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--------------- Print Magazine --------------
  May 2016
  April 2016
CYBER SPACE - by Sanjay Gade

The Post-Cash, Post-Credit-Card Economy


You walk into a cafe, order a macchiato, give your name to the barista and let him give you the once-over. That's it. Payment made.

At Home Depot on a purposeful Sunday, you load your cart with lumber and light bulbs and instead of pulling out your wallet, you type in your cellphone number and a PIN. Payment made.

In London, travellers can buy train tickets with their phones - and hold up the phones for the conductor to see. And in Starbucks coffee shops in the United States, customers can wave their phones in front of the cash register and without even an abracadabra, pay for their soy chai lattes.

Money is not what it used to be, thanks to the Internet. And the pocketbook may soon be destined for the dustbin of history - or at least if some technology companies get their way.

The cellphone increasingly contains the essentials of what we need to make transactions. "Identification, payment and personal items," as Hal Varian, the chief economist at Google, pointed out in a new survey conducted by the Pew Research Center. "All this will easily fit in your mobile device and will inevitably do so."

The phone holds and records plenty more vital information: It keeps track of where you are, what you like and who your peers are. That data can all be leveraged to sell you things you never knew you needed.

The survey, by the Pew Research Center's Internet and American Life Project along with Elon University's Imagining the Internet Center, asked just over 1,000 technologists and social scientists to opine on the future of the wallet in 2020. Nearly two-thirds agreed that "cash and credit cards will have mostly disappeared" and been replaced with "smart" devices able to carry out a transaction. But a third of the survey respondents countered that consumers would fear for the security of financial transactions over a mobile device and worry about surrendering so much data about their purchasing habits.

Sometimes, those with fewer options are the ones to embrace change the fastest. In Kenya, a service called M-Pesa (pesa is money in Swahili) acts like a banking system for those who may not have a bank account. With a rudimentary cellphone, M-Pesa users can send and receive money through a network of money agents, including cellphone shops. And in India, several phone carriers allow their customers to pay utility bills and transfer small amounts of money to friends and family over their cellphones.

In the United States, several technology companies, big and small, are busy trying to make it easier for consumers to buy and sell all kinds of things without the wallets. A start-up, WePay, describes itself as a service that allows the smallest merchant - say, a dog walker - to get paid; the company verifies the reputations of payers and sellers by analyzing, among other things, their Facebook accounts. Bill Clerico, its founder, reckoned that in the future, with ever swelling piles of digital data, he could gauge an individual's credit worthiness or eligibility for a mortgage.

A British start-up, called Blockchain, offers a free iPhone application allowing customers to use a crypto-currency called Bitcoins, which users can mint on their computers.

A company called Square began by offering a small accessory to enable food cart vendors and other small merchants to accept credit cards on phones and iPads. Square's latest invention allows customers to register an account with Square merchants and pay simply by saying their names. How does the merchant know the customer is who she says she is? With no more than a gaze. The customer's picture pops up on the merchant's iPad.

It is still early days for each of these companies, and as the Pew survey suggests, it is difficult to say whether they will gain widespread acceptance or freak people out - or whether, indeed, they will improve our well-being. With so much vital data in our cellphones, what happens when we lose them? Could we one day load up the cellphones of our teenage children with money for cab rides but not beer? Would cash be reserved for purchases of sex, drugs and, in repressive countries, banned books? Or just for people with bad digital reputations?

Perhaps one of the most revealing moments on the road to future money came with the arrival of a mobile payment system. Google Wallet, as it is called, has been designed to sit in your mobile phone, be linked to your credit card, and let you pay by tapping your phone on a special reader, using what is known as near field technology. But the future, alas, hasn't come as quickly as Google would like. To date, Google Wallet works on only four kinds of phones, and not many merchants are equipped to accept near field technology.

Meanwhile, PayPal, which allows people to make payments over the Internet, has quietly begun to persuade its users to turn to their cellphones. PayPal posted $31 billion in total transactions last year and became the fastest-growing segment of eBay, its parent company.

If today all you need to do is enter your phone number and PIN when you visit a store, perhaps tomorrow, that store will be able to detect your phone by its unique identifier as soon as you enter. Perhaps in the not-too-distant future, you won't have to shop at all. Your vast piles of shopping data would be instead collected, analyzed and used to tell you exactly what you need: a new motorcycle from Ducati, perhaps, or purple rain boots in the next size for your growing child. Money will be seamlessly taken from your account. A delivery will arrive at your doorstep.

Sanjay Gade

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