Prior Consent For Advertising Cookies

The "Article 29 Data Protection Working Party", comprising representatives of EU member state data protection authorities, has published an Opinion that the ePrivacy Directive will require prior informed consent before setting a tracking cookie on a user's browser from May 2011.

As I explained in a June 2009 article for Practical Law on behavioural targeting of online advertising:

"Cookies may be either "session cookies", which are temporary and deleted as soon as you close your browser; or "persistent cookies", which are stored on your computer hard drive until they expire or you remove them. You can configure your browser to warn you whenever a new cookie is about to be stored; clear the cookies that have previously been set; and/or block specific cookies in advance. Of course, you can also choose not to visit a website or use a service whose cookies you do not want to receive."

And as I also explained, "guidance by the Information Commissioner's Office (ICO) allows presumed consent, with a clearly displayed privacy policy or other means of opt out to enable a user's refusal (Article 5(3), E-Privacy Directive, transposed by regulation 6, E-Privacy Regulations)."

But opt-out is not sufficient, the Working Party now says, and relying on users' control of browser default settings will not be considered "in most cases, as meaningful consent... Prior opt-in mechanisms are better suited to deliver (sic) informed consent."

Officials also say that consent should be of limited duration (e.g. a year), easily revoked, and consent tools should be visible where monitoring takes place. There is commentary on how web site publishers, advertisers and advertising network providers should comply. Advertising interest categories aimed at children are discouraged, and in any case prior informed parental consent is likely to be required.

Further consultation is taking place, with selected parties, though other contributions are welcome. Apparently.

In the meantime, you might look forward to a more crowded, interactive browsing experience with lots of guff about cookies, from mid-2011.

Image from Law Is Cool.

Pay As You Go Financial Services

Thanks to Dave Birch, of Consult Hyperion, for the link to this fascinating paper by Ignacio Mas and Dan Ratcliffe on the success of M-PESA, the African payments system whose mission is to lower the cost of access to financial services. There are great insights for serving both the 'unbanked' as well as bank and other financial service customers. And given how grumpy we tend to be with our banks, it's revealing that the UK’s Department for International Development was instrumental in funding M-PESA's initial development by Vodafone and others.

As previous research for the UK's Financial Inclusion Taskforce (archived here) demonstrated, the challenge of financial inclusion is not how to draw low income earners into the existing banking system, but how to make financial services more useful, convenient, cost effective and faster. And that seems best encapsulated in 'pay as you go' models, since you 'know where you are' in terms of cost and usage/availability which is in itself convenient. M-PESA makes an interesting case study because virtually all M-PESA's 9 million pay as you go users rate the service better than the alternatives on these factors. And that's not only the view of low income earners. The Mas & Ratcliffe report says M-PESA users are more likely to have a bank account than non-users, as well as being wealthier, more literate, and better educated.

Here are some more stats from the report, as at January 2010:

• "16,900 retail stores at which M-PESA users can cash-in and cash-out, of which nearly half are located outside urban centers.
• US $320 million per month in person-to-person (P2P) transfers.
• still under two P2P transactions per month.
• US $650 million per month in cash deposits and withdrawal transactions at M-PESA stores.
• The average transaction size is around US $33, but Vodafone has stated that half the transactions are for a value of less than US $10.
• US $7 million in monthly revenue (based on the six months to September 2009).
• 27 companies use M-PESA for bulk distribution of payments. Safaricom itself used it to distribute dividends on Safaricom stock to 180,000 individual shareholders who opted to receive their dividends into their M-PESA accounts.
• Since March 2009, there are 75 companies using M-PESA to collect bill payments from their customers. About 20% of the electric utility's one million customers pay through M-PESA.
• two banks are using M-PESA as a mechanism for customers to either repay loans or withdraw funds from their banks accounts."

While M-PESA has been marketed very well, the report suggests the real key to its rapid, widespread adoption and frequent use is the decision to launch with a low cost mobile payment infrastructure, rather than a savings or credit product. This allowed the business to follow the usage-based pre-paid mobile airtime model, so that each transaction was profitable from day one, and no potential customer or transaction size was excluded as 'unprofitable'. It's free to register, pay money in, and there's no minimum balance. Now that so many people are on the system generating income, it's easier and more cost effective to respond to their demand for other suitable financial services and functionality.

Banks, on the other hand, "tend to distinguish between profitable and unprofitable customers based on the likely size of their account balances and their ability to absorb credit." I'd suggest that not only does this mean banks need to limit their customer base and rate of service adoption, but having made so many assumptions about the services to be provided and customers who might want them, it also becomes ingrained that banks must control the product rather than allow customers to shape the services they want. For example, MetroBank's launch strategy seems to assume you want the same type of banking services and delivery channels, but with merely longer branch opening hours, free coin-counting and immediate in-branch card delivery. Hardly the "revolution" it claims, compared to what's happening in Kenya, or even in the UK...

The success of M-PESA prompts comparisons with PayPoint, and how it's pragmatically solving parking payment problems using a mobile platform (see PayByPhone). And it's consistent with the adoption of pre-paid cards, amongst which the Oyster card and O2 payment card are interesting examples. Away from payments, and at the higher end of the market, the pay as you go approach is reflected in Zopa's person-to-person lending fee structure: borrowers pay a one-off upfront fee with no charge for early repayment, and Zopa lenders only pay a servicing fee based on the amount they have lent out at any one time.

