Losing Our Anonymity in a Cashless Society

-- By JieLin - 11 Oct 2019

A few classes back, the topic of a cashless economy came up, with discussions centered around a cashless economy destroying the privacy of the free market. This got me thinking about my own presence in a cashless economy, and out of curiosity, I passed my friend my recent credit card statements for a read. What came back to me made me realize that my statements revealed more about myself than I thought. She immediately noted that I always got Sweetgreen every Tuesday (an after-gym routine), or that my purchases every Friday afternoon seem to be around Midtown. I stopped her before she continued, but this was sufficient for me to realize that if a layperson could draw such preliminary conclusions about my statements, a trained data analyst could definitely draw greater inferences for use in ways that I cannot begin to imagine.

The Cashless Revolution

A Wikipedia definition of a cashless society is one which describes an economic state whereby financial transactions are not conducted with money in the form of physical banknotes, but rather through the transfer of digital information between the transacting parties. However, the advent of digital payments is developing fast. Ten years ago, six out of every ten transactions were cash. Today, it is three in ten. It is predicted that by 2025, 71% of the population potentially will have access to digital payment technology. In China, about 1 billion people already use mobile wallets, between AliPay? and WeChat? pay. Indeed, the world is moving towards the death of cash. From shops, cafes and restaurants no longer accepting cash to parishioners making digital donations to their churches instead of dropping notes or coins to a collection plate, cashlessness is increasingly becoming the norm of the generation. Arguably, this is nothing new. Historically, the casting of coins made former primitive forms of money redundant. The printing press made the use of coins redundant, as societies starting using paper notes. Contactless payment and credit cards are now doing the same to cash, on the grounds that this furthers convenience. This would be fine if we were making this choice freely. What is concerning is that the consequences of having a cashless economy have not been properly considered.

The Cashless Consequences

In a world without cash, every payment made will be traceable. More than just having governments access such information (which opens a whole can of worms with regards to democracy), do we really want banks or payment processors to have access to that information? The power that is handed to them is enormous, and one that commodifies our behaviors and actions in ways that we cannot begin to fathom. For starters, insurance companies are able to aggregate data about individuals from credit-card spending in order to judge risk, such as looking at one’s grocery purchases for an insight into the state of our health. Analytics firm Cardlytics has admitted to helping some banks use customers’ transaction data to target coupons or other retail offers. Even hospitals are buying our credit card data to identify high-risk patients and modify their medical plans accordingly.

This is a massive invasion of our privacy. Banks and businesses are employing our information in an unethical way, exploiting information that they have (or can purchase) about consumers to manipulate and control all aspects of our lives. A simple regular purchase at a burger joint today could lead to the repercussion of being charged a more expensive insurance package; my own recent increase in transactions at online jewelry shops could have contributed to targeted advertising at my lifestyle.

Convenience vs. privacy?

In the face of a movement towards an increasingly cashless economy, how can we protect our anonymity? To the extent that the use of cash as a payment method is gradually but significantly falling, is there anything we can do to protect ourselves without excluding ourselves from the broader society and economy? Or is there simply a tradeoff today between the convenience of cashless payments and one’s privacy? Indeed, many questioning the increasingly cashless economy fall back to the power of holding cash, thus implying that a necessary trade-off with efficiency/ convenience is necessary in order to win back our privacy. I believe that both concepts are not antithetical. Indeed, this has proven to be possible with the unified payment interface, or UPI. The idea is simple – one smartphone owner who is a customer of Bank A can request a payment from, or initiate a payment to, another owner who has an account with Bank B. Neither party needs to know anything more than each other’s mobile number or virtual ID. Traditional services used to transact money online require a host of details about the receiver’s bank account before one can start transferring or receiving funds. With UPI, such details are removed. Likewise, the advent of Paytm, which ensures that online payments are kept anonymous by only partially revealing mobile numbers to the recipient. The development of such systems could lead to an eventual creation of an interface structure which allows everybody to operate through a universal cashless system without caring who owns the banks. However, to ensure that our privacy is protected, more is required from the legislature to rein in the banks. Even Paytm faced complaints that Google allowed the disclosure of customer data for advertising and other purposes. The lack of impetus to act from the government is immense, given their participation and interest in gathering information about its citizens. However, as a democratic society, it is up to we the people to demand for the reclamation of our rights. In order to protect our privacy and uphold our freedoms, the government must put a stop to unnecessary data collection by banks. Achieving greater convenience in payments whilst maintaining our fundamental right to privacy are not mutually exclusive objectives – this is not a “can’t have your cake and eat it” instance. With enough action from all parties, I remain optimistic that a cashless economy where privacy is upheld is possible.

Nothing in your analysis explains why the Indian UPI or Paytm or any other cashless payments interface is untraceable. That's hard to do, because it's wrong. You could explain that anonymous digital cash is possible. I assigned David Chaum's 1992 article on the subject for that purpose. But no government is contemplating and no society is implementing anonymous replacements for cash. Your next draft should reflect both the technical understanding of what is possible and the political realities about what is not.

I don't understand why your present draft doesn't recommend that readers use cash, or reflect an inclination on your part to do so. If your personal payment stream was 70% cash, you would be reflecting your desire for society's state overall. You would be doing what you think is right. So why aren't you? The next draft could explain.

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