Why I hate sticky electrons
Is cash-money the proverbial dead parrot and if so should we mourn its passing? There have been a couple of compelling obituaries for it recently: the in this week鈥檚 Economist and a for the wedge by Jeff Randall in the Telegraph.
As they point out, there is a clear trend of coins and the folding stuff being replaced by electrons. There鈥檚 nothing novel about credit cards and debit cards. But many other forms of electronic money are increasingly in use all over the world 鈥 and you鈥檒l be using them before long, whether you expect it or not.
These include smart cards for small payments 鈥 like the Oyster card which has been a great boon in paying for public transport in London. And the use of mobile phones to pay for small value items (which is already happening in Asia) or even to transfer money overseas.
Now in some ways we should welcome this, because it should bring down the costs of buying and selling, which should mean that we as consumers see lower prices for goods and services.
Although we like to think that buying and selling in cash is 鈥渇ree鈥, in fact it鈥檚 pretty expensive. Just think about the costs to a store of collecting and counting all that cash, protecting it from being stolen, transporting it and so on. When you pay by electron, via a card or mobile phone, much of that cost vanishes.
And that鈥檚 why some retailers and other businesses offer discounts for electronic payment (or the premium for non-electronic payment announced recently by BT and savaged by Jeff in his column).
But there鈥檚 an aspect of the move to a world of electronic payment which I find less appealing 鈥 which is that data about the customer attaches to those bloomin鈥 electrons.
When I pay with electronic money as opposed to notes and coins, a record is created of what I, Robert Peston, choose to spend my money on. And over time, a profile can be created of my tastes and preferences.
This is the revolutionary aspect of the move to electronic money and away from anonymous cash. Over time it will change the very nature of commerce.
Now there are plenty of legitimate civil liberty concerns about the use of electronic money to track our behaviour, as the Economist points out. But I have another concern: it鈥檒l take serendipity out of commerce.
Mind you, serendipity is already on its uppers.
Tesco鈥檚 ability to give its customers what they want has been massively improved by the shopping information it collects through the Clubcards used by millions of them.
Google has for years been doing its best to kill off serendipity in advertisements with its search system that spews out ads tailored to our individual search preferences, offering us products and services that it thinks it knows will interest us because of the search terms we鈥檝e Googled.
It won鈥檛 be long before we鈥檙e also offered television ads customised for our individual viewing habits. British Sky Broadcasting is a long way down the track to launching a system that will download ads to the hard-drives of its Sky Plus boxes tailored to the revealed viewing preferences of particular customers.
Which is great for the revenues of all these businesses. In my regular meetings with the chief executives of banks, power companies, retailers and so on, they all swagger about how they are harvesting more and more information about you and me so that they can pre-empt our next purchase of a product or service with an apposite recommendation.
However as a consumer, it鈥檚 the things I never knew I might want, the genuine surprises, that frequently deliver the most satisfaction. The notion that what I can buy, what I can see on TV, what I can read in newspapers will all be customised to fit my electronic profile is distinctly unappealing.
At the thought of this thoroughly Googlized world of commerce, my instinct is to shout 鈥 a la Patrick McGoohan in the 鈥淧risoner鈥 鈥 鈥淚 am not simply an electronic record of viewing, shopping or searching habits, I am a 鈥︹
I'm 
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All fair points but electronic payments work easiest in the cities, less so in rural areas and non exsistent in deprived areas of the world. A great deal of the world's population still do not have access to a phone let alone a bank account or a swipe card.
What a romantic you are Robert! Sadly you're a week too late for valentine's day.
Serendipity is overrated
I'm not so sure that the use of smart cards and mobile phones for small payments will take off as some people expect. With credit cards, and to a lesser extent debit cards, you have the advantage of "buy now pay later". With smart cards it's a case of "pay now buy later". You have to charge the card/phones up - i.e. pay in advance. My company uses pre-payment cards in its so called "cashless canteen" and it's far from convenient. You can never remember how much is on the card, and when you come to rechare it, like as not the payment machine will not accept your grubby fiver. And if someone says that the cards can be automatically charged direct from your bank account, then you might as well use a debit card!
You say that it costs a lot for shops to process cash, whereas electron or debit cards are free, but seem to have overlooked the fact that there is a substantial charge to the store from the likes of visa and switch to receive a payment by card. Possibly not as much as the costs of processing a cash payment, but still something.
