The recent MobileMoneyAfrica Summit showed impressively just how far ahead Africa is compared to the developed world when it comes to mobile payment. Of necessity, of course: Mobile phones are ubiquitous there, but only a minority of Africans hold a bank account. There are already serious efforts under way to create a truly cashless society. Very predictably, many western companies are rushing in to partake in this market. Most successful so far is Vodafone’s implementation, called M-Pesa.
It is very questionable that this massive intrusion into every citizen’s privacy can be justified with the elimination of all illegitimate trade, however. It will be futile, anyway.
Richard Stallman recently pointed out some problems with this kind of cashless society: To buy something, you need the cooperation of a company. This company necessarily knows when and where you buy and how much you pay. Potentially, they will also know what you buy. And they can at any time stop cooperating. But even Richard did not anticipate a more sinister type of organization that presented at the Summit: Providers of software that allows governments to plug themselves into transaction processing in real time. The rationale for this is simple: Government can collect VAT as the deal happens. It’s transparent and no hassle for the parties involved in the deal. So far so good, but there are two issues:
- VAT is already one of the most efficient taxes to collect because merchants pay it, not consumers. RTPay offers a solution in search of a problem if simplification of VAT collection is the aim. Instead of a few million tax payments per year the government would have to deal with trillions of them.
- Why the required authorization of every single deal? The tax authorities could easily collect VAT without the right to veto a transaction in real time.
One can imagine a lot of “legitimate” uses for the authorization: All illegal trade is getting hard if government knows the exact nature of the deal because their authorization is required for every deal. And unlike the payment processor, the government will need to know exactly what you bought, because VAT can be different for different items. It is very questionable that this massive intrusion into every citizen’s privacy can be justified with the elimination of all illegitimate trade, however. It will be futile, anyway. Anything that has certain properties can be used as money. Certainly gold and silver, but also Bitcoins or prepaid phone cards. Crime will happily go on unless all these things are also tightly controlled.
This sort of cashless society gives governments unprecedented power over average citizens, however. The fact that every citizen’s movements and transactions are recorded will create a climate of anticipatory obedience. The porn video, whisky bottle or that Bitcoin magazine which is completely legal to purchase now may put you into a category with pedophiles, alcoholics and Silk Road users a few years down the road and may then cost you your job or your health insurance. So better stay clear of anything that gets even close to the line you are not to step over? Some may say if self censorship of that kind of behavior is the result of total surveillance payment systems, then good for us. But even those have to consider that once the socially accepted behavior has effectively outlawed porn, alcohol and possibly a few other things some of us may call fun, it would not stop there. Complete compliance with those societal norms may give you competitive advantages. In such a setting, norms must get stricter in time.
Society may become totalitarian without any explicit totalitarian laws in place. A climate of fear is all totalitarianism needs.
Ruediger Koch is an IT contractor in the financial services industry. He can be reached at enki-at-rkoch.org