Tuesday, December 4, 2018

Some businesses want to make you pay with a credit card or your phone by not accepting cash. N.J. could soon ban that

By Brent Johnson, NJ Advance Media for NJ.com

Experts say it's becoming more common for businesses to accept only credit cards and
electronic payments and banning cash. (file)

No card, no phone, no problem.

A group of state lawmakers want to make New Jersey only the second U.S. state — and the first in 40 years — to ban businesses from refusing to accept cash from customers and requiring them to pay electronically.

The bill — which a state Senate committee will consider Monday — comes at a time when cities like New York and Philadelphia are weighing similar measures.

Experts say cashless businesses are becoming more common — especially in cities — thanks to a proliferation of credit and debit cards, self-serve kiosks, and mobile devices like Apple Pay that make it easier for customers to simply swipe and go.

But experts and lawmakers also warn that can disenfranchise people who don’t have the means to set up a bank account or can’t afford to be burdened by credit card debt.

“When you start going cashless, you marginalize people who are older, poorer, younger, who haven’t established credit — or people who don’t want to use credit to buy a pack of gum. Which would be me," said state Assemblyman Paul Moriarty, D-Gloucester, one of the bill’s main sponsors.

“For people that want to (use credit), that’s fine,” Moriarty added. “But stores should still accept legal tender, which is the U.S. dollar.”

Bill Maurer, a professor at the University of California-Irvine who directs the school’s Institute for Money, Technology and Financial Inclusion, said many businesses go cashless for “speed and convenience." That especially includes quick-service restaurants that are “trying to move people through quickly,” Maurer said.

It can also help prevent against robbery. Plus, Maurer said, electronic payments allow businesses to “capture data'” from customers to use for marketing and offers.

“In going cashless, you are kind of self-selecting a clientele that’s gonna be a little more higher end, spend some more money," Maurer said.

Thus, he said, these businesses are willing to overlook the added cost of devices and fees for card payments.

But Maurer said about 25 percent of the U.S. population doesn’t have access to credit cards or similar technology.

“Cash is a profoundly democratic form of payment,” Maurer said. “You just need to have it.”

For the full story, please visit: https://www.nj.com/politics/2018/12/some-businesses-want-to-make-you-pay-with-a-credit-card-or-your-phone-by-not-accepting-cash-nj-could-soon-ban-that.html

Wednesday, November 28, 2018

More Restaurants and Cafés Refuse to Accept Cash — That’s Not a Good Thing “Just because you don’t have a piece of plastic, you can’t get a sandwich?”

By Alexa Tsoulis-Reay in New York Magazine's Grub Street

Cash-free businesses create a gulf between the people who can go there, and those who can’t.
Photo: Dirk Butenschön/EyeEm/Getty Images

I was at a health-food and coffee shop on East Houston, grabbing an $11 vegan sandwich for lunch, when I noticed the man next to me, who appeared to be homeless, trying to buy a cup of coffee. The entire exchange wasn’t going well: First, there was the absence of any traditional milk from the dairy-free café’s “vegan mylk” selection. The coffee’s price, $2.95 for a small, was also fairly steep. But just as it looked like the situation was going to resolve itself, a final, insurmountable hurdle arrived: As the would-be customer started to pay with a stack of coins and notes in his hand, an employee was forced to tell him that cash wasn’t accepted at the café. Eventually, he gave the coffee to the man, only after the three of us stared at each other uncomfortably.

Until then, I had been aware of cash-free restaurants and cafés, but had never fully grasped the effects of their growing numbers. Afterward, I realized “cashless” coffee shops, cafés, and take-out spots are everywhere. It also struck me that these businesses force people to adopt a way of shopping and living that not everyone wants, and that in doing so they create a gulf between people who can shop at these businesses and people who can’t.

