Re: [Taler] A hybrid approach to allow Taler payments at an EMV payment terminal

[Christian Grothoff]

Dear Jaap-Henk,

I think this is at least on paper a reasonable *technical* idea for 
quick adoption. But, I fear there are some practical problems which you 
are not articulating -- maybe because you have solutions I'm not aware 
of -- but that need to be addressed:

0) Do modern smartphones give you access to the interface to 
simulate/emulate EMV payment tokens? I think that's a technical killer 
issue still on iOS.

1) What are the fees that the card industry would charge you to create 
such one-time EMV payment tokens? One key argument for merchants to 
adopt GNU Taler is that it is cheaper. If the fees become higher 
instead, that could be an issue. Now, in good news, the fees would only 
be higher for merchants that accept Taler via 'legacy' mechanisms, so 
maybe that's OK. I'd still like to know how insanely high the fees would 
be, and if it would be possible to pass _all_ of them onto the merchant. 
Because a customer probably won't put 10 EUR into their Taler wallet to 
then buy an EMV token for 6 EUR to buy a coffee for 5 EUR with the 
merchant still paying 50 cents in fees.  So I would really like to 
understand the economics of the approach. Do you have numbers?

2) Legality might be another major issue, as allowing anonymous pre-paid 
cards to be sold against (e)cash is already an issue, but banks 
operating a GNU Taler exchange may have even bigger qualms allowing GNU 
Taler to be used to purchase such pre-paid cards. At least on the 
regulatory side, my understanding is that cash2ecash is much harder than 
bank2ecash or card2ecash, as the potential for AML problems is basically 
multiplied. So we *also* would need a legal assessment as to whether 
offering such a service would be legal, both for the Taler provider and 
the prepaid anonymous EMV seller.

So if all of these three concerns can be addressed, I think this would 
be great as customers would obviously love to be able to pay with Taler 
everywhere immediately --- and merchants could then gradually migrate to 
reduce fees. Now, if (0) remains an issue for users in of the 
Apple-Jails, that's a nuisance but not a killer IMO. Similarly, (1) can 
be a problem, but not necessarily a killer. But (2) has to be soundly 
addressed before we should look into technical implementations (for 
which then https://nlnet.nl/taler/ would probably be good ;-)).


Happy hacking!

Christian



On 6/17/24 14:29, Jaap-Henk Hoepman via Taler wrote:
> L.S.,
>
> New payment schemes like Taler have to deal with the fact that payment 
> is a two-sided market: for merchants to accept a new form of payment 
> there must be enough customers that would like to pay with it, while 
> customers will only join a new payment scheme if enough merchants accept 
> it.
>
> A year ago or so I thought about an hybrid approach that integrates a 
> privacy friendly payment scheme like Taler into the existing EMV based 
> card payment infrastructure, making the overall scheme privacy friendly. 
> This was triggered by recent proposals by the European Central Bank for 
> a digital euro, and the observation that (at least in the Netherlands) 
> more and more people use their NFC enabled smartphone to pay in stores.
>
> The core of the idea is to use a scheme like Taler to store anonymous 
> coins within a wallet on a smartphone, and to use these coins to buy a 
> one time EMV payment token at the time of purchase to pay in a shop (or 
> onlie). Details are here:
>
> https://blog.xot.nl/2023/03/03/a-proposal-for-a-privacy-friendly-digital-euro-using-the-existing-payment-infrastructure/index.html
>
> Because payments are handled using the already existing EMV based 
> payment infrastructure, the hybrid scheme is accepted by all merchants 
> that accept traditional card or smartphone base payments. This breaks 
> the vicious cycle described above, make the transition to a (Taler 
> based) privacy friendly payment scheme much smoother. Of course, as more 
>   and more users migrate to the new payment scheme, at some point 
> merchants could be convinced to accept Taler directly (at a fraction of 
> the cost).
>
> I'm sharing this here to see if there is interest within the Taler 
> community to furter explore opportunities in this direction.
>
> Looking forward to any responses.
>
> Best,
> Jaap-Henk