While this is a bit strange when issued as a government ID, the cards seem familiar to me: In Norway, pretty much all debit cards - including ones with VISA and Mastercard - have picture ids on the back that are valid in most instances a formal government id would be, and it's the primary id document for a substantial percentage of people.
It caused a few amusing episodes when I first moved to the UK and still had my Norwegian accounts, when shop clerks would look at me with a puzzled look, wondering why in the world I tried paying with an id card - until I pointed out the VISA logo.
So MasterCard have in one swoop pretty much monopolised the entire payments industry of an entire country? Helping the unbanked is probably a good thing (probably) but I wonder how expensive these cards will be, or will become.
I personally would hate the idea of having a "Mastercard" branded ID card or passport here in the UK. Maybe in Nigeria it's the lesser of two evils, perhaps not.
it may not be one currently, but if an entire population is forced to use an ID from a private company, and then that company provides incentive for other services formed around the ID (which was forced), it begins rapidly approaching monopoly status.
Back in the nineties, when Java was still the next big thing, manufacturers promised that we would carry a single Java smartcard for all applications: identification, credit cards, electronic wallets, etc.
As we now know this never happened. The biggest reason is marketing: every company wants to have their own logo on the card, which is impossible to do with a generic card.
Reference from 1998: ftp://service.boulder.ibm.com/software/pervasive/info/javacard.pdf
On a related note, I recently found out that all SIM cards run JavaCard applications. Apparently SIM applications are not uncommon in countries where smartphones still aren't common.
Indeed, SIM cards in third-world countries seem to be the only place where installing applets on a third-party smartcard (i.e. the telco's SIM card) is commonplace.
Smartphones are only recently catching up through the addition of secure elements in the device. Without them, the SIM card is the only place to securely store secrets.
Well, I for one can't see any issues with an entire country of poorly educated people being given a card that with a flip of a switch, introduce them to the crippling force of 25.5% compound interest.
I wish I had no morals, making money would be so easy.
until some point at which the auto-enrollment and e-ads with "Enroll Now" and "Ask Me Later" buttons only begin rolling out, like most credit institutions tend to do.
"He said the broader economic impact of the card will be felt as the previously unbanked and under-banked are able to gain access to the mainstream economy, and the visibility of their assets allows them to build a financial history and establish credit-worthiness with financial institutions."
Not sure how one builds credit worthiness without credit being granted.
"The new cards carry two photographs of the holder, and a chip storing an individual's biometric information including 10 fingerprints and an iris scan using a system developed by Cryptovision." [0]
Sounds like a data protection nightmare. Is there any information about the chip design and whether both purposes are strictly separated? Who is maintaining the ID information, MasterCard? Is a POS allowed to read ID data?
What kind of ID data are you referring to? If when I swiped my credit card the point of sale could see my name, year of birth, and picture I would consider that a good thing.
With my drivers license for example anyone I hand the card to can read name, date of birth address, picture, because those things are printed on the outside of the card.
That card contains biometric data and certainly more information that is not necessary for a transaction. If that card gets cloned, you will lose more than just money. So the probability of identity theft is much higher - each POS can be an attacker.
Also, if MasterCard is maintaining both data sets and is losing it, will they be held liable for the Personal ID data too?
While that is problematic: This is Nigeria. Given that Nigerians themselves tend to vote Nigeria as one of the most corrupt countries in the world, I suspect many Nigerians may prefer Mastercard to be the one holding the data over the Nigerian government...
This is a big thing. Mastercard is a global company. In Nigeria, a country that has nothing to loose and some small advantages to gain this may seem like a no brainer. However, if this new tech proves itself reliable enough I expect it to be pushed to many more countries.
Think about it. A BANK will OWN your biometric data (10 fingerprints, iris signature, facial signature). Everything. And this is not a governmental entity. Nigeria, as a poor country, cannot challenge the tech brough by Mastercard.
An then what would be the next step? No more cash payments? If you pay by cash the whole system would flag you as potential threat?
