The Growing Perils of the Cashless Future
Michael Kling
Wednesday, 23 Apr 2014 | 10:26 AM ET
We're finally on the brink of the cashless society that futurists and other have been forecasting for years. The average consumer owns at least two credit cards and early adopters have begun ditching plastic for virtual wallets. Even businesses that used to rely heavily on cash — think taxis, food trucks or even craft fairs — can now go cashless, thanks to new technology like Square.
Yet, the more we abandon paper bills for plastic, smartphone payments and even cryptocurrencies like Bitcoin, the perils of the new, cashless economy are becoming more apparent. Recent security breaches at Target, Neiman Marcus and other retailers illustrate the vulnerability of electronic payments to hacking attacks.
There were 2,164 reported security incidents exposing 822 million records last year, nearly doubling the previous highest year, 2011, according to Risk Based Security, a data security firm. The pace seems to be continuing this year.
video here:
http://www.cnbc.com/id/101605846
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The Cashless Society
http://www.slate.com/articles/business/cashless_society.html
The Cashless Society
Historical and contemporary perspectives on the future of money
http://cashlesssociety.wordpress.com/
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Mobile money - ready for lift-off?
28 April 2014 Last updated at 07:37 ET
Is tomorrow the day that the idea of using your mobile phone to pay for things finally takes off? The Paym system which links your mobile phone number to your bank account goes live on Tuesday - and may have a better chance than others of finally gaining widespread acceptance for mobile payments.
However, having seen plenty of other mobile money ventures flounder, I'm reserving judgement. Only last week, I got a cheque (and what am I supposed to do with that?) in the post for £9, the remaining balance in my O2 wallet. I'd forgotten I even had money in this app and so it seems had most of the other users because the wallet scheme has been closed due to what Telefonica - O2's owners - described as "a number of developments in the financial services sector".
Then at the weekend, while thinking about which other payment services were on my phone, I found I could use the PayPal app very simply to send small amounts of cash to friends. This seemed ideal - until a relative pointed out that to get the £5 I'd sent her as a test she'd have to log into PayPal and, while she had an account, she'd never used it and couldn't remember the password.
I had better luck with the £5 I sent to a friend who's a mobile money expert - until he returned the £5 as a Barclays Pingit payment. Now I had used this service when writing about it a year ago - indeed a statement arrived a few days ago telling me I had £30 in my Pingit account. But I had long since wiped the app off my phone, and I spent half an hour on the line to a Barclays call-centre to find I would have to go through a lengthy verification process to reawaken Pingit and get hold of my cash.
The problem for mobile money schemes is the need to balance security with ease of use. So far, the sheer aggravation of having to download apps, set up memorable phrases and remember passwords has made the schemes of doubtful value to many. That in turn has meant there is no network effect, where I use a payment app because all of my friends use it and lots of businesses accept it. Some schemes - like the Starbucks mobile payment app or the Hailo taxi app - have achieved lift-off, but there is no universal system enabling the mobile user to pay anyone with a click.
video here:
http://www.bbc.com/news/technology-27186701
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In a cashless society, what will the new currency be? Your reputation
Coins and notes are uneconomic. We may be on a path to a world where 'identity transactions' take their place
'Social capital will be deployed in smaller and more commonplace transactions, not only getting a job or buying a house.' Photograph: Siri Berting/Compassionate Eye Foundation
Dave Birch
theguardian.com, Wednesday 7 May 2014 07.11 EDT
New research suggests that it costs the average SME more than £3,600 per year just to handle cash, and – thanks to Bitcoin and other innovations – thoughts of a cashless society seem to be stirring again. But what would a cashless society look like? And how will we get there?
The social anthropologist and money historian Jack Weatherford said: "The electronic money world looks much more like the neolithic world economy before the invention of money than it looks like the market as we have known it in the past few hundred years."
What Weatherford means is that ancient society worked on a shared memory of mutual cross-obligations, continuously adjusted and revised. In the clan, everyone knew who owed what and to whom, a structure that does not scale beyond the kinship group. Once clans form into tribes and tribes move into cities, the shared memory is no longer sufficient. We need intermediaries to manage, and money is one of them. If, however, technology gives us back that shared memory, then we don't need intermediaries to enable transactions. It becomes what some people call a "reputation economy".
