I am always interested in areas where constraints lead to innovative designs, for example Out of Africa, With Smart Cards which is a good example of Thomas Barnett's Core/Gap way of looking at the world:
BEER DELIVERY IN POOR countries is a two-man job. One guy drives the truck and unloads the cases. The other one holds the shotgun. It's not that criminals are particularly interested in the beer; it's heavy and cheap. Rather, they're looking for the money stuffed in the pockets of the delivery man. A general shortage of banks, communication lines and reliable accounting standards in poor countries means everyday items like wages, utility bills and store deliveries require the exchange of cash.An awkwardly named Johannesburg company has a fix for that. Net 1 UEPS Technologies (UEPS: 23.71, -0.05, -0.2%) — the acronym stands for universal electronic payment system — has developed a technology that transfers funds between smart cards without the use of communication lines or central computers. It's hoping to attract more than just beer distributors as customers. From the company's annual financial report: "We believe that we are the first company worldwide to implement a system that can enable the estimated four billion people who generally have limited or no access to a bank account to enter affordably into electronic transactions with each other, government agencies, employers, merchants and other financial service providers."
Each transaction requires two smart cards (each with embedded computer chips) and a point-of-sale device. One card belongs to the merchant and the other to the customer. The terminal is battery-powered, so it can be used anywhere. Transactions require fingerprint verification and Net 1 guarantees cardholders against liability for fraudulent purchases. Merchants periodically present their cards at wired Net 1 terminals, where information is downloaded to the company's computers. Lost cards are easy to replace, since account information is stored each time a transaction is made. Cards can be adapted to serve a variety of purposes, from voting to disbursing small loans to tracking AIDS treatments.
Today the company's cards are used by 3.6 million South Africans to receive monthly welfare and pension payments and to make purchases at participating merchants. Over the next year it plans to introduce the service in Namibia, Botswana and Nigeria. Management says the cards benefit everyone involved. Individuals collect interest on their savings without having to meet bank deposit minimums. Merchants get new sources of income. Employers and government agencies get a convenient way to disburse funds. Everyone reduces their risk of theft. Welfare recipients pay no fees. Wage recipients pay modest ones. The company makes most of its money from fees paid by South Africa's provincial governments. It also profits from hardware sales, merchant fees and card-based sales of financial products like insurance. Last year sales increased 13%. This year they're expected to climb 12% and next year, once the company has moved into its new markets, sales are seen increasing 17%.
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The smart card is mightier than the sword. Is there a lesson for Internet security here? Porting valuables across hostile terrain using a layer of abstraction and stronger identity and authentication protocols...
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