Plus, is there any prove that access to credit for really poor people is actually creating wealth ? This is the modern slavery and anyone who has credit in west either for education or commercial purpose has felt on its own skin what means to work for paying up the debt.
MasterCard can be (and is) used all around the world as a debit card. Giving credit to the customers and defining its limits is up to the issuing bank.
It doesn't even have to provide debit. Banks here in Portugal also issue cards for university students, in partnership with them. In the end it's just an advertising scheme, you don't need to have an account to attend school :)
I can see it now: for the low, low price of $40 (times three companies) you can check once to see if someone has bypassed the 30-year-old security on your MasterCard(tm)(c)(r)(pp) ID and fraudulently used it for border crossing or employment. Then, for the low price of a few hundred dollars and many hours of your time (x 3 companies, natch) you can dispute the ID usage and get yourself removed from the watch lists that pop up nasty red symbols and words like "suspected forgery / illegal alien / terrorist watch list" whenever a future employer tries to verify your biometrics. Of course, the police and TSA still get the vague but serious-sounding warnings, so you still get pulled off of planes for extra pat downs and an extra 45 minutes added to every traffic stop, but hey, at least you can get a job.
I know. I was projecting the shitshow in the payment processing industry onto a national ID program in order to argue that the same techniques used to extract money (not to mention anticompetitive staying power) from the payment-processing system would work just as well if not better in a national ID system.
Is MasterCard to blame for those ridiculous sytems? Not specifically, but if the same incentives are in place (and they are, that was the point of my imaginitive story) then I fear that anyone involved in the business end of a privatization effort for, say, US IDs could copy the business model of "half-ass the security to generate pain, make your money as the exclusive provider (or licensor) of half-assed solutions to the generated pain." It's a good business model, which is why it's imperative that we keep business interests away from the most lucrative targets.
Alternatively we could try to fix this horrendous perverse incentive, but I think that's a much shakier approach that would be much easier for the wrong people to work around.
> An then what would be the next step? No more cash payments?
Yes. From the article:
"“In close collaboration with both the public and private sectors to achieve the full potential of this program, NIMC is focused on inclusive citizenship, more effective governance, and the creation of a cashless economy, all of which will stimulate economic growth, investment and trade,” he adds."
Don't confuse consumer credit – which is taking out loans in order to buy goods like toasters that will decrease in value – from a business loan – which is a bet that you can add value to what you buy with the loan, and thus earn enough to pay it back (and more, hopefully).
Having a quick look around, I found this blog post from Kiva who helped pioneer microlending in the developing world. The answer seems to be "yes, but credit isn't enough to turn anyone into an entrepreneur": http://fellowsblog.kiva.org/fellowsblog/2013/03/22/how-effec...
As a bit of a rant: the West is generally overburdened with consumer credit. People panic when the value of their house goes below that of their mortgage, which is called negative equity. But (almost) every consumer credit agreement leads to this negative equity. It's mad.
Can you think of an institutional or cultural way to get people in the West out of some of their consumer credit traps? I don't think the lenders are going to help!
I wonder if this got downvoted because someone read it as sarcastic. It wasn't meant to be so; I thought the parent comment was useful and I was wondering how to change the culture around consumer lending, which I agree has got a lot of people trapped (or at least burning a lot of their income on interest payments and fees).
Your distinction between consumer credit and business credit is not as clean as you make it seem. Your example of consumer credit (toasters) is most clearly exemplified in a home loan. In this case, the point of the loan is to allow someone to own an item and draw utility from it over a long period of time; they could not afford the purchase at the beginning of the time period, but their income over that period can cover the cost. To a good approximation, the income of that person would be independent of whether they were given the loan (i.e. if they had to rent a smaller place).
But there are lots of personal purchases financed by consumer loans that increase one's income just like a business loan. The most notable is a student loan, but especially in poor countries (and poor people in rich countries) there are lots of other examples: Buying a vehicle to allow one to work at a higher paying job outside of walking distance, buying a tin roof that doesn't need to be replaced every year,
Regarding your last paragraph, there's a huge difference between a typical mortgage and buying a toaster with a credit card.
