A week ago, we started a new cycle about how we’ve been working for years to eliminate cash from circulation. Here you will find the first part. Today we continue our story.
Cards and cultural revolution
At the beginning of the 21st century, PayPal appeared on the market. Of course, it was a revolutionary solution for those times. It’s not just about technology, but more about … culture. Note that this tool started the era of paying with cool apps. For centuries, only coins were used in commerce, most often gold and silver. In the fifteenth century a Venetian, English or Polish merchant would not even wonder in this field. Why the season to launch a new payment tool when there are coins? Today, the case is different: some gadgets are trying to outdo each other in order to look for new mobile “apps” for payment. There was no such thing before the PayPal era. The cards were the only revolution.
PayPal was also promoted in the same way as these cards: as a tool for express, convenient and secure transfers. However, as psychology experts note, the cards have done something else. They guaranteed the illusion of wealth. They let us almost conjure up products like a magic wand. The loss of banknotes and coins from the wallet could still make us think twice about whether we need this funny cat figurine, compilation of the greatest U2 hits or a new piece of furniture for the room. We saw the outflow of cash with our own eyes – a bit like playing a fashionable RPG – and we could watch how our character loses his standard of living while fighting opponents. This card does not have it. Well, unless someone keeps track of the account level in online systems every day or runs his accounting using Excel. Most, however, do not work that way.
Interestingly, just as politicians are afraid of cryptocurrencies today, so they were afraid of … credit cards. In the second half 1960s President Johnson’s assistant Betty Furness said that offering cards to people is making them “compulsive debtors” and is as irresponsible as giving sugar to diabetics. And all in all she was right.
Today, most people have become accustomed to living in debt. In 2016, the average family in the US was over $ 16,000 in debt with debit cards. 70% Americans have a minimum of one card, half two, and every tenth over three. The average family was also generally indebted – not just by cards – at USD 40,000. Some even think that cards also help people survive recessions. They have actually become the norm in our lives, and will probably soon be supplanted by mobile applications.
How to make money from sending money?
Now let’s look at the issue of eliminating cash from one more perspective. If I buy a new T-shirt for PLN 100 in a banknote, nobody will make a profit from it. All right, a t-shirt seller will benefit, but no third party. However, if I make the same transaction digitally, someone will have to do it – just a company, a third party (even in the case of blockchain we pay such a fee, although it can be very low).
Even if the fee is literally pennies or cents, globally millions of such transactions will give third parties great earnings. That’s why the giants – Apple, Google, Facebook and Amazon have been fighting for this market for years.
It is not only about fees, but also about data. After all, when making transactions online with any of the companies, we leave a trace. The given entity knows that we already like to travel to Crete, for example, we prefer elegant clothes of a particular brand or we are interested in fantasy literature. You may also find out that we go to the cinema every Friday evening and we prefer a trip to the pub on Saturday afternoon.
Seemingly it still doesn’t sound particularly threatening. After all, what about the fact that Google knows even more about me than my mother, since I don’t know anyone from this company privately? In return, I order goods in a convenient way, without even leaving the house! However, the problem is and is not limited to the annoying dedicated ads we see on the websites we visit.
Paradoxically, all of this already affects policy today. We all know that social media activities influenced the results of the US presidential election to a large extent four years ago. Undecided voters’ data was used to convince them to support Donald Trump.
How does this change our everyday life? As early as 2012, an angry teenager’s father ran into the headquarters of the Target chain. He wanted to know why the company was sending her advertisements for pregnancy and baby products. He was shocked that she was informed that she could now buy a baby cot and clothes for a newborn cheaper. The company analyst explained to her father on the basis of what 25 products that the girl bought online, it was determined that she was pregnant. It turned out that Target found out that the gentleman would become a grandfather earlier than the most interested. And that’s already scary, right? Here you can also see the importance of anonymous shopping using blockchain …
However, this process will take place. A few months ago, in one episode of “Freedom under renovation”, Tomasz Wróblewski wondered why Mark Zuckerberg announced that Libra might not come into existence then. He said it was doubtful that a company like Facebook would suddenly change its plans 180 degrees. He speculated that it was only about reassuring politicians who were afraid of the giant’s digital currency. In fact, Zuckerberg will want to start with Libra when a new economic crisis breaks out – Wróblewski had such visions 10 months ago. The crisis has begun, and Facebook allows you to pay with WhatsAppem in Brazil. After a successful test on a living organism, he will probably transplant this idea to other countries. It’s probably entering Libra through the back door.
Why are we writing about this? Crises are good times for implementing innovations. In 2007, an iPhone appeared on the market. A year later, the previous crisis related to the banking market began.
The new device has transferred digital purchases from computer to smartphone. In 2013, work began on Apple Pay. Why?
Nathaniel Popper from the New York Times probably caught the ideas of the company:
“For banks and credit card networks, Apple Pay could mean cutting off part of the revenue stream, as the technology giant seems determined to occupy a more central position in the world of finance. ”
Today Apple Pay may not be in the very center of the market, but it will definitely move in this direction in the long run. Google, Facebook and other technology companies are also fighting for this place.