I don't see why there can't be compromise. It seems to me electronic money is very convenient but people have concerns over invasion of privacy. Why can't the lawmakers introduce legislation to allow people to opt out of the data collecting?
Personally I'm not concerned if I can be tracked by mobile or if businesses profile me. There are other matters I would be concerned about, such as the provision of health care based on my well documented eating habits. However, I'm not a fan of the slippery slope argument.
I think these smartcards are a worrying development. You are selling this concept as a benefit, but I believe this is simply a precursor to micro-chipping the population like cattle, ostensibly to 'protect' us from identity fraud or protect us from the current bogey-man of 'global terrorism'. Reminds me of something I read in the Book of Revelation once about evil big-government marking the population so people cannot conduct any transactions, even for food without having a 'mark'.
And he causeth all, both small and great, rich and poor, free and bond, to receive a mark in their right hand, or in their foreheads:
And that no man might buy or sell, save he that had the mark, or the name of the beast, or the number of his name.
Here is wisdom. Let him that hath understanding count the number of the beast: for it is the number of a man; and his number is Six hundred threescore and six.
Not even Stalin or Hitler's government had this much control over people's lives.
Actually, it's not quite as drastic as you make out. Already available online are one-off credit card numbers which you can use. This was set up to combat credit card fraud - you give the service company the exact money you want to spend, and they give you a credit card number which you can use only once, so even if somebody else intercepts it, they cannot use it for fraud.
This can also act as a privacy shield, and I am sure that in the coming months and years, ways will be developed to allow you to make purchases by proxy, and retain your anonymity if you so desire.
Also, to be honest, I don't object to having tailored advertising. It saves me seeing ads for things which I really don't want, or care about. The thought of future TV with not a single advert for "Big Brother" or any kind of soap opera has me sold on the idea already...
Your direction of argument in saying that large supermarkets monitoring information reduces the likelihood of you finding something interesting is partly true. However it has nothing to do with electronic cards! Anything you buy, even if you pay in cash goes through the till, adjusting the stock balance. If credit cards were banned in Tesco, the options in store wouldn't change at all. Obviously your arguments do apply to people who shop online with supermarkets as they use clubcard information to direct you to items that you are likely to buy: if that's the case that you are arguing then frankly your lazyness to go shopping in the real world is entirely your fault.
Also, doesn't 'serendipity' basically mean finding something useful whilst you are searching for something else? I hardly think you can criticise google for the downfall of serendipity in commerce, I mean honestly, just because the adverts are tailored they are not less likely to yield something of interest to you that you haven't seen before: in fact i'm sure you could actually argue the opposite.
The Octopus Card in Hong Kong has been running for years, it started as a transport card (Oyster is modelled on it)so used on all buses, trains, ferries, trams.
It is now used in supermarkets, parking meters, parking garages,convenience stores, fast food restaurants.. the coverage is growing.
To charge it up the customer has options: (1) add value at a train station machine or ticket counter, (2) charge up at any retailer that accepts it, (3) direct billing to credit card account for set replenishment. Option 2 is good for retailer, as they get cash advance on the settlement of their account with Octopus.
Frankly, the only things I used to pay actual real cash for was in taxis, and that will change soon no doubt. All other non octopus spending went on the credit card for the loyalty points as it was.. so yes, cash is on it's way out in the urban environment.
What gets me is those firms which allow you to do most of their legwork for them by buying and paying for things electronically, and then find the cheek to include a "service charge" in the final costs!
It seems that many airlines are guilty of such practises.
Anyone like me who grew up in the 50s in a small English community - perhaps it is the same even today - will know what you describe and attribute to the electronic age is nothing new.
In my village the community had a comprehensive knowledge about each of its individuals, retailers knew precisely what peoples' purchase habits were and responded accordingly.
I think what you describe says more about an urbanised population which thinks it can be or should be anonymous whilst at the same time being stacked on top of one another and enjoying the benefits of the modern age.
I wonder too just how much people share your concern and how much it is
a product of the Metropolitan civil liberty and human rights industries trying to secure gainful employment manufacturing danger and sinister intent where there is none?
the idea of electronic money is a horrible idea,goverments keeping tags on it's workers,ngo's knowing your every purchase,your own car having a black box so that you can be tracked from you front door all the way to work and back again.
but, think of the other side of the coin when the american gov.just recently could not account for billions of dollars going missing in iraq just imagine if those dollars had been electronic not paper,problem sorted just look at the bank staement and you could see exactly where the money went.
