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The voluntary alternative
to material ID cards
A Proposal by David
of Business Consultancy Services Ltd (BCSL)
eCommerce may or may not be capable of expanding
the economy but if the government introduce ID cards, we may never find
out. Dematerialised ID, with its use of mobile phones and digital certificates/PKI,
would at least give expansion a chance it uses the right technology.
It is not just individuals who suffer from
ID theft. So do organisations.
It is not just individuals who are involved in money-laundering. So are
banks and other organisations. A serious attempt to reduce ID theft and
money-laundering would bring organisations into the same infrastructure
as individuals. Dematerialised ID could achieve that. The government's
ID cards scheme could not they've got the scope wrong, as well
as the technology.
- Digital certificates are not material. That is what gives dematerialised
ID its name. Dematerialised ID is all about issuing digital certificates
instead of material ones or, at least, in addition to material ones.
There is a successful precedent. Compare dematerialisation
in the UK securities industry. We no longer have material share certificates,
in the main. We still manage to invest in shares.
A conventional birth certificate, for example, is material. You could
be issued with a digital certificate in addition to the material one,
a dematerialised equivalent. Another example, the conventional credit
card you carry around is material. You could just as well carry it around
as a digital certificate stored on your mobile phone.
In general, under dematerialised ID, any supplier, who currently issues
any material voucher, which entitles the bearer, to any benefit, could,
instead, issue a digital certificate, to be stored on the bearer's mobile
- That is the principle for any supplier, whether the supplier be in
the public sector, the private sector or the voluntary sector, whether
the supplier be an organisation or an individual.
- The government is just one supplier among many.
- Under dematerialised ID, there are no ID cards for the government
to create, distribute and manage. And while the chosen biometrics remain
unreliable, there is no need for the government to collect everyone's
biometrics. There is, therefore, no need for them to create a National
Identity Register (NIR). The government's rôle is, therefore,
reduced. That is no loss to them or us. Creating ID cards and the NIR
to record our biometrics would be a waste of time and money.
- The words "voucher" and "certificate" are used
- There are some certificates, like birth certificates, where we would
probably want to retain the material version, and others where we might
be quite happy to have only the dematerialised version.
- The benefit of digital certificates is that they can be used in transactions
where it is important to prove authenticity quickly.
- Digital certificates can be stored on mobile phones or on any other
digital media, like CDs or USB sticks, in the office, at home or at
a trusted third party custodian.
- Dematerialised ID is conservative. So far in the proposal, "dematerialised
ID" has simply been used as a name for what happens anyway. People
already have mobile phones and carry them around everywhere they go.
People are already located by their mobile phone and their associates
are already identified by mobile phone records. Issuing digital certificates
to people's mobile phones to replace or supplement material certificates
is the first instance in the proposal of anything new being suggested.
- ... could result in many of us having hundreds
of digital certificates instead of our present material vouchers
- Dematerialised ID would have the effect of providing each subscribing
member of the public with a collection of digital certificates from
several sources, each one vouching for some entitlement or affirming
You might have one digital certificate issued by the Department for Work
and Pensions vouching for your right to work, for example, another one
issued by your union showing that you are a member, a third issued by
the Department of Health certifying your right to treatment under the
National Health Service (NHS) and a fourth issued by your bank confirming
your current account number and allowing you to write digital cheques.
By the time you have added your passport and your driving licence to
the list, your credit cards, your travel cards, your store cards and your
loyalty cards, your membership of the Automobile Association, your membership
of various sports clubs, your degree certificate and your professional
qualifications, your entry pass to get into the office, the key to your
car and your
front door, and the tickets for tonight's concert at the Albert Hall,
that is a lot of digital certificates and a lot of software applications
running on your mobile phone.
- ... far too much for smart cards to cope
- They will require a lot of storage space. There is very little memory
on smart cards and the number of applications that can run on them is
limited. Smart cards will inhibit the growth of eCommerce.
There is plenty of memory on mobile phones and mobile phones are computers
– there is no limit to the number of applications that can run on them.
