Why Blockbuster looks at your ID.

[Perry E. Metzger]

Adam Fields <cryptography23094893 at aquick.org> writes:
> On Fri, Jul 08, 2005 at 10:42:02AM -0400, Perry E. Metzger wrote:
> [...]
>> A system in which the credit card was replaced by a small, calculator
>> style token with a smartcard style connector could effectively
>> eliminate most of the in person and over the net fraud we experience,
>> and thus get rid of large costs in the system and get rid of the need
>> for every Tom, Dick and Harry to see your drivers license when you
>> make a purchase. It would both improve personal privacy and help the
>> economy by massively reducing transaction costs.
>
> Haven't we been saying this for years?

Yes. The only unusual point that I am making is that the lack of such
a system is precisely the reason why the clerk at the store often asks
for your ID when you make a purchase in the US. (The other major case
is alcohol or tobacco purchases, where, again, it is a question of
liability, but in this case, liability to the government which holds
you responsible if you do not check government issued IDs.)

> The standard argument I hear against it is "the people who would have
> to pay for the very large initial investment have no economic
> incentive to do so". They obviously don't think they have a long-term
> need to do so now, and in the short term, this only replaces fraud
> costs (a relatively known entity) with infrastructure costs (a
> completely unknown one).

Actually, the people who would have to pay the investment -- the banks
and merchants -- have an excellent incentive. The loss because of
fraud is stunningly large. The real issue is that *consumers* have
little incentive to cooperate with such a system, because thanks to
the regulations, they suffer virtually no losses if their accounts are
hijacked.

Perry

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