Transport for London plans contactless payment system

Transport for London (TfL) has confirmed that it plans to introduce technology that would allow passengers to pay travel fares by swiping debit or credit cards.

London's transport authority said the first phase of 'future ticketing' will involve the availability of contactless payment in partnership with Visa, MasterCard and American Express on the bus network in 2012. The new system would act as an alternative to Oyster cards.

"Once introduced, contactless payment using credit and debit cards would make London's public transport much more accessible to visitors (both domestic and international) who are not familiar with Oyster or who do not carry an Oyster card, but do have a contactless credit or debit card, even if that card was issued by an overseas bank," said Transport for London in a statement.

"This should increase London's attractiveness as a destination for tourism and business and its competitiveness with other world cities," it added.

TfL also revealed that it has been working with transport operators in major international cities to develop "common standards and systems" for the new plans. It said it wants to position London at the forefront of ticketing technology and expects to see this method of paying for travel "widely adopted" in the next few years.

"These technologies have the potential to propel us into a world where travelling around London can be easier and even more convenient for passengers. The mayor is continually looking for new thoughts and ideas and that includes contactless payment," Kulveer Ranger, the mayor's transport adviser said.

"This technology is now maturing and could enable people to pay for their travel using credit or debit cards resulting in a simpler process for the customer, and reducing commission and processing costs for TfL," he said.

Ranger described the evolution of the next generation of emerging technologies as a "big step" for the Oyster card.

"Any improvements we introduce would clearly need to deliver value for money but we are excited about the potential benefits there could be for the London commuter," he added.

The fare structure for credit and debit card payments will match that for the Oyster card, for which most fares are half the rate of the cash equivalent. A spokesperson said this should encourage people to use cards rather than pay cash.

In September UK transport minister Norman Baker said the government eventually wants to implement a national transport card, like London's Oyster, that can be used in different cities across the country.

Basel III misses opportunity to break down the silo culture in banking – Algorithmics assessment

Algorithmics, the world's leading provider of risk solutions, has published a comprehensive assessment of all the elements of Basel III, and finds them lacking in their conceptual approach to capital and liquidity. In it Algorithmics questions the missing link between capital and liquidity

The raft of proposals from the Basel Committee includes the headline-grabbing tier 1 capital ratio, buffer building, and leverage and liquidity ratios, which are all significant in their own right. However, having assessed all the regulatory documents from a holistic rather than risk silo perspective, Algorithmics’ research paper, titled ‘Basel III: What’s New? – Business and Technological Challenges’, identifies what they claim is a fundamental flaw of failing to reflect the true relationship between liquidity and capital.

One of the report’s authors, Dr Mario Onorato, Head of Balance Sheet & Capital Management at Algorithmics, and Honorary Senior Lecturer, Cass Business School in London, says, “Continuing to view capital as a primary mitigant of liquidity risk fails to recognise the complete nature of liquidity risk. Should a liquidity situation arise and the bank uses reserves set aside to absorb losses and meet obligations, the value of the company and of the capital are also likely to decline, because the bank will begin to be perceived as ‘riskier’. Liquidity risk and capital are therefore inextricably linked and cannot be addressed as separate silos.”

Basel III goes only part way to addressing the weaknesses of the established silo-based approach to risk management. The compartmentalized, prescriptive nature of the liquidity coverage ratio and net stable funding ratio within Basel III is unhelpful because it does not reflect the capital-liquidity interplay. This summer’s European Bank stress tests did not touch on liquidity, the very thing that crippled the markets during the recent crisis. The avoidance of a repeat occurrence is a key Basel III objective.

Regardless of regulatory gaps, Dr Onorato suggests stakeholders’ demands for better governance will result in banks amending their risk processes and systems in order to view risk holistically for all their legal entities, from both a bottom up and top down perspective.

“A truly effective risk management system will take a holistic approach to risk measurement and reporting; viewing and managing the interconnections between all risk factors, such that their potential impact on the balance sheet and stakeholders’ interests can be properly accounted for.” says Dr Onorato

To download a copy of this Algorithmics' Basel III research paper visit: http://www.algorithmics.com/EN/media/pdfs/Algo-WP0910-LR-Basel3-Exd.pdf

UK Treasury to investigate high-frequency trading practices, news report reveals

The UK Treasury is to launch a probe into practices surrounding high-frequency trading, according to reports in London's Financial Times.

According to the newspaper, the investigation has been set up to assess what impact a computer-generated error made via these trades would have on the economy as a whole.

High-frequency trades are currently the subject of regulatory scrutiny in the US following the ‘flash crash’, which occurred on the Dow Jones Industrial Index earlier in the year.

