With the recent introduction of yet another form of an electronic payment, Google Wallet, one must wonder about the inevitable transformation to a worldwide cashless society. Not surprisingly, question of cashless transactions is a very popular topic recently. One of the more comprehensive posts in the blogosphere, lists several great points.
As an exchange student in Denmark, I watched Danish students paying for their beer with debit cards at several credit card terminals mounted right at the bar. No cash, no tips. That was in 1999.
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| Photo by penywise at SXC |
As an exchange student in Denmark, I watched Danish students paying for their beer with debit cards at several credit card terminals mounted right at the bar. No cash, no tips. That was in 1999.
Coincidentally, as an IT student, I had a chance to visit one of the two major bank and credit card processing centers in Denmark. In the underground bunker, with an exact redundant mirror site couple doors down, racks and racks of servers tracked every transaction in the country. For a land of 5.5 million people, how easy it is to keep a detailed financial profile on every citizen?
The history of credit cards and the evolution of electronic transactions is not completed yet. Smartphones are just the next step to strip the society of the anonymity of cash. All in the name of convenience and lower costs. At the same time, access to cash is becoming more and more expensive to regular customers. We all used out-of-the-network ATMs at 2:00AM with scalper surcharge fees of $2, $3, or $5, nice try Chase, just to be smacked with another fee from your own bank. So much for cutting the cost.
The convenience of paying by debit card, phone or a chip implanted in your body, brings up many security and privacy questions. To avoid lawsuits and loss of customers, large corporations rarely disclose hacking attacks only to be caught with their pants down after a major security breach. Sadly, the web security technology just cannot keep up with the black hats out there.
Putting aside all the conspiracy theories and corporate secrets, who would benefit the most from all virtual financial transactions?
The short answer: banks and governments.
Bruno S. Fray and Friedrich Schneider cite these numbers from some countries:
That is a nice chuck of extra taxes when we realize that the U.S. economy is valued at $15.17 trillion. And since the U.S. debt is now equal to economy, any increase in government coffers is welcomed with a grim.
Tax that, IRS:
With the total control of financial records, the governments can basically control, read: manipulate, the private assets of all human population. I know, I know. They would never dare, the financial records need to be disclosed anyway, it's all for the protection of the good citizens, so on, so forth. The fact is, who controls the controllers? What about our right to privacy? Combined data from Facebook, toll road transmitters, banks, credit card companies, and medical records, leaves nothing out for the ever wondering eye of the government. That would be the Treasury Department. Or your hacker neighbor, if you are (un)fortunate to meet one.
The banks, of course, have a different intention in the cashless society. Having all your finances on the platter, banks can ruthlessly rule your private life. Credit sore would become irrelevant overnight if the bank would know all your spending habits (ha, it already does!), bill your have to pay (it does already!), and account balances (yet again) without the wiggle room of stash of cash. But the most concerning issue with the banks is the administration of the fees and access to your own money.
Without cash, there would no cash-only revolt against a bank with surprising new debit card fees. What about access to an alternative form of payment during extended periods of blackouts or major disasters? And the cash gifts to your loved ones? People who work for tips? Endless fees and taxes.
Today, I dare to say, we are just not ready for the all in virtual cash society. So, cut your plastic, live fantastic. Now, where's my debit card? I need to pay for my grande vanilla skim latte.
The short answer: banks and governments.
Bruno S. Fray and Friedrich Schneider cite these numbers from some countries:
The South European countries (Greece, Italy) have an underground economy almost one third as large as the officially measured GNP: followed by Spain, Portugal and Belgium having a shadow economy between 20-24 % (of official) GNP. According to these estimates, the Scandinavian countries also have a sizable unofficial economy (between 18-20 % of GNP), which is attributed mainly to the high fiscal burden. The “central” European countries (Ireland, the Netherlands, France, Germany and Great Britain) have a smaller underground economy (between 13-16 % of GNP) probably due to a lower fiscal burden and moderate regulatory restrictions.The shadow economy in the United States is estimated to be between 8 and 10% of GNP.
That is a nice chuck of extra taxes when we realize that the U.S. economy is valued at $15.17 trillion. And since the U.S. debt is now equal to economy, any increase in government coffers is welcomed with a grim.
Tax that, IRS:
8% of 15.7 trillion = $1,256,000,000,000
10% of 15.7 trillion = $1,570,000,000,000
With the total control of financial records, the governments can basically control, read: manipulate, the private assets of all human population. I know, I know. They would never dare, the financial records need to be disclosed anyway, it's all for the protection of the good citizens, so on, so forth. The fact is, who controls the controllers? What about our right to privacy? Combined data from Facebook, toll road transmitters, banks, credit card companies, and medical records, leaves nothing out for the ever wondering eye of the government. That would be the Treasury Department. Or your hacker neighbor, if you are (un)fortunate to meet one.
The banks, of course, have a different intention in the cashless society. Having all your finances on the platter, banks can ruthlessly rule your private life. Credit sore would become irrelevant overnight if the bank would know all your spending habits (ha, it already does!), bill your have to pay (it does already!), and account balances (yet again) without the wiggle room of stash of cash. But the most concerning issue with the banks is the administration of the fees and access to your own money.
Without cash, there would no cash-only revolt against a bank with surprising new debit card fees. What about access to an alternative form of payment during extended periods of blackouts or major disasters? And the cash gifts to your loved ones? People who work for tips? Endless fees and taxes.
Today, I dare to say, we are just not ready for the all in virtual cash society. So, cut your plastic, live fantastic. Now, where's my debit card? I need to pay for my grande vanilla skim latte.
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