Specifically, people typically use credit cards with the intent of paying them off quickly and by applying their normal income stream to paying it. The resale value of the item purchased doesn't matter at all in that scenario, only the usefulness of actually owning the item.
Mortgages, on the other hand, are rarely taken out with the intent of paying them back in that way. The typical mortgage term is 30 years and few people anticipate staying in a house that long. Most mortgages are taken out with the intent that the bulk of the loan will be paid off by selling the house. Negative equity completely screws up that plan, which is why people get so upset about it.
That's not to say that credit card debt is somehow wise in many cases, but toasters and houses don't compare well here.
Why is that? Nigeria seems to be quite successful by African standards. They even make good movies. Of course not without problems, but they seem to have both spare money and some political will - a very rare thing to have in Africa.
Huh. There's only one globe in global. The top 25, heck the top 3 or 4, probably add up to most of the global economy. Top 10 - that'd be pretty impressive.
>Plus, is there any proof that access to credit for really poor people is actually creating wealth?
Not that I can detect. It just seems to be a mantra that is repeated enough to be assumed true. It was one of the repeated justifications for a similar card recently created for public transportation payment in Chicago.
I don't know about adding to total wealth, but from a personal finance/welfare standpoint, it's a very good thing.
Access to credit smooths out cash flow, which is the hardest part of being poor. You might be able to save up for something over a month or a year, but what if you have to have it right now (healthy groceries, car problems, hell, maybe even lightbulbs)? What are your options? Either you get a shoddy version that winds up costing you more in the long run, or, currently, you go to a loanshark. If you could just float it on a credit card for a few weeks or even a couple months at low interest, it would be drastically easier. I'm not advocating living off of credit cards - at some point you have to come up with the money - but if it can turn one absolutely impossible payment that would put you on the streets into three moderate payments, then that can be a very powerful option to have, and it's currently something that rich people can generally do and poor people generally can't.
If you can't save enough to not live from check to check, what are the odds that you're going to come up with the money every time that you borrow vs. the odds that you become a revolving borrower borrowing a steadily increasing amount to cover interest payments? Also: poor people don't have low interest credit cards.
As a middle-class 40 year old who has spent time in his life poor to the point of homelessness, I've never had a credit card or understood the necessity. I understand that people with money use them for the promotional treats, but for people without money?
Money should be borrowed in order to purchase capital IMO, not to paper over poverty until a catastrophic bankruptcy.
Unlike the Persian Gulf states though, it doesn't spread the oil wealth to its citizens. So it's a country full of poor people, more than the Gulf oil monarchies.
Nigeria, as a poor country, cannot challenge the tech brough by Mastercard.
That's a ridiculous statement. Yes, the country has been mismanaged by corrupt, inept leaders for a half-century. But despite their best attempts it's currently the largest economy in Africa and ranked 20th by the World Bank in gross national income (not per capita) for 2013.
An then what would be the next step? No more cash payments?
MasterCard does seem to be working towards that. It isn't a meritless goal either; a recent study estimated that cash costs the USA $200B a year, or around 1.5% of GDP:
Another commenter notes "a bunch of college campuses have College ID cards that were also mastercards." I would just add to this that Chicago launched public transit cards this year that are also Mastercards. http://www.ventrachicago.com
Here's an excerpt from the Mastercard press release with a few more details:
"MasterCard has pioneered large scale card schemes that combine biometric functionality with electronic payments and we want to capitalize on their experience... enrollment process involves the recording of an individual’s demographic data and biometric data (capture of 10 fingerprints, facial picture and digital signature)..." http://newsroom.mastercard.com/press-releases/mastercard-to-...
I wonder how Americans would feel if the U.S. government teamed up with Mastercard, devised a similar biometric ID card -- and required all U.S. citizens to obtain one to drive, pay taxes, get government benefits, vote, etc.? (I also wonder what "demographic data" referred to above means, and whether it means everyone's religion will be encoded on the ID...)