The index fell by approximately 1,000 points in less than 20 minutes and a report into the reasons behind the crash is expected to be released by the Securities and Exchange Commission over the coming weeks.

In an email from within the Treasury, which the Financial Times gained access to, the department said: “This ‘flash crash’ exposed the vulnerability of high-frequency algorithmic trading, which was a contributory factor to the decline in confidence that is still being felt across markets.”

It added: “The possibility remains of a computer-generated trading failure occurring in the UK and having a significant economic impact.”

The Treasury’s report is expected to focus on the use of algorithms which enable traders to rapidly buy and sell a wide range of shares and derivatives.

Lucas Pedace of the government Office for Science is due to lead the report.

Safaricom upgrading its mobile banking services

Safaricom whose M-PESA mobile banking service has taken Kenya and Africa by storm is upgrading its services to capture a wider telecoms pie in a bid to remain the dominant player in the market amidst a fierce tariff battle.

Outgoing Safaricom Chief Executive Michael Joseph says the M-PESA service will remain an additional value for its customers.

Industry analysts saw last week's move by Telkom Kenya to lower its price on data bundles as a move to bring down Safaricom's dominance in the market. However, Safaricom which claims to have the fastest 3G network says the quality of its services will sustain its subscription as it had superior speeds.

Joseph said the company was working to improve on its successful money transfer services while seeking to win the tariff wars by all means.

Among the new developments lined up by Safaricom include expansion of its maximum sending amount that currently stands at 35,000 shillings to 50,000 to increase the transaction range and reducing the minimum transaction amount from the current 200 to 100 shillings a move to capture the lower end market.

Meanwhile Joseph expressed his delight after the review of the communication regulations removed a clause in the equality and competition rules that defined the dominant operator as one whose revenues exceeded 25% of the total income of all licensees in a particular segment of the market and prone to regulation.

Joseph was speaking during the signing of partnership between Safaricom and Sarova hotels through which Sarova customers will be able to pay their bills through M-PESA.

Research in Motion launches payments development toolkit

BlackBerry maker Research in Motion (RIM) has launched a payments development toolkit to encourage developers to create their own transactional apps for selling digital goods and services using the handset.

The early release Payment Service SDK can be integrated by developers into their applications as a library as long as it is distributed through the BlackBerry App World storefront.

Users can incorporate options such as subscriptions, feature unlocking and pay per use with their customers then making the purchases through their BlackBerry IDs, using various options such as credit card, PayPal and carrier billing, without having to leave the app.

UK Police arrest 19 over multi-million pound online banking raids

UK police have arrested 19 people in connection with the theft of millions of pounds from online bank accounts. The Metropolitan Police Services Police Central e-Crime Unit (PCeU) have arrested the 15 men and 4 women in dawn raids at addresses in London last Tuesday.

Authorities believe that thousands of PCs belonging to UK citizens have been infected with malicious computer codes, including the infamous Zeus Trojan, enabling an organized criminal network to capture personal log-on details.

The gang is then accused of using the information to access bank accounts and fraudulently transfer funds to previously opened 'mule' and 'drop' accounts.

Several major world banks have suffered losses with around £6 million thought to have been taken from UK citizens in just one three month period although police say this figure is likely to "increase considerably".

The PCeU worked with the UK banks through its Virtual Taskforce gathering information and evidence ahead of making the arrests.

The 19 were arrested on suspicion of offences contrary to the Computer Misuse Act, Proceeds of Crime Act and the Fraud Act and are currently in custody for questioning. Two were also arrested on suspicion of possession of a firearm.

Detective Chief Inspector Terry Wilson of the PCeU, says: "We believe we have disrupted a highly organized criminal network, which has used sophisticated methods to siphon large amounts of cash from many innocent peoples' accounts, causing immense personal anxiety and significant financial harm - which of course banks have had to repay at considerable cost to the economy."

Hackers "jailbreak" iOS of the new Apple TV

Members of a hacker group have managed to jailbreak the latest release of the Apple TV. A post on the iPhone Dev Team Blog reported that members were able to crack the customized iOS firmware shortly after its release last Monday on an Apple download site. The release came the same day Apple began shipping the $99 device.

The fact confirms earlier speculations that Apple TVs run iOS. iPhone Dev Team members ran it through an in-development iOS 4.1 hacking tool they developed called SHAtter. They quickly extracted the cryptographic key used to lock down the Apple TV firmware, which is the first step in finding a reliable jailbreak.

It's unclear exactly what could be done with a jailbroken Apple TV. Compared with other iDevices, it has a paltry amount of storage space. And, of course, there's still the prospect that Apple will make last-minute changes to Apple TVs that patch the vulnerability SHatter exploits.