The signals for change are visible. The son of a friend of mine decided earlier this year not to go to college. Instead, he is already hard at paid work as a programmer, having made the calculation that shared memory will provide an effective means to gather valuable and accurate reputational information that used to be too expensive to gather. Such intermediaries provide what Sam Lessin, Facebook's head of identity products, calls "hacks" and what Rory Sutherland, the vice chairman of Ogilvy & Mather UK, calls "patches".
Using patches such as college degrees and credit ratings instead of real, immediate reputational data is just not good enough in our connected world, which is why there are companies now looking at using the social graph as an alternative.
more here:
http://www.theguardian.com/commentisfree/2014/may/07/cashless-society-new-currency-reputation-coins-notes-identity-transactions
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Can ‘Dirty Cash’ Move Us To A Cashless Society?
If you saw a $20 bill on the ground, would you pick it up? Sure, everyone loves an extra buck or two, but do you know where that cash has been?
A recent study by MasterCard and Oxford University found that even the bills sitting safely in a wallet are likely covered in bacteria. However, the majority of people do not wash their hands after handling cash, even if they are aware of the potentially unhygienic material they are touching.
The research found that the average European bank note contained 26,000 bacteria, which could be potentially harmful to a person’s health. Even so, a follow-up survey by MasterCard found that only one in five individuals wash their hands after having handled cash. In that second survey, MasterCard interviewed over 9,000 consumers in Europe and the majority of individuals ranked physical money as being more unhygienic than hand rails on public transport or communal food, such as nuts in a bar.
In a blog post, Dr. Jim O’Mahony, lecturer in Biological Sciences at The Cork Institute of Technology in Ireland, noted that there are no firmly adopted international guidelines on the use of handling cash during seasonal flu outbreaks. As such, he advised consumers to stay aware of the potentially germ-ridden paper money. Cashless transactions would be a logical answer to keeping people healthy, he said.
“Given that the majority of people acknowledge that handling cash could be perceived as being hazardous – yet on a practical basis people are disinclined to adopt basic hygiene practices – a more successful approach may be to encourage the use of more cashless transactions,” O’Mahony wrote.
“This would seem like a logical approach given the consumer research highlighted 66 percent of Europeans prefer to use a card or contactless payments over cash.”
Furthermore, MasterCard found that 39 percent of Europeans are open to the idea of using a credit or debit card or contactless payment instead of cash to be more hygienic. In terms of replacing cash, the majority of surveyed individuals – 63 percent – chose card payments, while 35 percent said that they would prefer to make online payments instead of using cash.
Cash might be dirty, but switching over to literal money laundering might not be the answer either, according to experts. The “dirty money” survey found Europeans are having a difficult time eliminating cash from their daily lives, noted Chris Kangas, head of contactless payments for MasterCard Europe. While innovative, contactless payments can also prevent some bacteria and germs from spreading, Kangas said.
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http://www.pymnts.com/company-spotlight/2014/can-dirty-cash-move-us-to-a-cashless-society/#.U2zalXIpJHZ
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Does a cashless society mean less crime?
March 30, 2014 9:45 am • By Jim Gallagher jgallagher@post-dispatch.com 314-340-8390
We’re buying more stuff with keystrokes and plastic instead of cash these days. Now comes evidence that our cash-light ways may be foiling crime.
Researchers at the University of Missouri-St. Louis looked at what happened when Missouri switched from handing out welfare checks to depositing welfare on debit cards. Burglary, larceny and assault went down, they found. Robbery may have fallen, too, although there weren’t enough robberies in the sample to draw a firm conclusion.
To understand why, put yourself in the shoes of a crook.
You can swipe the purse of a well-dressed woman downtown. You’ll get a couple of credit or debit cards and a little cash. The typical American carries just $15, according to a Tufts University survey.
The cash is nice, but the credit card is problematic. Credit cards don’t sell for much on the street, says criminologist Richard Wright of UMSL. Try to use a stolen card in a convenience store, and your picture will be on a video camera. Cards stop working when the victim reports the theft.
On the other hand, you could go to a poor neighborhood and lurk around at a check cashing shop when a hotel maid shows up with her paycheck. Snatch that purse and you’ll get no plastic, but more real money.
