-
Consumers who travel with debit or credit cards have no obligation to report their bank account balances or the size of their credit lines. Certainly those who rely on prepaid cards to access financial services should be entitled to the same rights.
November 14 -
Bitcoin lets users send money nearly instantaneously, at almost no cost, and (if desired) anonymously. Getting funds in and out of the system is the hard part. That may soon change.
August 24 -
After I wrote a post last week expressing optimism about this technology's potential, several generous Bitcoin fans sent me small donations of the virtual currency. Thank you. Now stop. Please.
August 29 -
The anonymous blackmailers may be trying to manipulate the market price of bitcoins, even if their claim to possesses Mitt Romney's tax returns is hoax.
September 6
First in a series
I recently came across a gem – a
A mix of Jetsons retro-futurism and Mad Men-era political incorrectness makes the speech a hoot to read. But once you stop chuckling and consider the full implications of the cashless society Stanley M. Humphrey described, you get a sense of the privacy dangers that in the present day still lurk ahead.
Humphrey, a consultant with Booz, Allen and Hamilton, spoke to a gathering of users of the
He then described a shopping trip by a housewife (Did I mention it was 1959?) of the future. At the department store, "no presentation of cash or check is involved; no time lost in preparation or signing of sales slips, change-making, or credit verification." Rather, that "universal" payment card "is inserted in a slot, the clerk pushes a button to record the goods selected, a master button is pushed, and the transaction is completed." So far this sounds close to many transactions today, except my wallet is stuffed with receipts from these otherwise paperless purchases (and my wife sends me to do the shopping on weekends).
The imaginary housewife's stop at the grocery store is considerably more streamlined than my outings to Stop and Shop. "No check-out station is involved," Humphrey said. "Each item of pre-packaged food is ordered by insertion of the universal credit card in a slot and buttons pushed. … The merchandise is automatically gathered in an electrified cart" – which is "routed to your wife's parked car."
Behind the scenes, the data for the shopper's transactions would be processed by the Second National Financial Utility of Metropolis (successor to a generic Second National Bank and Trust Co.), which would debit her husband's "fund account" (no longer referred to as a checking account, since checks would be obsolete) and credit the retailer's for the purchases. Unless the retailer's account was at the Union Data Processing Utility, in which case Second National would communicate with its counterpart "in machine language," automating the work of clearing houses and bank transit departments. (Humphrey's use of the word "
The utility, Humphrey said, could provide the customer a single statement "with data on all your transactions. All of this is done with no exchange of cash, checks, invoices, receipts, or other paper."
Humphrey went on to predict automated billing for electric, gas and phone services, as well as for mortgages and other recurring payments; direct deposit of paychecks; and electronic ticketing at airlines – all things we now take for granted (although I don't know anyone who buys power from a "Metropolis Gas and Atomic Company").
He even foresaw that phones would one day be used in everyday banking and payments – though not the kind we carry in our pockets. Acknowledging that payments between individuals and low-volume transactions could not make use of the machines owned by department and drugstores, Humphrey said,
Almost every individual does have access to a device which could be used for input to the Second National's data processor – the dial telephone. Through dial coding of low volume transactions, the use of cash may be relegated to the very small area of petty purchases, bribes, and gambling debts.
Near the end of his talk Humphrey acknowledged the privacy issues raised by virtually eliminating cash transactions.
The Internal Revenue Service, he said, would no longer need investigators and "tax revenue would rise drastically," since "every financial transaction of any importance for every individual in the country would be recorded as it occurred."
You can imagine him winking as he warned the guys in the grey suits and pocket protectors that one day they would no longer be able to prepare their tax returns with
generous allowances for charitable contributions, local sales taxes and so on. Instead, your fund account at Second National would be automatically charged as a result of governmental calculation on an exact, accurate basis (using Second National tapes) of your income tax liability….Frightening, isn't it?
"Turbo" tax, indeed.
Alan F. Westin certainly found Humphrey's predictions frightening, and not just for tax reasons. In his 1967 classic "
The life of the individual would be almost wholly recorded and observable through analysis of the daily 'transactions' of 'Credit Card No. 172,381,400, Humphrey, Stanley, M.' Whoever ran the computers could know … who paid the rent for the girl in Apartment 4B; who went to the movies between two and four P.M. on a working day at the office; …and the hotel at which Mrs. Smith spent the rainy afternoon last Sunday.
In short, Westin warned, "there would be few areas in which anyone could move about in the anonymity of personal privacy and few transactions that would not be fully documented for government examination."
That's why it's a good thing, on balance, that more than half a century after his speech, Humphrey's vision has been only partly fulfilled.
Next:
Marc Hochstein is the Executive Editor of American Banker. The views expressed are his own.