age."

While companies have been experimenting with contactless mobile payments for years, 2011 is expected to be the year the technology really takes off. That's because millions of phones capable of making contactless payments are expected to be shipped out in 2011.

As a result, this pay-by-phone market is forecast to make up $22 billion in transactions by 2015, up from "practically none" last year, according to research firm Aite Group.

0:00 /1:51Your phone is becoming your wallet

"Mobile payment is going to get really interesting and is going to see a lot of activity in 2011," said George Peabody, director of emerging technologies at Mercator Advisory Group. "We're going to start seeing more and more people leaving their homes without their wallets."

But that doesn't mean it's going to happen overnight, said Jane Cloninger, director at Edgar Dunn & Co., a consulting firm specializing in financial services and payments.

"I definitely believe that the mobile wallet will eventually replace the plastic card -- but it's going to take some time because consumer habits take a long time to change," she said. "But where before it's been a lot of discussion, we're at the point now where you're going to start seeing momentum toward it and going to see it move beyond the trials and into reality."

Companies including Visa, MasterCard, Google, Bank of America, Citi and U.S. Bank are all testing contactless mobile payments, and many expect to roll out mobile wallets this year.

"2011 is going to be a very exciting, very dynamic year when it comes to mobile payments because it's the Wild West again, with all these players positioning in various different ways to redefine the digital payments landscape," said Michael Upton, senior vice president of online and mobile banking at Bank of America, which expects to launch it own mobile wallet later this year.

Meanwhile, AT&T, T-Mobile and Verizon joined forces with Discover and Barclays in November to form Isis and provide a rival to Visa and MasterCard.

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"It's a glorious competitive battle amongst some of the largest entities in the country," said Peabody.

The Isis mobile wallet will let consumers store multiple cards, make payments with the wave of their phone, check balances, receive coupons and use rewards points at the point of sale. But it may stretch beyond just the money in your wallet. Abbott sees the potential to include your insurance cards, driver's licenses, and other information typically found in a wallet.

"[Payment] is where we're going to start, but where it goes is wide open to the innovation of other players who want to be involved," he said.

Beth Robertson, a payments analyst at Javelin Research and Strategy, said that could mean developing ways for consumers to make contactless ATM withdrawals by simply waving a phone in front of an ATM as you would at the point of sale.

But because of just how much your smartphone now holds, it's quickly becoming your most dangerous device.

"We're increasingly living our lives on our cell phones...The problem is that we're not yet used to thinking about our wallet in terms of our phone," said Ed Goodman of Identity Theft 911. "No matter how good security on any type of mobile banking or payments, there are going to be people who are able to find a way around it -- it's really all about making sure everyone ramps up their awareness." 

18/01/2011 - Russia To Adopt Universal ID Card in 2012

Russia To Adopt Universal ID Card in 2012

by Aaron Saenz January 18th, 2011 

2012 will be the year of universal ID cards in Russia.

For all those conspiracy theorists out there, 2012 just got a little more ominous. As required by legislation passed this last summer, Russia will adopt a universal ID card starting next year. The Universal Electronic Card (UEC) is intended to eventually replace all local, regional, and national forms of ID, providing a central database through which Russians can access everything from medical insurance to ATMs. According to the official website, the UEC will be adopted by around 1000 national and regional services along with about 10,000 commercial enterprises. The mayor of Moscow has already declared it will be able to handle public transportation there, and we can expect similar adoptions throughout the nation. Will all Russians be carrying a single form of ID that is their only passport to all public and private services? Looks like it. A similar project has started in India, and there are experiments for related concepts in Mexico. Universal ID is starting to catch on around the globe. Where will it spread to next?


Ostensibly, the UEC is designed to push the Russian ID system into the 21st century. Not only is the card to provide a way for citizens to easily make electronic purchases (in person and online) it is supposed to cut down on fraud. While it doesn’t seem to include any biometrics, the card has other security measures. All information (whether for public or commercial use) will be stored in a database, not on the card. The UEC will have a number, a ‘passcode’, that points the user to the appropriate record in the database. It’s unclear what kind of readers (RF, magnetic strip, etc) will be able to access the UEC, but the site says that at least one (perhaps the only one ) will be contactless. For financial transactions users will be able to set predefined limits so that the card can only withdraw a restricted amount of funds over a period of time. Each use of the UEC will require the entry of a personal identification number, and get this, everyone will be granted a fake PIN as well! If someone is coercing you into using your UEC, then enter the fake PIN. Authorities will be notified surreptitiously while the transaction appears to be continuing regularly. I’m sure we can think of a dozen ways to get around that, but still, pretty cloak and dagger there, Russia.

Examples of how the UEC will work. Translations welcome.

Starting in 2012, Russians will be able to carry the UEC and start connecting it to their bank accounts, credit cards, bus passes, etc. Due to the legal mandate most of the businesses and all of the local/regional/national services will be required to accept it. Convenient, yes. Potentially disastrous? Maybe so, but Russia’s not going to be alone in this. India is adopting a universal ID for national identity, and is going to encourage public institutions and commercial enterprises to accept it. That UID, however, will contain some pretty thorough biometrics. Programs in Mexico (powered by a company in the US) will experiment with iris-based identification for public and commercial purposes, albeit on a smaller scale. Universal ID, especially those with advanced security features, seem to be a rising trend on the global stage.

There are some real benefits here. Convenience, certainly. Many Russians simply don’t have a way to make a secure purchase online, and their public system is a warren of overlapping ID cards that require an equally tangled bureaucracy. Properly set up, a UID tied into bank accounts could help you keep track of purchases and manage finances with greater accuracy. Security could also improve, but I think that any such system (even those that employ biometrics) are at best a short step ahead of criminal ingenuity.

I don’t think you have to be a conspiracy nut to notice the dangers either. With a single ID, agencies will be able to track personal activity more precisely. That could mean catching terrorists through financial detective work, but it could also mean a large scale invasion of privacy. Not sure if this is just old Cold War prejudice talking here, but I think Russia’s reputation makes that possibility seem likely.

In any case, whether or not Russia’s UEC proves to be a boon or bane to its citizens, it is certainly coming. And soon. The more often we see universal ID adoption, the more I believe that some form of that technology is going to spread to every industrialized nation around the world. Government or private issue, service or commercial orientated, biometrically enhanced or not – UID is on the rise. Whatever problems or advantages that may cause, we best prepare for them now.

[image credits: UECard.ru]
[source: UECard.ru (Google Translated to English here)]