Cash is what the thief wants most. His drug dealer doesn’t take a credit card. So, putting welfare on debit cards makes the recipient a less attractive target.
Crime in St. Louis and the United States has been trending down for a quarter of a century. There are many possible reasons: more police on the streets, smarter policing, putting more criminals in prison, the end of the crack epidemic 20 years ago, demographic shifts.
more here:
http://www.stltoday.com/business/columns/jim-gallagher/does-a-cashless-society-mean-less-crime/article_4432514e-8822-5d6b-a02f-60b4681138ae.html
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Yes, debit cards make our streets safer. But they make the Internet more dangerous.
By Brian Fung
March 26 at 1:30 pm
Cash means crime. It's as attractive to street thugs as it is to Bond villains. You can spend it anywhere, on anything, and it's almost completely anonymous.
Scientists have long suspected that reducing the role of cash in American society might reduce the incidence of physical crime. As my colleague Chris Ingraham notes, a new economic study shows switching people from paper welfare checks to electronic debit cards is linked to a drop in assaults, burglaries and robberies.
The findings suggest a cashless society would indeed be a more peaceful one. But even as fewer people use cash for everyday transactions, that creates opportunities for new kinds of theft that involve very different players, wielding a very different playbook.
The question now isn't whether electronic payment methods reduce crime. It's whether they're changing the criminal landscape in a way that reduces some crimes and facilitates others.
Instead of assault and burglary, we're seeing a rise in malware and botnets. Rather than beefy bullies who commit crimes of opportunity, skilled hackers are increasingly probing corporations for gaps in security. A robust industry has grown up around the sale of digital exploits. And the more we move away from cash, the more vulnerable to these attacks we become.
"No one knows (or is willing to hazard a guess) how many people participate in" online crime, according to a report this week by the RAND Corporation.
"Similarly, few want to estimate how large the market is, although the general feeling is that it is large, and one expert noted that it generates billions of dollars, at the least."
more here:
http://www.washingtonpost.com/blogs/the-switch/wp/2014/03/26/yes-debit-cards-make-our-streets-safer-but-they-make-the-internet-more-dangerous/
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In a cashless society, child gamers are moving to digital currency
By Colin Campbell on Feb 12, 2014 at 8:01a @ColinCampbellx
As a child, in England in the 1970s, I would spend my pocket money on sweets and fizzy drinks. I'd also buy practical jokes, small toys, football cards; games and entertainment.
Kids today are no different. They spend half their allowances on junk food and pretty much all the rest on entertainment, often in the form of games or in-game items.
But the method of payment is where the world has really changed in the last few decades. When I was a kid, every last thing in my house, except the house itself, was bought with cash. We had no credit cards, no check books. My parents' wages were paid in brown envelopes containing banknotes.
Such a notion, today, seems quaint. Now, kids live in an era of digital money, in which the only way to buy things online is via electronic transfers. Yet only a fool would give a child access to plastic.
Parents, infamously, have been stitched up by content providers and even platform holders allowing children to make almost unlimited purchases of virtual goods. Most adults are figuring out how to block kids from buying stuff online, while companies are finally being reined in with much-needed regulations and penalties.
Enter Oink, a payment technology from Virtual Piggy. It's basically PayPal for kids. Parents create an account, and set a monthly limit. Kids can make purchases in online and real life stores using their digital account, or an Oink card. They cannot go over the limit set by parents.
Parents have access to an online log that shows exactly what is being bought. They can also block certain retailers. They can cancel or suspend the card at any time. This gives parents more oversight and control over their offsprings' purchases than if they were using cash. It limits exposure to expensive credit card mistakes. And it drastically cuts down on the pestering that goes on in all digital households.
"Say your kids come to you asking you to make a three dollar purchase online," said Oink CEO Dr. Jo Webber in an interview with Polygon.
"If you could give them three dollars you probably would. But you have to give them a credit card and that just means a 'no'.
"Oink gives the kids a middle ground where they get to spend their own money in a way that is controlled and responsible. But the parents get the benefit of not having those conversations for every last purchase."
more here:
http://www.polygon.com/2014/2/12/5402986/in-a-cashless-society-how-child-gamers-are-moving-to-digital-currency
