operator was not presented the secrete data contained on the SIM, communication would not be allowed, and the fraud would be thwarted.

Later on, the presence of the Subscriber Identity Module allowed one further fundamental function, as the deployment of mobile networks brought with it a new need, that of allowing various mobile operators to serve each other’s clients. For example, a caller in Chile uses a Chilean operator to speak to someone in China served by a Chinese operator. When an operator serves a client of another operator, that’s called roaming. Of course, the roaming operator wants the original operator of the client to pay for that service. That’s where the Subscriber Identity Module took its second role. As the roaming operator could present to the original operator the secret data of the user, the original operator could not deny paying the roaming operator. What we see here is a fundamental function of the trusted core of personal electronic devices, called non-repudiation, which facilitates electronic commerce, of which mobile telephony was an early form.

The story of the success of the GSM and its smart card architecture must include mentioning that the very portability of the Subscriber Identity Module played a fundamental role, since it allowed the decoupling of the relationship of the mobile phone operator with personal electronic devices produced by the phone handset manufacturers. By moving the SIM from one handset to another, the consumer would get instant service with the same mobile phone operator, keeping the operator more in control of the customer relationship, and less so the handset manufacturer.

The role of computational devices in finance is as old as finance itself. In fact early writing was most often linked with the need to record business information, a fact used by John Chadwick in The Decipherment of Linear B, where he made the winning hypothesis that the clay tablets of Knossos in Greece where transactional records. There is then little wonder that some of the early computer networks were associated with inter-bank transfers, which fostered the establishment of networking technology in the banking world. So just like it happened with cellular telephony, with the need of security, cards with embedded trusted electronics, smart cards that the banks called chip cards, came into play, enabling consumer usage of the financial network. Ironically, when the actual deployment of chip cards started picking up a bit of steam in 1978, a core idea of the inventors was that this was the ideal carrier of electronic money, a form of money akin to banknotes and coins, but in a digital form; however, this vision really didn’t end up being central to the early development of chip cards, that took the form of securing banking transactions more similar to a digital form of personal checks.

The extension of the banking system into the realm of networks for consumers required means to recognize the person making the financial transaction. Hence was borne the credit card of today, whose function was initially to carry an identification number that would trigger the various mechanisms needed for the economic exchange to happen.

As we’ve seen in Chapter 1, in the 1990’s, it became apparent that the state of the art to protect banking information, the magnetic stripe of credit cards, was made largely obsolete by the increasing sophistication of the hacker community, and this particularly in countries with an expensive or lacking network infrastructure. Therefore, the most powerful financial card operations, Europay, MasterCard and Visa, defined a standard way, called EMV from their names, to use chip cards to protect individual financial transactions over their private networks. The closed architecture of the network then established the need for a device called a Point-Of-Sale terminal (POS), accompanied with a card-acceptance device, that allows secure reading of the information of the user’s chip card. When you go to the grocery, the point-of-sale terminal is the computer used by the cashier, the successor to cashing machines of yore. Actually, the point-of-

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