> I wonder how Americans would feel if the U.S. government teamed up with Mastercard, devised a similar biometric ID card -- and required all U.S. citizens to obtain one to drive, pay taxes, get government benefits, vote, etc.? (I also wonder what "demographic data" referred to above means, and whether it means everyone's religion will be encoded on the ID...)
hopefully nauseous. a national ID is bad enough; a national ID ran by a private conglomerate is worse. The privacy implications are harrowing either way, from a personal standpoint.
Also, could we soon see a blockchain backed implementation of this? i imagine a wallet w/ pointers to biometricChain and facialImageChain could be strung together easily enough and deployed to any national network.
I was born in Nigeria and grew up there until I was 17 and from what I know about everyday life in Nigeria, the implementation of this system could be astoundingly complex. In the foreseeable future, I think that only about 20% of the population will end up using this system because for most of Nigeria, life is primarily focused around a cash economy.
Nigerian life is rife with many daily issues that foster a large distrust of institutions and the government. Master Card and their POS machines, cash and voting machines would have to build that trust. Life in Nigeria also involves a lot of wary informal trading between many half-educated people (elementary school) who do not use banks, do not use any services that are provided by the government/any large institution, and do not use any automated services at all.
That trust is already lost with Mastercard's association with the Nigerian government because the relationship between the people and the government is quite sour. The government, the leadership of the country (and a good chunk of the people) are daily involved in corruption.
There are many things in Nigeria that you just can't actually do except you bribe, or know someone on the inside who will protect you from having to spend money to bribe. Nepotism tends to be the only alternative to bribery. This sort of thing is widespread, from purchasing a car, to passing an exam (yes, sometimes) to just using a roadside mechanic, to driving from point A to point B (you will have to bribe the police to pass a check point, even if you have no fault). Adopting a checks-and-balances master card system in this kind of a society will be ridiculous at best. The everyday institutions, and millions of people (yes millions!) who thrive on these corrupt systems simply do not want such a system. Neither does the government. The government is the most corrupt of all organizations in Nigeria.
Because the problems are so entrenched, it would take a long time for a large portion of the population to start using this. (BTW The voting part of it is a joke, or maybe a dream).
Master card is probably only seeking to gain with the growing upper middle class that work in a mostly formal economy and mostly live in Lagos. If this section of society adopts their system, they can seek to gain with time. However, they would need to maintain a good wall between themselves and the federal government if they want to gain trust and make not reduce this thing to a joke.
62 comments
[ 2.7 ms ] story [ 112 ms ] threadIt caused a few amusing episodes when I first moved to the UK and still had my Norwegian accounts, when shop clerks would look at me with a puzzled look, wondering why in the world I tried paying with an id card - until I pointed out the VISA logo.
I personally would hate the idea of having a "Mastercard" branded ID card or passport here in the UK. Maybe in Nigeria it's the lesser of two evils, perhaps not.
They also forced you to activate them (she asked repeatedly if she could avoid them), so you could not just disable the credit card functionality.
What mastercard has done here seems the logical next step.
At pace, this was called the "pace onecard".
As we now know this never happened. The biggest reason is marketing: every company wants to have their own logo on the card, which is impossible to do with a generic card.
Reference from 1998: ftp://service.boulder.ibm.com/software/pervasive/info/javacard.pdf
Check out https://simhacks.github.io/defcon-21/
Smartphones are only recently catching up through the addition of secure elements in the device. Without them, the SIM card is the only place to securely store secrets.
I wish I had no morals, making money would be so easy.
"He said the broader economic impact of the card will be felt as the previously unbanked and under-banked are able to gain access to the mainstream economy, and the visibility of their assets allows them to build a financial history and establish credit-worthiness with financial institutions."
Not sure how one builds credit worthiness without credit being granted.
"The new cards carry two photographs of the holder, and a chip storing an individual's biometric information including 10 fingerprints and an iris scan using a system developed by Cryptovision." [0]
[0] http://www.zdnet.com/nigeria-launches-new-biometric-id-card-...
