Digital Transactions Authoritative, insightful and timely information for payments professionals
Gideon Samid • Gideon@AGSgo.com
In his startling 2011 book, “The Currency Wars,” James Rickards reports on financial war games conducted by the Pentagon in which our national security leaders increasingly recognize an emerging, unaddressed area of vulnerability. This vulnerability meanders through arcane Wall Street methodologies, cuts through full-blown cyber terrorism, and passes through economic war games.
The reality is that the sovereignty of countries may be an illusion. Interdependence, globality, and cross vulnerability may be the order of the day. And the study of this war zone hardly matches its present-day threats.
It took a while, as Rickards reports, for our generals to realize that they need to consult Wall Street mavens to prepare for the next war. But what is still missing from our planning is the input of our industry. By the end of the day, when all the big financial swings on Wall Street are done, it is Main Street with its massive counts of card swipes that registers, expresses, and implements our economic and civil order. The forest of point-of-sale terminals, and the massive processing of debit and credit transactions across the land, represent the ground action that creates normalcy and access to everyday products.
Simply put, we in the electronic-payments industry hold a community knowledge that is (i) critical for planning our defense in the coming cyber-financial war, and (ii) not covered by the input given by tank commanders and hedge-fund wizards.
“How many entries in your customers’ databases are non-bona fide?” I ask our clients, and the answer is far from numeric. “How many malevolent, system-hostile merchants are registered in your system?” I ask one chief information officer and another. Shoulders are shrugged. What if some ill-wishing “entries” in your system decide to flood your data arteries with fake commerce or with massive dispute cases? I ask. Why don’t you gather some of your brightest systems people and role-play with them, I suggest. You work for a hostile government aiming to unleash payments chaos in the United States. What would you do?
At best, I provoke some instinctive intellectual curiosity, but my questions fade away before leading to action. Payments people and their consultants are naturally focused on (i) increasing customer convenience, and (ii) preventing financial “leaks,” which entails retail security and close-horizon planning. The question of the day for these people is how many buttons one has to push to execute a payment cycle. This question is important, but we don’t want to be in the position of the lane painters on the famous Minneapolis bridge that optimized traffic flow while ignoring structural integrity, ending up with a perfectly lane-marked but totally collapsed freeway.
Hundreds of millions of Americans go about their daily business payment card in hand and swiping it as routinely as they wash their hands. Trillions of dollars annually flow from POS terminals to a network of banks, abiding by rules of operation based on the brilliance of the original planners at Bank of America (the predecessor of Visa). These well-oiled procedures allow strangers to safely and securely conclude billions of transactions. While many, as we know, prey on our global credit networks to steal a buck, nobody, as yet, has tried to disrupt it to paralyze civil order in the United States. But, as the enemies of America gang up on it, indications are that exactly such a plan is in the making, and we sure don’t want to be naive about it.
Americans have little physical cash laying around. Their wealth is electronically accessed, transacted, and managed. As modern network science teaches us, such complexity hides countless weak spots that an enemy can identify and surgically stab and disable. Imagine that your cards don’t work, your bank is unresponsive, and all that happens exactly when some bio-weapon has been unleashed or a dirty bomb requires massive evacuation.
A working group to think about such “unthinkable” horrors must be set up. The group should comprise knowledgeable people from our industry. They should sit together with mavens of macro-finance and national security experts and strive to out-think our enemies. As 9-11 has taught us, we cannot afford to lose the imagination race. Nineteen misguided youngsters in 2001 managed to turn our amazing technology for long-distance air travel into a powerful weapon against us. Now similarly malevolent enemies are plotting to do similar mischief with our payments technology.
