Monday, August 11, 2008

Again, Debit Growth Far Outpaces Credit

U.S. credit card transaction and dollar-volume growth once again played second fiddle to debit, According to the latest financial reports from MasterCard Inc. and Visa Inc., U.S. debit and still-strong international growth kept the networks’ operating earnings in the black during their quarters ended June 30th.

MasterCard’s U.S. debit- purchase transactions, excluding the PIN-based Maestro brand, rose 17.8% to 1.9 billion in the quarter from 1.61 billion in the year earlier period. Over the same period, U.S. debit purchase volume rose 18.6% to $79 billion from $67 billion.

In contrast, U.S. credit and charge card purchase transactions rose only 0.8% to 1.59 billion, and credit/charge purchase volume increased just 2.8% to $142 billion.

In all, MasterCard’s U.S. credit and debit purchase transactions rose 9.4% from the corresponding year-earlier quarter to 3.49 billion. Worldwide, MasterCard’s network processed 5.22 billion transactions on MasterCard, Maestro, and Cirrus cards, up 13.6%. U.S. credit didn’t fare as badly at Visa, yet growth still fell far short of debit. U.S. debit payment transactions rose 15.8% to 4.91 billion from 4.24 billion in the year-earlier quarter.

Debit purchase volume, including that on Visa’s Interlink PIN-based network, hit $193 billion, up 16.3% from $166 billion in fiscal 2007’s second quarter.

On the credit side, U.S. payment transactions posted a 7.2% increase to 2.17 billion from the year-earlier quarter’s 2.02 billion, while payment volume rose 8.1% to $195 billion from $181 billion.

And the Password Is...(Information Card)

Information Cards (protected by a PIN) look to be a logical replacement to passwords.  Microsoft, Google and Oracle are among the founding members.  So what exactly is an information card?  Here's a brief overview from the Information Card Foundation: (ICF)

Information Cards are the digital, online equivalents of your physical identification credentials such as a drivers license, passport, credit card, club card, business card or a social greeting card. Users control the distribution of their personal information through each Information Card. Information Cards are stored in a user’s own online wallet (called a “selector”) and “handed out” with a mouse click just like a physical ID card.

Information Cards can be issued to users by organizations for general or specific use. Users can also create their own Information Cards as a shortcut to avoid the endless process of filling out web forms. But more importantly, the infastructure behind the cards allows for trusted sources (a bank, a credit union, a government office, etc.) to verify specific information (“claims”) made by a user. In other words, Information Cards give users the ability to make claims about themselves, verified by qualified 3rd parties, while using the Internet.

Here's an excerpt from an article from yesterday's NY Times "Goodbye Passwords You Aren't a Good Defense" talking more about Information Cards:

Password-based log-ons are susceptible to being compromised in any number of ways. Consider a single threat, that posed by phishers who trick us into clicking to a site designed to mimic a legitimate one in order to harvest our log-on information. Once we’ve been suckered at one site and our password purloined, it can be tried at other sites.

The solution urged by the experts is to abandon passwords — and to move to a fundamentally different model, one in which humans play little or no part in logging on. Instead, machines have a cryptographically encoded conversation to establish both parties’ authenticity, using digital keys that we, as users, have no need to see.  In short, we need a log-on system that relies on cryptography, not mnemonics.

As users, we would replace passwords with so-called information cards, icons on our screen that we select with a click to log on to a Web site. The click starts a handshake between machines that relies on hard-to-crack cryptographic code. The necessary software for creating information cards is on only about 20 percent of PCs, though that’s up from 10 percent a year ago. Windows Vista machines are equipped by default, but Windows XP, Mac and Linux machines require downloads.  And that’s only half the battle: Web site hosts must also be persuaded to adopt information-card technology for sign-ons.

It is the author of the NY Times article that we won’t make much progress on information cards in the near future because of what he calls "wasted energy and attention devoted to a large distraction, the OpenID initiative". OpenID promotes “Single Sign-On”: with it, logging on to one OpenID Web site with one password will grant entrance during that session to all Web sites that accept OpenID credentials.

Support for OpenID is conspicuously limited, however. Each of the big powers supposedly backing OpenID is glad to create an OpenID identity for visitors, which can be used at its site, but it isn’t willing to rely upon the OpenID credentials issued by others. You can’t use Microsoft-issued OpenID at Yahoo, nor Yahoo’s at Microsoft.

Why not? Because the companies see the many ways that the password-based log-on process, handled elsewhere, could be compromised. They do not want to take on the liability for mischief originating at someone else’s site.

Kim Cameron, Microsoft’s chief architect of identity, is an enthusiastic advocate of information cards, which are not only vastly more secure than a password-based security system, but are also customizable, permitting users to limit what information is released to particular sites. “I don’t like Single Sign-On,” Mr. Cameron said. “I don’t believe in Single Sign-On.”

Microsoft and Google are among the six founding companies of the Information Card Foundation, formed to promote adoption of the card technology. The presence of PayPal, which is owned by eBay, in the group is the most significant: PayPal, with its direct access to our checking accounts, will naturally be inclined to be conservative. If it becomes convinced that these cards are more secure than passwords, we should listen.

BUT perhaps information cards in certain situations are convenient to a fault, permitting anyone who happens by a PC that is momentarily unattended in an office setting to click quickly through a sign-on at a Web site holding sensitive information. This need not pose a problem, however.

“Users on shared systems can easily set up a simple PIN code to protect any card from use by other users,” Mr. Cameron said.  The PIN doesn’t return us to the Web password mess: it never leaves our machine and can’t be seen by phishers.

Logging on to a site should entail a cryptographic conversation between machines, saving us from inadvertently giving away the keys.

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