One point not considered in the article is that organised crime is almost entirely funded on a cash basis. An all-electronic economy would make it considerably more difficult for those who trade in drugs, arms, human trafficking and so on.
So on balance, whilst I share the concerns about the invasive collection of data on purchasing patterns, I strongly welcome the advent of the cash-free economy.
I think the main benefit of electronic money over the physical is its mobility.
Think of all the cash that is currently being stored in shop tills and safes, if this was electronic the shop/organisation could use this cash for other ventures.
This would increase overall spending and boost the economy.
> But there鈥檚 an aspect of the move
> to a world of electronic payment
> which I find less appealing 鈥 which
> is that data about the customer
> attaches to those bloomin鈥
> electrons.
That's surely the best aspect - money
suddenly becomes stuck to a person
like glue. And as money is used in
many nefarious activities (it is the
root of all evil, after all) a trail
of people through each illegal
transaction may prove highly
inconvenient for perpetrators. We鈥檒l
soon have those south London arms
dealers in chains!
I think this is all bad news for the USA. If the greenback is no longer needed as a secondary currency for so many developing countries because things get done electronically, it looks like the value of the dollar could fall even further, and more permanently.
Another nail in the coffin of cheap consumerism in North America ?
Could electronic payment catch on in the developing world as effectively as mobile phones have ?
It's because marketing a product costs and if there is a lower chance of an ad making you buy something they'll ignore it.
Whether you like it that way or not is irrelevant: you're merely a consumer now, not a customer.
In the old days, a customer could take their custom elsewhere,so satisfying the customer was a needed thing.
Now you are merely the temporary holder of cash that rightly belongs to the producers and if you take your custom elsewhere, you'll likely find out that the company you moved to is in the same umbrella group, so they haven't lost your money.
Having been an early and enthusiatic adopter of debit cards I have now switched back to hard cash for most day to day purchases. And I am not altogether impressed with the Oyster system.
When someone hit one my debit card with an unauthorised 拢3,000 charge it was a huge wake up call. The bank paid back the money without quibble but I have never written down my security details and was very careful with both them and my card. I realized that with a credit card I can simply refuse to pay such fraudulent charges but with a debit card the money has gone. Should the bank argue I would be in a sticky position.
My Oyster card has proven to be technologically erratic. Sometimes triggering the barriers far too easily and others refusing to work however much contact is made. I have had to replace two Oyster cards completely through failure.
So it's cash or credit cards for me.
Handling cash is expensive? so technology will put swathes of security guards, drivers, bank staff out of jobs will it?
God only knows how people are supposed to earn any cash in the first place when technology makes them redundant all the time
Further to Alan Tench's comments about pre-payment on these cards, is nobody bothered that companies such as Oyster must be earning large amounts of interest on OUR MONEY through these pre-payment cards?
To avoid higher tube fees, Londoners have a choice of monthly/annual travelcards or Oyster cards: either way, Oyster get their hands on our money BEFORE they provide the service. Nice business strategy.
Would you pay for a prostitute by card ?
Cash is king
One thing that bothers me about this move towards electronic money and credit is that it gives the power of gatekeeper to the banks.
Certain service providers here in Hong Kong, ISPs among them, will only take on customers with credit cards. Cash or cheque payment isn't good enough for them (because they can't track your spending). In the cases where there is no other provider to certain addresses, then perfectly solvent people who have cash but no credit cards are excluded from the system.
It follows that to join this modern system and participate fully in society, you first have to be approved by a bank's credit department. This marks a fundamental and insidious change to personal liberty.
The time has come to phase cash out: queues at cash machines belong to the previous millennium at it is surprising that there are still shops and restaurants in this country that do not accept cards.
Plastic money is more convenient than clumsy banknotes and coins and online banking allows you to keep a good record of what you have bought, where and when.
Cheque books are another relic from the past that could follow cash to the pages of history books. In my native Finland, banks have not issued cheque books to private clients for several years as payments are made either online or by transfers from one bank account to another.
In this country, the sorting code and account number that we use would allow the same, yet few invoices seem to have account number of the company that has sent it.