Mobile phones could support the expansion of eCommerce.
This may be what lies behind the IDABC
"Although smart cards were the main focus, it was also recognised
that other non-card based solutions for carrying out qualified eServices
are being developed. Work on mobile device technology is particularly
important, as this medium potentially offers cost, security and functionality
benefits over smart cards."
- It can be cheaper to produce digital certificates
than material ones
- The Home Office's July 2002 budget includes £2.007bn for 67.5m
sophisticated* smart cards (para.5.46
& Annex 5, para.32). It follows that the cards cost £29.73
* "Sophisticated", incidentally, is undefined
by the Home Office.
This is the production cost alone. It does not include the cost of making
checks on people's personal details. That is covered by other elements
of the budget. It does not include the cost of registering or checking
biometrics or the cost of card distribution.
With these volumes, the comparable cost for producing a digital certificate
alone, no smart card required, is estimated by BCSL to be less than 1p,
i.e. that component of dematerialised ID would be around 2,973 times cheaper
than the government scheme. Digital certificates are cheaper in this case
than material ones.
- ... and digital certificates have many
other potential advantages
- Compared with material certificates, it is quick and cheap to produce
digital certificates, quick and cheap to distribute them, easy to revoke
them and, thanks to PKI, quick to authenticate all parties to a transaction.
That makes it feasible to introduce the wide variety of certificates
needed to reflect the sophisticated requirements of our lives. Distributing
digital certificates, amending them and revoking them, can all be done
simply by making phone calls. There is no need to incur the delay and
cost of using the post or courier services.
And thanks to the mobile phone network, these certificates can be remotely
and continuously monitored and managed.
It feels uncomfortable at first to hold only a digital certificate. It
takes time for confidence to develop. But we know that it can develop.
We have no doubt now that a piece of paper signed by the Chief Cashier
of the Bank of England can be exchanged for £20-worth of goods or
services. There must have been doubts when paper money was first introduced
but, since then, confidence has grown and it would do the same with digital
The principle of dematerialisation can be applied widely.
take, for example, visas
- Suppose that visas
were issued in future in the form of digital certificates and stored
on each visitor's mobile phone. The mobile phone could monitor the visa
locally and warn the visitor when it was running out, just as mobile
phones already warn you when the battery is running out. Equally, UKvisas,
the organisation which administers visas, could send text and/or voice
messages to the mobile phone, in the language selected by the visitor,
warning him or her that the visa was running out.
UK tax on overseas income
- Some individuals are exempt from paying tax on their overseas income
as long as they spend no more than 90 days per year in the UK. Dematerialised
ID would allow HM Revenue & Customs to count the days spent in the
country by reference to the presence of that individual's phone on any
of the UK's mobile phone networks. It may be objected that the individual
might simply leave his phone abroad in order to evade the count. But
if the phone also stored his entry permit then he couldn't get into
the country in the first place.
- ... academic qualifications, tickets to the FA
Cup Final and other events, and credit cards
- There is an active market in forged
academic qualifications, for example, in touted FA
Cup Final tickets and tickets
to pop concerts and to the theatre.
Replace the material exam certificates, and the material football match
and concert and theatre tickets, and the material credit cards used
to pay for them, with digital certificates, and PKI can be used to promote
cheques and the clearing system
- Another example, cheques
need to be signed. There is a digital signature facility in PKI. Again,
this is nothing new. There is already a body of law in most countries
covering digital signatures in general and the question whether they
are irrevocable in particular. Replace cheques with digital certificates
which can be digitally signed, and another source of fraud is reduced.
The clearing system could be speeded up at the same time.
- ... banknotes
- The Bank of England could issue digital certificates instead of material
notes, thus reducing the incidence of counterfeit
- A further example, Finland are considering the feasibility of prescriptions
being digitally signed by GPs.
and credit card fraud
- Final example, credit card fraud has been reduced by the introduction
in the UK of chip
and pin cards, but only for transactions where the customer is present
and only when the transaction takes place in the UK. The credit card
companies already use PKI to authenticate their merchants' credit card
terminals. The weak link is the one between the customer and the terminal.