With my drivers license for example anyone I hand the card to can read name, date of birth address, picture, because those things are printed on the outside of the card.
That card contains biometric data and certainly more information that is not necessary for a transaction. If that card gets cloned, you will lose more than just money. So the probability of identity theft is much higher - each POS can be an attacker.
Also, if MasterCard is maintaining both data sets and is losing it, will they be held liable for the Personal ID data too?
An then what would be the next step? No more cash payments? If you pay by cash the whole system would flag you as potential threat?
Plus, is there any prove that access to credit for really poor people is actually creating wealth ? This is the modern slavery and anyone who has credit in west either for education or commercial purpose has felt on its own skin what means to work for paying up the debt.
God help us all!
Efficiency! Value creation! Huzzah!
You can't have Nigerian ID on your card and Nigerians can't enter country illegally on your MasterCard credit account. It's orthogonal things.
Is MasterCard to blame for those ridiculous sytems? Not specifically, but if the same incentives are in place (and they are, that was the point of my imaginitive story) then I fear that anyone involved in the business end of a privatization effort for, say, US IDs could copy the business model of "half-ass the security to generate pain, make your money as the exclusive provider (or licensor) of half-assed solutions to the generated pain." It's a good business model, which is why it's imperative that we keep business interests away from the most lucrative targets.
Alternatively we could try to fix this horrendous perverse incentive, but I think that's a much shakier approach that would be much easier for the wrong people to work around.
Yes. From the article:
"“In close collaboration with both the public and private sectors to achieve the full potential of this program, NIMC is focused on inclusive citizenship, more effective governance, and the creation of a cashless economy, all of which will stimulate economic growth, investment and trade,” he adds."
Having a quick look around, I found this blog post from Kiva who helped pioneer microlending in the developing world. The answer seems to be "yes, but credit isn't enough to turn anyone into an entrepreneur": http://fellowsblog.kiva.org/fellowsblog/2013/03/22/how-effec...
As a bit of a rant: the West is generally overburdened with consumer credit. People panic when the value of their house goes below that of their mortgage, which is called negative equity. But (almost) every consumer credit agreement leads to this negative equity. It's mad.
Can you think of an institutional or cultural way to get people in the West out of some of their consumer credit traps? I don't think the lenders are going to help!
But there are lots of personal purchases financed by consumer loans that increase one's income just like a business loan. The most notable is a student loan, but especially in poor countries (and poor people in rich countries) there are lots of other examples: Buying a vehicle to allow one to work at a higher paying job outside of walking distance, buying a tin roof that doesn't need to be replaced every year,
http://www.givedirectly.org/blog_post.php?id=284534178491025...
buying basic health care allowing one to stay healthy to work, etc.
Specifically, people typically use credit cards with the intent of paying them off quickly and by applying their normal income stream to paying it. The resale value of the item purchased doesn't matter at all in that scenario, only the usefulness of actually owning the item.
Mortgages, on the other hand, are rarely taken out with the intent of paying them back in that way. The typical mortgage term is 30 years and few people anticipate staying in a house that long. Most mortgages are taken out with the intent that the bulk of the loan will be paid off by selling the house. Negative equity completely screws up that plan, which is why people get so upset about it.
That's not to say that credit card debt is somehow wise in many cases, but toasters and houses don't compare well here.
Why is that? Nigeria seems to be quite successful by African standards. They even make good movies. Of course not without problems, but they seem to have both spare money and some political will - a very rare thing to have in Africa.
Not that I can detect. It just seems to be a mantra that is repeated enough to be assumed true. It was one of the repeated justifications for a similar card recently created for public transportation payment in Chicago.