Oyster cards can be bought and used anonymously, so the privacy argument is a bit overstated.
I'm also not sure about the 'serendipity' thing. There's no point companies trying to sell you stuff we were going to buy already, so they'll use their new information to discover things that might interest you but you don't yet know about.
The idea of being advertised to through my own tastes is great. It's not that I'm going to be overwhelmed by the same, old boring adverts day-in day-out; advertisers are too smart for that.
If I buy a pair of football boots, they're not going to bombard me with adverts for football boots, because they'll know I already have them. But they may send me adverts for shirt, socks, balls etc or even the little clips you can use to fasten the net to the post, which would be great because I can't find any anywhere!
Great idea, can't wait til it catches on.
If (1) your mobile can access the Internet (2) it is pay-as-you-go and you bought it for cash under a false name (perhaps taken from the death notices in a newspaper?) and (3) you can buy goods by loading value into it, also for cash . . . it seems to me that if you want to buy child-porn you are onto a winner. No phone records, no credit-card records, no risk.
Just a thought.
Just yesterday, our biggest local supermarket chain lost credit data on hundreds if not thousands of customers. Credit card data loss has become increasingly common here.
MC/Visa have just increased their charge to merchants to 4% (to match AmEx); people who trust me prefer checks or cash for which they do not have to pay.
I use Oyster cards for convenience, although for privacy reasons I may have forgotten to tell TFL when I moved.
It's all very well having these electronic forms of cash but the simple fact is I don't want companies or the government know what I'm spending my money on. If I want to buy a bar of chocolate, a can of beer, or indeed 100 cans of beer that's my business.
For those that had forgotten I do not exist to serve the State, the State exists to protect my liberty. The loss of privacy is a big step in the direction of a loss of liberty.
Recently I've moved to Sweden to study, to a country obsessed with smartcards, swipe cards, hard plastic cards with metallic strips and/or chips on them in general. In three weeks here I have amassed no less than five seperate cards for my day to day purchasing "convenience"- one for the cashless coffee machines, two for different photocopiers, another for the bus, one for public telephones and numerous swipe cards for entering in, out and through a myriad of buildings, all, may I add, with the added joy of possessing their own seperate pin numbers (for security's sake mind). As commented previously, often these "convenient" forms of payment are seldom convenient, especially when you haven't enough credit left on your pre-paid card (or in certain cases, no card at all)to make the cashless purchase but more than enough cash in your wallet to pay for items in the conventional/traditional/archaic way four times over.
In addition to David's comment, all these pre-payment/top-up cards require you to pay for goods/services before you actually receive/utilise them. As is the case with most of these cards, inevitably there will always be some small monetary value left on them even after you cease needing their "convenience", as these yet unpaid-for-goods are priced in such a way that you'll never really be able to to spend all your purchased credit without having to top up a further hole number amount (in notes as coins cannot be accepted) to be able to pay for one. Refunds on unspent sums cannot be given, thereby leaving you out of pocket but allowing somebody else to drive around somewhere in a very nice Ferrari.
Do what I do, buy a 3V Card, use the convenience but keep your anonymity.
Cash will never die, but lets at lease move forward
What concerns me is security. If you have cash in your hand and sombody robs you. All the robber gets is what cash you have on you. Using cellular phones and the like to make purchases could make it more easy for well educated robbers and con men to wipe you out. Cash is still best for most purchases. Another point is that if national bank notes dissappear, then it could be interpreted as a loss of national identity. The greenback is part of America. As are other currencies part of their countries. Like my dad used to say "In God we Trust, All others pay cash".
I concurr with Mags above, but being briefly based in the Netherlands instead. Here the 'Chipknip' card is also a card you can load with cash -virtually at least, being done from your bank account, and use to make small purchases like train tickets or vending machines, or services like photocopying or cycle parking.
All good and well but only being based here for a couple of months I don't have a Netherlands bank account, and hence neither a chipper card. Every so often as a result, I find myself unable to use services I would otherwise expect to be able to use coins for (a cup of coffee from a machine for instance). Also, what happens when I land up in another country's jurisdiction, as most recently contemplating the (different) chipcard only parking meter in Brussels?
Oddly, where cash has become more mobile and anonymous (the Eurozone - or even the hawala system anyone?), electronic cash seems to be making us more fixed, identified as people, purchases, and particularly locations.