Cash is king, but kings are increasingly scarce.
There are two ways to look at threats to the electronic payment systems consumers and retailers – online and brick and mortar – rely upon: as an ongoing process of swatting down isolated and rarely successful attacks, or as a full scale war that the good guys are completely capable of losing. Since the holiday mega-crack at Target stores, I’m leaning towards the latter.
The point of sale is a critically weak link. Near term, U.S. retailers and financial institutions need to accelerate the switch to the chip-and-pin system that’s already standard in Europe. Magnetic stripes are laughably easy to counterfeit and there’s no independent and technically secure way to verify identity, particularly for credit cards.
Three possible longer term solutions were on display at CES. Clover makes a POS terminal that tries to solve the problem by 1. leveraging the Android operating system’s built-in security features and 2. providing a platform for retailer-specific apps and third party devices, for example NFC, that can be continually updated. Breaking the payment ecosystem up into more and smaller buckets has the advantage of compartmentalising breaches, but the disadvantage of variable expertise and diligence in implementation.
Two companies offered biometric solutions at the Showstoppers press preview event at CES. Hoyo Labs uses the sensors built into smart phones – primarily forward-facing cameras – to verify identities via an app.
Agnitio is commercialising voice recognition technology originally developed for the U.S. Army. Your identity can be verified either by an app that runs on your phone – the data that defines your voice print never leaves your device – or via a third party server. The profile it creates is based on inherent characteristics of your voice, and doesn’t depend on the way you say a particular word or even the language you speak. It can be tied to a particular pass phrase, though, for another layer of security (although speaking passwords out loud presents other problems).
There’s no shortage of imaginative kit. The war can be won, if consumers, retailers and financial institutions are willing to bear the trouble and cost required.