There's definitely a future in pay-as-you-go financial services.

London Water

I'm a great proponent of drinking London tap water, rather than the bottled stuff. So this is not a scare story about London's tap water not being drinkable, nor even that it tastes bad.

This post is about the difference between tap water and tap water that's been through a decent filter. Most top restaurants, for example, will soften and filter their tap water to help improve the taste of everything the water is used with, including tea and coffee.

I took this photo at my brother-in-law's birthday dinner. He's the marketing director of a leading water softener and filter supplier. Before our very eyes, he dropped an ordinary 'builder's tea' bag into each of the two glasses and whisked it out again within a minute. The water in the glass on the left is ordinary tap water. The water in the glass on the right is the same water that's been through his new household filter.

The tea in the lefthand glass tasted like the 'builder's tea' we all know and love. Almost like a pint of bitter, by comparison with the subtle flavour of the tea in the righthand glass. I can't magine what the difference would be with soups, sauces and so on.

We have a filter on our kitchen tap, but I'm told it won't have quite the effect seen above. The challenge is in demonstrating that, which seems to be as easy as making a few cups of tea. Is this the new 'Tupperware Party'?

Anyhow, the humble water filter seems worth considering before spending a lot on cooking gadgets, coffee-makers or fancy tea sets.

Could An EU Contract Law Catalyse A Single Market?

Not content with the dog's breakfast of European consumer and retail finance directives, the European Commission now wants to harmonise all contract law in the European Union.

The latest fry-up is yet another futile attempt by the EC to catalyse cross-border retail markets of the same scale as national markets within the EU. This is spawned partly by a dogmatic interpretation of single market policy. But it also reflects the difference between the common law view of the world (do anything until the government says 'stop') with the civil law view (wait for the government to tell you how it can be done).

I'm an avid fan of cross-border markets, but long experience and the EC's own research has shown that they can't simply be mandated. Regulation is the least significant of the numerous barriers to cross-border retailing. Cooking up a bunch of extra regulation that doesn't solve a real problem merely adds legal costs for everybody to no end. Or worse: it's ironic that the EC's changes to VAT on electronic services from 2015 actually removed a significant driver for firms to structure their activities in a way that boosted cross-border e-commerce in the first place.

When will this expensive, Quixotic tinkering end?

Well, economic reality may be pointing away from a single European market of the scale envisaged by the EC. Some describe the north-south divergence in the EU and others herald a return to national currencies, or at least regional versions of the Euro.

But if, as I suspect, this latest Green Paper is intended as a frantic signal that the single market is not dead, there'll be plenty more such concoctions before the whole thing finally comes apart at the seams.

The End Of Cheap Travel?

I've been an avid supporter of low cost travel operators, but recently I've detected a marked change in their attitude, and some fairly hair-raising pricing ploys. Perhaps it started with some of Ryanair's tactics, but I'm afraid it may not have stopped there.

My recent experience seems to bear out Stelios's complaint that easyJet no longer deserves to use the word "easy". Not content with a 2.5 hour delay on the way to Mallorca because of the need to change crew, easyJet cancelled the return flight for 'operational reasons', according to the unapologetic desk attendant. We opted for a flight scheduled to leave 2 hours later, but a further 2 hour delay ensued while a charter company jet (typically configured on the assumption that humans grow no higher than 6 feet) was summoned because EasyJet had run out of planes (according to the pilot, who also mentioned strikes by French air traffic controllers). It appears that if we'd chosen to fly at midnight, we'd have paid £25 less per head. Should low cost airlines be obliged to refund the difference if flights are delayed beyond such a price band? The difference was almost enough to cover the cost of carrying our bags, especially as I'd foolishly failed to pay for baggage online when booking the flights 5 months ago, so incurred a baggage charge at double the online rate - £109 or 17% on top of the flight itself.

Meanwhile, back at the car rental desk, there was the usual kerfuffle over the fine but expensive distinction between "damage waiver" and "super damage waiver". I confess to always querying staff about the rationale for two 'waivers', as I suspect the cost of a combined waiver would be significantly less. But this time I was truly gobsmacked at having to pay Europcar an extra €173.32 to cover the insurance excess of €730 for 14 days (€12.38 per day on top of a base rental of €35.92). I was similarly stunned to learn that Europcar proposed to charge €75 each for two booster seats that we bet (correctly) you could buy in the local Carrefour for €16 euros a pop (€32 for the Ferrari-logo version). We'd pre-paid the basic rental of €502.88, so €348.32 worth of pretty essential 'extras' meant that the real cost of what we wanted was an additional 70% of the prepaid amount. Certainly true to the Europcar tag line: "You rent a lot more than a car".

But why all this nonsense? Is it perhaps because if 'low cost' travel operators were up-front about the 'real' cost of their services the average budget traveller would simply stay home or travel less often but with a 'traditional' operator? How many infuriating experiences will it take for many customers to take one of those options?

I sense that in this Age of Conspicuous Thrift the Western experiment with low cost airlines and other allegedly budget travel operators may be coming to an end. And we may well see a return to the era when the closest most people came to international travel was the effervescent luxury of a Peter Stuyvesant commercial.