by JEM BENDELL
PHOTO/www.hedgethink.com All rights reserved.
New technology is transforming the way we pay for everything, but at what cost?
Last month I was asked to speak at a conference in the City of London on the ethical issues surrounding new payment systems. The audience was packed with people working on innovative things like payment apps for smart phones and ‘contactless payments,’ where you can just wave a card or a phone over a terminal.
Their new financial technologies are rapidly changing the way we pay for everything. This may be convenient, but as wand-waving and other high-tech alternatives to cash become the only ways to pay for anything, what happens if the wand loses its magic? What are the costs of becoming entirely dependent on technology in a cashless society?
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This uncertainty is related to a second issue—that of anti-competitive practices. Visa and Mastercard already account for over 80 percent of the credit card market worldwide, and well over 90 per cent in many countries. The Financial Times refers to this situation as “a well-protected oligopoly” and so, for them, a good investment. Yet it also represents a hitherto unimaginable degree of control over the means of payment. Even if policies are adopted to diversify this market or—if that doesn’t work—to break up these oligopolies directly, such unprecedented levels of control raise a third area of concern in the form of peoples’ rights to privacy.
In my understanding of good governance, individuals are sovereign and should only give up their freedoms knowingly. There was no such consent to mass surveillance, and privacy is a human right that is recognised by the United Nations. At a time when exchanges of general communications data between spy agencies are routine, what happens to privacy as the payment revolution rolls on?
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Over the last few years, governments and politicians have told payments firms or banking networks to switch off access for organisations or banks they want to damage, outside of any legal framework. For example in 2011, after the online publisher Wikileaks continued to embarrass the US military by releasing diplomatic cables on the conduct of US wars, MasterCard, Western Union and PayPal responded to requests from a small number of US politicians to block Wikileaks’ accounts, preventing them from receiving donations, even in Europe.
Similarly, after disputes between Iran, the European Union (EU), and the US in 2012, the EU ordered the Belgium-based banking network SWIFT to suspend all transaction services with Iranian banks. In 2013, the US also encouraged the EU to impose financial sanctions on Russia by targeting five major state-owned Russian banks.
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