Access to credit smooths out cash flow, which is the hardest part of being poor. You might be able to save up for something over a month or a year, but what if you have to have it right now (healthy groceries, car problems, hell, maybe even lightbulbs)? What are your options? Either you get a shoddy version that winds up costing you more in the long run, or, currently, you go to a loanshark. If you could just float it on a credit card for a few weeks or even a couple months at low interest, it would be drastically easier. I'm not advocating living off of credit cards - at some point you have to come up with the money - but if it can turn one absolutely impossible payment that would put you on the streets into three moderate payments, then that can be a very powerful option to have, and it's currently something that rich people can generally do and poor people generally can't.
As a middle-class 40 year old who has spent time in his life poor to the point of homelessness, I've never had a credit card or understood the necessity. I understand that people with money use them for the promotional treats, but for people without money?
Money should be borrowed in order to purchase capital IMO, not to paper over poverty until a catastrophic bankruptcy.
That's exactly the point. They don't currently, but it would be enormously helpful if they could.
It's the oil king of West Africa, more akin to a middle eastern state than anything else.
That's a ridiculous statement. Yes, the country has been mismanaged by corrupt, inept leaders for a half-century. But despite their best attempts it's currently the largest economy in Africa and ranked 20th by the World Bank in gross national income (not per capita) for 2013.
MasterCard does seem to be working towards that. It isn't a meritless goal either; a recent study estimated that cash costs the USA $200B a year, or around 1.5% of GDP:
http://www.amren.com/news/2013/10/paying-with-cash-costs-ame...
Obviously currency is worth spending money on, but that doesn't mean it has to be bank notes.
The banking services would have to be backed by partner banks.
Mastercard is also not intrinsically linked to credit. You can get Mastercard debit cards in large parts of the world (as you can for VISA).
"MasterCard has pioneered large scale card schemes that combine biometric functionality with electronic payments and we want to capitalize on their experience... enrollment process involves the recording of an individual’s demographic data and biometric data (capture of 10 fingerprints, facial picture and digital signature)..." http://newsroom.mastercard.com/press-releases/mastercard-to-...
I wonder how Americans would feel if the U.S. government teamed up with Mastercard, devised a similar biometric ID card -- and required all U.S. citizens to obtain one to drive, pay taxes, get government benefits, vote, etc.? (I also wonder what "demographic data" referred to above means, and whether it means everyone's religion will be encoded on the ID...)
hopefully nauseous. a national ID is bad enough; a national ID ran by a private conglomerate is worse. The privacy implications are harrowing either way, from a personal standpoint.
Also, could we soon see a blockchain backed implementation of this? i imagine a wallet w/ pointers to biometricChain and facialImageChain could be strung together easily enough and deployed to any national network.
Nigerian life is rife with many daily issues that foster a large distrust of institutions and the government. Master Card and their POS machines, cash and voting machines would have to build that trust. Life in Nigeria also involves a lot of wary informal trading between many half-educated people (elementary school) who do not use banks, do not use any services that are provided by the government/any large institution, and do not use any automated services at all.
That trust is already lost with Mastercard's association with the Nigerian government because the relationship between the people and the government is quite sour. The government, the leadership of the country (and a good chunk of the people) are daily involved in corruption.
There are many things in Nigeria that you just can't actually do except you bribe, or know someone on the inside who will protect you from having to spend money to bribe. Nepotism tends to be the only alternative to bribery. This sort of thing is widespread, from purchasing a car, to passing an exam (yes, sometimes) to just using a roadside mechanic, to driving from point A to point B (you will have to bribe the police to pass a check point, even if you have no fault). Adopting a checks-and-balances master card system in this kind of a society will be ridiculous at best. The everyday institutions, and millions of people (yes millions!) who thrive on these corrupt systems simply do not want such a system. Neither does the government. The government is the most corrupt of all organizations in Nigeria.
Because the problems are so entrenched, it would take a long time for a large portion of the population to start using this. (BTW The voting part of it is a joke, or maybe a dream).
Master card is probably only seeking to gain with the growing upper middle class that work in a mostly formal economy and mostly live in Lagos. If this section of society adopts their system, they can seek to gain with time. However, they would need to maintain a good wall between themselves and the federal government if they want to gain trust and make not reduce this thing to a joke.