If material credit cards were replaced with digital certificates, then
even customer-not-present credit card fraud could be reduced. How? Answer:
- When the customer is present during a credit card transaction, his
mobile phone can connect to the merchant's credit card terminal using
a free Bluetooth or infra-red or RFID short-range link. PKI will authenticate
the transaction from end to end, from the digital certificate credit
card on the customer's mobile to the merchant's terminal to the credit
card company's mainframe.
- When the customer is not present, the only difference is the link
– the customer will be connected by the mobile phone network, by a dialled
connection, instead of a short-range link. Nothing else is different.
The same high level of authentication can therefore be provided whether
the customer is present or not.
- The customer's private key must be issued under secure conditions,
preferably involving a Faraday
cage, as noted above. Thereafter, the strength of PKI allows the
customer safely to use public networks such as the mobile phone network.
PKI is the general solution to the customer-not-present problem.
Again, Finland are already conducting a feasibility study, in this case
Where does the Home Office's sometimes voiced notion come from that
their scheme places the UK in the vanguard?
- Dematerialised ID could expand the economy
- With authenticity promoted by PKI, there should be less fraud, there
should be less provision in company accounts for fraud and there should
be less money spent on insurance against fraud. What with that and the
reduced cost of producing vouchers, including ID cards, dematerialised
ID could help to reduce the costs of doing business and so expand the
- ... it could have attractive benefits
and not be just an imposition
- This again distinguishes it from the government's ID cards scheme,
which contributes nothing to eCommerce. Dematerialised ID provides incentives
for people to enrol. There are benefits on offer to everyone, unlike
the government scheme, which is simply penal.
- ... and it could give the government an important
- The credit card companies are not stupid. They know that PKI could
reduce the incidence of credit card fraud. They have tried in the past
to extend PKI to the credit cards themselves, to close the authentication
gap between the card and the merchant's terminal.
The problem was that the PKI software would have had to be issued by
the banks. And the banks, quite rightly, did not see it as their job to
act as software distribution and support businesses. A combined effort
between the government, the banks and the mobile phone companies might
succeed in delivering the benefits of mass, consumer PKI.
- Digital certificates could be issued
to organisations as well as to individuals
- Digital certificates could be issued to companies* by Companies House
in addition to the present material certificates of incorporation. The
Financial Services Authority (FSA) could issue digital certificates
to banks*. The Trades Union Congress could issue them to unions* and
the Charities Commission could issue them to charities*. Any club* could
issue digital certificates to its members instead of material membership
cards. Individuals and organisations both, could be brought into one
single infrastructure, the PKI.
* Dematerialised ID does not require these organisations
to store their digital certificates on mobile phones, of course, they
can be stored on any digital medium.
- ... thus improving the chances of reducing
identity theft and money laundering
- That would improve the chances of combating money laundering and
identity theft. Money laundering, after all, involves not just individuals
but also companies and banks and others. Issuing smart cards to individuals
alone, as the government propose, can be at best only a partial solution
to the money laundering problem. Similarly, it is not just individuals
who suffer from identity theft, so do companies and other organisations.
The incidence of identity theft in the UK is estimated to be £1.7bn
p.a. The Home Office promise that ID cards will reduce identity theft
but they do not say how much it will be reduced by. There is no value
associated with this promise. And there is no argument advanced to support
it. It is quite conceivable that the introduction of ID cards should actually
increase the incidence of identity theft, not reduce it.
The National Criminal Intelligence Service (NCIS, now SOCA) estimate
the annual value of money laundering in the UK to be of the order of £10bn.
Their figures suggest that the annual value of detected money laundering
is of the order of £0.1bn, a mere 1% of the total incidence.
figures are embarrassing. Some major change in detection methods is
surely called for. ID cards issued to individuals alone will do little
to improve the figures. Dematerialised ID could be the change required.
