November 2, 2012

A "Mobile Payments" Election in Our Future?

            Just two weeks before Americans go to the polls the mobile payments venture of AT&T, TMobile, and Verizon launched in Salt Lake City and Austin. Today Isis is about shopping; before long the technology it and other mobile payment platforms are adopting could reshape the democratic process.

            At the heart of all the near field communications (NFC) platforms is a SIM card with a secure element that verifies the user. The secure element expands the SIM’s normal authentication and authorization with higher-grade smartcard-like verification.

            Right now, everyone is talking about the “mobile wallet.” At this point it looks like a jump ball with multiple parties maneuvering for position. In addition to the U.S. carriers in the Isis consortium, GSM carriers throughout the world are mounting their own NFC push. The action is not limited to mobile operators, however; retailers Walmart, Target, Best Buy and CVS have joined the fray with their own MCX consortium. Visa and MasterCard both have their own initiative. And, of course, the highly-valued start-up Square, as well as PayPal, Google and Apple all have their own solution.

            As if this isn’t enough confusion under the jump ball, there is a Cold War between mobile operators and Google’s Android and Apple’s iOS regarding who provides gateway and mobile transaction services. Carriers want their hardware SIM to control; Google and Apple want a software-based SIM that gives them the leverage. This is no small faceoff since whoever owns the SIM also owns the customer relationship.

            It will be a while before all these competing forces are resolved and there is stability in the mobile wallet world. Regardless of the ultimate outcome, however, all this activity means there will be a major push to get secure SIMs into the market. That is when really interesting other things will begin to happen.

Repeatedly, mobile applications intended for one purpose have morphed into non-obvious user-driven applications. What began as a 25-pound car phone in the trunk morphed to replace landlines and connect more citizens of the planet than any network in history. What began as a control channel Short Messaging Service for network engineers was discovered by consumers who now send billions of text messages daily. What began as a secure mobile payments platform will no doubt follow a similar path into new, non-obvious applications.

            Korean mobile operators, for instance, have become the agent to secure the government’s database of all citizens. Since Internet activity in Korea requires the user to input their national ID number, those numbers were ending up in Website databases. After one of those databases was hacked in 2011 the government and carriers developed an improved process. When a mobile user registers with their ID number the phone number is automatically matched with the registered user’s SIM and sends back a one-time PIN via SMS. The user then inputs the PIN to confirm their identity. In essence, the carriers have become the administrative authority that prevents hacking and keeps valuable personal information off of Websites.

            In Estonia the same kind of SIM and PIN made that country the first in the world where it is possible to vote via mobile phone in national elections. Online voting using the national identity card’s chip and a special PIN had been available since the local elections of 2005. In 2011, however, that was extended to mobile devices. In that election 24.3 percent of the electorate voted electronically without going to the polls. The Republic of Moldova is reportedly about to roll out the same mobile voting capability for its citizens. In Brazil two weeks ago voters in Rio de Janeiro’s municipal election cast ballots by secure mobile phones.

Mobile voting in municipal elections or small countries (Estonia has 1.3 million population, Moldova 3.3 million) is one thing; the expansion into a nation of 300 million would be another challenge. The absence of a national ID card, like in Korea, Estonia and Moldova, is also an issue. Secure mobile devices, however, just might provide the pathway to a solution.  When passports, credit cards, and other personal-identification functions use secure chips that are verified by a hard line connection, the extension into mobile devices can’t be too big a stretch.

This election in the U.S. has seen state legislatures enacting restrictive voting rules allegedly for the purpose of stopping hypothetical voter fraud. The ultimate anti-vote fraud measure may be coming to everyone’s pocket and purse. If a secure chip is good enough to verify our citizenship at passport control it should be good enough to authorize the democratic right of citizenship. If mobile wallet security is good enough to be used for secure financial transactions it should also be capable of providing secure electoral transactions.


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  2. A wise man I know once commented "as long as the state makes me carry around identification, I am going to need a wallet!" as an argument against the value proposition of mobile wallets as mere replacements for traditional wallets.

    Now that same wise man is envisioning mobile identification enabled by the same underlying technology that enables secure element mobile wallets.

    These are exciting times!