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RCA has made great strides, and should be supported, but I think Nick O still has a point.  In the future, won't users of tablets and smartphones find card readers too clunky to carry around?  In which case, couldn't biometrics provide an alternative, and very portable, means of authentication?  

Both tablets and smartphones can capture sounds and images for biometric verification, and these can only get better with time.  The question is, how long do we have to wait?   It's down to the vendors to demonstrate whether this provides a serious alternative authentication method at this time, with the devices and bandwidths currently available. 

Bo, fascinating blog.  You are right, potential savings are huge, and we should give greater priority to innovations in payments incorporating VAT.  

Some small steps are already being taken towards this vision.  For years, proprietary fuel card networks have been stripping out VAT and providing a monthly consolidated statement for end-customers (some businesses conduct 1000s of fuel purchases each month).  The savings, through reduced admin and fraud prevention, are significant. 

What is the next step?  Perhaps general acceptance commercial payment cards (e.g. procurement cards, T&E and small business cards) will begin to allow businesses to buy other products (besides fuel) in the same way.  The technical challenges have been identified and are being addressed. 

A new generation of alternative payment solutions will eventually address the VAT area more elegantly than cards, and I suspect these may be developed in the most "digitised" societies e.g. Scandinavia.  

In the short term, card-based solutions are quick to launch and scale internationally, and perhaps we should get commercial cards to do more to help with VAT.    

You're right.  At an industry level the magstripe losses really mount up.  I guess players feel less anxiety over that because the losses are little clicks and are shared among many organisations.  It's like lots of little pin-pricks. Whereas a data breach like Heartland's can lead to a big hit on a single company which could, frankly, destroy them. There is no "industry response" here, just private companies trying to avoid a repeat of the Heartland incident, so E2E encryption is the flavour of the month.