- If this sort of mobile eCommerce with mass
authentication by PKI (mCommerce) is ever to take off, then there are
- Contact details and other data are stored sometimes on the SIM card
of your mobile phone and sometimes on one or more separate memory chips.
When you upgrade from an old handset to a new one, it is often a very
clumsy process getting the data transferred from one to the other. That
transfer process must be made smoother and, if dematerialised ID is
extended, it must include the transfer of digital certificates and their
- ... we shall need better backup and restore
- That implies that there must be standard backup facilities, perhaps
on your PC, perhaps at a third party, which allow you to back up all
your data and applications from your old handset and then restore them
onto the new one. And these backup and restore facilities must work
irrespective of the operating systems and physical architectures of
the two handsets and irrespective of the network operators involved.
- ... and efficient revoke and reissue facilities
- Dematerialised ID must also be able to handle the loss and theft of
your mobile phone. If you lose your phone, or it is stolen, not only
do you want to be able to restore all your backed up data onto a new
handset, you also want all your old digital certificates to be revoked,
so that no-one else can use them, and re-issued to you. We shall need
revoke and reissue facilities.
BCSL foresees therefore that there will need to be a new mass consumer
and corporate business, somewhat akin to share registrars or custodians
or bankers, third parties whom you trust to keep copies of all your details,
who offer an efficient backup and restore service and who offer an efficient
revoke and reissue service.
Dematerialised ID will not thrive unless this new business develops.
And this new business will not develop without widespread trust. Its development
is, therefore, by no means assured.
Elements of this custodian business already exist. Microsoft's .Net
Passport service, for example, and Nokia's Mobile
Personality (p.8). The idea was first floated by BCSL in May
2003 (para.6.3). Having spent the intervening years watching this
area, one thing is certain – one of BCSL's original suggestions is wrong,
UKPS (now IPS) will not be one of these new custodians (para.4.4).
- mCommerce has not taken off yet
- If your computer is securely protected behind the steel doors of the
chancery in one of our richer embassies, no-one unauthorised can access
it easily, and any digital certificates/private keys you have stored
on it are safe.
If the digital certificates you rely on are stored on your mobile phone,
which you take everywhere with you, that is a different matter. There
must be something between the person using the phone – perhaps someone
who has stolen it from you – and the private keys. Otherwise you might
as well walk around with thousands of pounds-worth of banknotes.
That something could be your fingercopies, but they don't work with 20%
of the population. Which leaves us with passwords, Personal Identification
Numbers (PINs), memorable phrases, your mother's maiden name and all the
other paraphernalia of today's eCommerce.
We started with all the majestic strength of PKI, replete with its mathematically
provable abilities to authenticate anything, and here we are reduced to
PINs and passwords.
People can't remember many passwords, they rarely change them, they are
often easy to guess, sometimes people write the password on a Post-it
note and stick it on their PC and some people will tell you their password
if you just ask them.
So, passwords in the case of applications operated on desktop PCs are
risk-prone, as they are with applications operated on mobile phones.
Similarly, whether your computer is a PC or a mobile phone, you live
with the risk of hackers and viruses getting into it.
But with mobile phones, there are further problems:
- The tiny, fuzzy screens.
- The tiny, clumsy keypads.
- The high incidence of loss and theft.
These problems all inhibit the growth of mCommerce.
- ... and it may never take off
- People have been talking about mobile phone-based commercial applications
for years and, in the main, they have never materialised (let alone
They may never take off.
- ... but the government's ID cards scheme certainly
- The point of rehearsing the possibilities for mCommerce in this proposal
is simply this. It is clear that dematerialised ID, with its emphasis
on mobile phones, could support the growth of mCommerce if anything
can. And it is clear that the government's ID cards scheme, with its
emphasis on smart cards, could not. Given all the funds and all the
effort that would have to be diverted into the ID cards scheme, it would
not only give no boost to mCommerce, it would actively inhibit it.
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