Banks Suck, a fact of life for most. Fees abound, lines grow longer by the day, the banking industry is ripe for change. The advent of NFC payments brings imminent change closer. The tipping point for alternatives could be driven by the most basic need .. security of transaction.
APPLE and GOOGLE are launching Near Field Computing (NFC) payment architecture products, only to find opposition, by major retailers. Banking is in for a shocking realization, much like the RIAA. Change or Die.
The real battle is happening behind the scenes, away from the common transactions we consumers see daily. Beyond the ease of payment, a hurdle that should represent the REAL GOAL of payment technology, lies the kickback based architecture of credit card based payments. Monthly press releases from major retailers, concerning data breaches, show how vulnerable banks and payment systems are to a very aggressive hacking community. The crooks are not dumb. Yet the “Banksters” are standing their “old school” ground, hoping the storm will pass.
A lesson can be learned from the recording industry: The model is changing. Technology exists, in many different forms, a solution to the very broken payment model we use in the US. Real time credit card transactions are based on a very simple and (proven) hackable model. The solution lies in encrypted multi factor authentication. The specifics are too “technically spicy” to address in this post.
The ability to “swipe pay” has existed for quite some time. First introduced in Europe in 1982, and in the US in 1986, using a specific (and static) digital key is a long proven. Since the early eighties the tech has come a long way. WIth the advent of the Internet and open source encryption, the ability to generate a “use once” payment key is rock solid. Vendors of all types, and all sizes, refuse to use current tools. The ROI has not presented itself. It seems this ship has sailed.
Last year, in 2013, an orchestrated ATM attack .. using stolen ATM data .. resulted in a $45M haul. One weekend of activity results in a $45M haul, yet the banks decided this was not enough of a loss to result in a call to action to fix the issue at hand. The basic infrastructure is insecure. Current tech, when discussing credit cards and ATM transactions, is akin to a yard fence. No real security at all, when attacked by a semi sophisticated hacker.
Solutions are coming to market, with reference to alternative payments. In addition to Debit/Credit card payments changing transaction form, actual alternative currencies are also coming into play. The number of alternative currencies, like BitCoin, are growing by the day. Banks and traditional currencies must adapt or go away. Consumers, when challenged with an alternative, will find a new way to do business.
Traditionally alternative payment models have been spurred by hyperinflation and currency devaluation. The lack of confidence in payment models could cause new options to be driven to adoption. Though eCurrencies are less stable they provide alternatives not seen in “traditional” payment models. The ability to be anonymous, or not linked to a greater portfolio, inserting a firewall of sorts from a total wealth portfolio shows promise. When engaged in a financial war, a tank ditch is a good thing.
The current battle over who will win the war of payment models lies in the hands of the incumbents, the financial institutions. My war cry is different. Make a shout for change, vote with your purchasing dollars. Supporting your purchasing habits with more secure options will make your voice heard, and deny banking the ability to leverage their old school model, where the purchaser ALWAYS pays.
A secondary “win” lies in wait. Many vertical markets have realized a reduction in overhead, based on digital efficiency. Charging retailers and business with a “standard” set of fees, associated with Credit Card based purchases amounts to highway robbery. Servers do the majority of the heavy lifting, with regards to CC transactions. This realized reduction in operational cost has yet to meet the consumer and retailers at the point of purchase.
Maybe we, as a buying market, can help realize the savings already seen by the banking and CC industries. Efficiency in the buying process, combined with increased security, should be a WIN-WIN. Only through a common voice will the masses grab the golden ring, a secure transaction that does NOT include a payday for the middlemen, heavy lifting that truly lies in digital infrastructure. Ostensibly a zero cost and high profit environment for the CC companies and banks, standing in the middle of virtually every eTransaction.
Vote for Change. Vote with YOUR Dollars. Pay in CASH, while it still exists. Maybe the credit industry and banks will take notice.
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