Age of Context and Security

News from Target, increasing the number of cards compromised to 70 million and the expansion of data loss to mailing and email addresses, phone numbers and names, affirms that we are in a security crisis.

Card data is from a brand and business perspective, the new radioactive material. Add personally identifiable information (PII) to the list of toxic isotopes.

The depressing vulnerabilities these breaches reveal are a result of skilled hackers, the Internet’s lack of inherent security, inadequate protections through misapplied tools or their outright absence. Security is very very hard when it comes to playing defense.

There is a set of new technologies that could, in a combination produce a defense in depth that we have not enjoyed for some time.

Looking at the Age of Context (ACTs)

Age of Context released, a book based on the hundreds of interviews conducted with tech start-up and established company leaders. A wide-ranging survey. They examine what happens when our location and to whom we are connected are combined with the histories of where and when we shop. Result is a very clear picture of our needs, wants and even what we may do next.

Combining the smartphone and the cloud, five Age of Context technologies ACTs, will change how we live, interact, market, sell and navigate through our daily and transactional lives. The five technologies are:

1. Big Data. Ocean of data generated from mobile streams and our online activity, can be examined to develop rich behavioral data sets. This data enables merchants to mold individually targeted marketing messages or to let financial institutions improve risk management at an individual level.

2. Geolocation. Nearly every cell phone is equipped with GPS. Mobile network operators and an array of service providers can now take that data to predict travel patterns, improve advertising efficiency and more.

3. Mobile Devices and Communications. These are aggregation points for cloud-based services, sending to the cloud torrents of very specific data.

4. Sensors. Smartphones, wearables (think Fitbits, smart watches and Google Glass) and other devices are armed with accelerometers, cameras, fingerprint readers and other sensors. Sensors enable highly granular contextual placement. A merchant could know not only which building we are at and the checkout line we are standing in but even which stack of jeans we are perusing.

 

5. Social. Social networks map the relationships between people and the groups they belong to, becoming powerful predictors of behavior, affiliations, likes, dislikes and even health. Their role in risk assessment is already growing.

The many combinations and intersections of these technologies are raising expectations and concerns over what is to come. Everyone has a stake in the outcome: consumers, retailers, major CPG brands, watchdog organizations, regulators, politicians and the likes of Google, Apple, Microsoft, Amazon, eBay / PayPal and the entire payments industry.

We are at the beginning of the process. We should have misgivings about this and as an industry, individuals and as a society, we need to do better with respect to privacy and certainly with respect to relevance.

Provided we can manage privacy permissions we grant and the occasionally creepy sense that someone knows way too much about us, the intersections of these tools should provide more relevant information and services to us than what we have today. Anyone who has sighed at the sight of yet another web ad for a product long since purchased or completely inappropriate to you understands that personalized commerce has a long way to go. That’s part of what the Age of Context technologies promise to provide.

ACTs in Security    

ACTs role in commerce is one albeit essential application. They have the potential to power security services as well, specially authentication and identity-based approaches. We can combine data from two or more of these technologies to generate more accurate and timely risk assessments.

It doesn’t take the use of all five to make improvements. One firm have demonstrated that the correlation of just two data points is useful, it demonstrated that if you can show that a POS transaction took place in the same state as the cardholder’s location then you can improve risk assessment substantially. (based off of triangulated cell phone tower data).

Powerful questions of each technology that ACTs let us ask:

Data – What have I done in the past? Is there a pattern? How does that fit with what I’m doing now?

Geolocation – What building am I in? Is it where the transaction should be? Which direction am I going in or am I running away?

Mobile – Where does device typically operate? How’s the device configured? Is the current profile consistent with the past?

Sensors – Where am I standing? What am I looking at? Is this my typical walking gait? What is my heart rate and temperature?

 

Social – Am I a real person? Who am I connected to? What is their reputation?

Knowing just a fraction of the answers to these questions places the customer’s transaction origination, the profiles of the devices used to initiate that transaction and the merchant location into a precise context. The result should improve payment security.

More payments security firms are making use of data signals from non-payment sources, going beyond the traditional approach of assessing risk based primarily on payment data. One firm have added social data to improve fraud detection for ecommerce payment risk scoring. Another firm, calling its approach Social Biometrics, evaluates the authenticity of social profiles across multiple social networks including Facebook, Google+, LinkedIn, Twitter and email with the goal of identifying bogus profiles. These tools are of course attractive to ecommerce merchants and others employing social sign on to simplify site registration. That ability to ferret out bogus accounts supports payment fraud detection as well.

This triangulation of information is what creates notion of context. Apply it to security. If you can add the cardholder’s current location based on mobile GPS to the access device’s digital fingerprint to the payment card, to the time of the day when she typically shops, then the risk becomes negligible. Such precise contextual information could pave the way for the retirement of the distinction between card present and card-not-present transactions to generate a card-holder-present status to guide risk decision-making.

Sales First, Then Security        

The use of ACT generated and derived signals will be based on the anticipated return for the investment. Merchants and financial institutions are more willing to pay to increase sales than pay for potential cost savings from security services. As a result, the ACTs will impact commerce decision making first-who to display an ad to, who to provide an incentive to.

New Combinations  

Behind the scene, the impact of the ACTs on security will be fascinating and important to watch. From a privacy perspective, the use of the ACTs in security should prove less controversial because their application in security serves the individual, merchant and the community.

Determining the optimal mix of these tools will take time. How different are the risks for QR-code initiated transactions vs. a contactless NFC transaction? What’s the right set of tools to apply in that case? What sensor-generated data will prove useful? Is geolocation sufficient? Will we find social relationships to be strong predictor of payment risk or are these more relevant for lending? And what level of data sharing will the user allow-a question that grows in importance as data generation and consumption is shared more broadly and across organizational boundaries. It will be important for providers of security tools to identify the minimum data for the maximum result.

I expect the ACT’s to generate both a proliferation of tools to choose from and a period of intense competition. The ability to smoothly integrate these disparate tools sets will be a competitive differentiator because the difficulty of deployment for many merchants is as important as cost. Similar APIs would be a start.

Getting More from What We Already Have  

The relying parties in a transaction – consumers, merchants, banks, suppliers – have acquired their own tools to manage those relationships. Multi-factor authentication is one tool kit. Banks, of course issue payment credentials that represent an account and proxy for the card holder herself at the point of sale or online. Financial institutions at account opening perform know your customer work to assure identity and lower risk.

Those siloed efforts are now entering an era where the federated exchange of this user and transactional data is becoming practical. Firms are building tools and the economic models to leverage these novel combinations of established attributes and ACT generated data.

The ACTs are already impacting the evolution of the payments security market. Payment security incumbents, choose just two from the social side, find themselves in an innovation rich period. Done well, society’s security posture could strengthen.

Posted in Best Practices for Merchants, Credit card Processing, Credit Card Security, e-commerce & m-commerce, Electronic Payments, Internet Payment Gateway, Payment Card Industry PCI Security, Point of Sale, Smartphone, Visa MasterCard American Express Tagged with: big data, breaches, card data, cardholders, checkout lines, commerce, data loss, data sets, digital, ecommerce, geolocation, GPS, inherent security, Merchant's, Mobile Devices, mobile network, online activity, personally identifiable information, pii, POS, Security, security crisis, sensors, smartphone, social networks, transaction, transactional, travel patterns, vulnerabilities

Go Green Forget the Paper Receipt Point of Sale Email.

Retailers today collect email at every point of interaction. Collecting customer information in the store at the point of sale (POS) offers the greatest potential to build retailer’s email list quickly and to drive timely offers and communications that increase customer loyalty and retention.

The practice of collecting email addresses at the point of sale (POS) isn’t a new one. However, more companies are embracing the trend, and they’re doing so with increasing regularity.

 E-Receipts

One popular technique among retailers is to ask shoppers if they would like a receipt emailed to them. It is important to note that an agreement to receive an e-receipt should not be necessarily interpreted as consent to be added to a commercial email list unless this intent is adequately communicated to the consumer and they consent. It always best practice to reference their consent to marketing emails at the same time as the e-receipt request.

It is possible to collect (PII) Personally Identifiable Information at the counter in a

careful and conscientious manner if you follow guidelines.

1. Be transparent about the commercial intent. A consumer who feels misled is more likely to complain and to seek redress under the consumer protection laws. If following different scripts is a challenge,  apply the same disclosure/request script for both credit and cash transactions.

2. Consider using the credit card terminal or other touchpad device for customers to enter their email rather than using the sales associate. The device should first prompt the customer to consent to receiving an in-store e-receipt and/or marketing communications, ideally before proceeding with the transaction, it could be after as well.

3. Decouple PII collection from the credit card purchase. Ask customers for their email addresses before taking their credit cards or after they sign off on the purchase so it is clear that email is not required as part of the transaction.

4. Fulfill any incentives offered at the counter through email. Provide each consumer with a dynamic and unique link. A consumer will have less of a reason to give you a valid email address if you offer and fulfill the incentive at POS. Limiting the use of the incentive to email will help you avoid incentive abuse.

5. Send a welcome permission pass. Don’t assume that the customer wants anything more than an in-store e-receipt even if you can legally claim to have this right. Let the customer make an informed decision at the counter or in a subsequent email.

6. Validate submitted data. Ask customers to verify the accuracy of their PII before submitting. Use appropriate list management tools to prevent avoidable domain errors.

Clients that take the proper steps to overcome POS challenges and risks will reap the rewards of subscriber loyalty, a stronger reputation and better inbox performance in the long run.

Posted in Best Practices for Merchants, Credit card Processing, Electronic Payments, Gift & Loyalty Card Processing, Point of Sale Tagged with: associate, best practice, cash, commercial, communications, companies, consumer, credit, credit-card, customer, e-receipts, email, emailed, incentive, interaction, list, loyalty, offers, personally identifiable information, pii, point, point of sale, POS, retailers, rewards, sales, script, subscriber, timely, touchpad, transactions, transparent