The more I thought about it, the more these businesses began to infuriate me. Are these business owners trying to keep out certain customers? What about children? Or people who are paid in cash, or others who, for whatever reason, can’t or won’t open a bank account (because they are undocumented, for example, or do not have a home or a fixed address)? What about tourists who simply want to avoid bank exchange rates? What about other people who, quite reasonably, don’t love the idea of companies like Apple and Square being able to track their complete purchase histories?

And aren’t the businesses that refuse to accept cash really just sending a not-so-subtle message about the types of customers they want?

“We already have so many forms of stigma and discrimination in this country,” says Bill Maurer, a UC Irvine professor who also directs the Institute for Money, Technology and Financial Inclusion, “and now we are adding mode of payment to the list — if we start marking belonging by ‘means of payment,’ that’s a big problem.” Maurer, who coordinates research in over 40 countries about the impact of new payment technologies on people’s well-being, encourages everyone to seriously think about the long-term ramifications of a “cashless revolution” — but that doesn’t seem to bother cash-free advocates too much.

“Cash is our main competitor; I don’t envy being in cash’s position,” a Visa spokesperson told me recently. In summer of 2017, the credit-card company announced a “cashless challenge” that would award a $10,000 prize to businesses that went completely cash-free. The cashless challenge, the spokesperson explained, was designed to “make it okay to say I am cash free, and hopefully encourage others to come forward, too.”

For the full story, please visit - www.grubstreet.com/2018/11/cashless-restaurants-cafes-problems.html

Tuesday, November 20, 2018

Colloquium on ‘Digital Finance in Africa’s Future: Innovations and Implications’

by Lena Gronbach and Prof. John Sharp

An international Colloquium entitled ‘Digital Finance in Africa’s Future: Innovations and Implications’ was held in Johannesburg, South Africa, on 22-26 October 2018.

Opening Keynote: Mr. Trevor Manuel

Organised by the Johannesburg Institute for Advanced Study and the Human Economy Research Programme at the University of Pretoria, in association with Disrupting Africa, the colloquium brought together African innovators in the field of digital finance, as well as academics from various disciplines within the humanities, to discuss the latest developments in this increasingly important field.

The participants were drawn from a variety of academic institutions and FinTech companies, including the University of Geneva, the University of Addis Ababa, The Institute for Money, Technology & Financial Inclusion (IMTFI), Temple University, and the American University, as well as MFS Africa, eTranzact, Creditable, Wala, Inclusivity Solutions and Gosocket. The South African Reserve Bank and the Central Bank of Kenya were represented as well.

The Colloquium had two complementary aims. The first was to give some key players in the field of digital finance in Africa the opportunity to highlight the extent and sophistication of their innovations, and to discuss their successes as well as the obstacles and challenges they face. The second aim was to bring these innovators into conversation with academics with a special interest in the social, political and economic implications of the innovations in question.

South Africa’s former Minister of Finance, Mr. Trevor Manuel, opened the colloquium by emphasizing the importance of understanding the social and economic implications of new payment technologies and the need for prudent yet enabling regulation: “We must build on the success of mobile money, where Africa is recognized as a world leader. But much depends on the extent to which existing institutions can respond the demands of rapid, repeated structural and cultural shifts, and, at the same time, drive financial access to better serve all people across Africa.” Further, he acknowledged that “we have to focus on whose interests will best be served by the race to digitalization” – in other words, to consider the social impact of FinTech innovations in addition to their technological feasibility and financial profitability.

Mr. Manuel’s keynote speech led into an open discussion guided by Nnamdi Oranye, FinTech author and founder of Disrupting Africa, and Stephen Mwaura Nduati, former head of the Central Bank of Kenya’s national payment system.

Stephen Mwaura Nduati (former head of the national payments system of the Kenyan Central Bank) and Mesfin Fikre Woldmariam (University of Addis Ababa/ IMTFI alumni)

Eight working sessions took place over the next four days, each consisting of presentations by an innovator and an academic or a regulator, followed by group discussion. The topics included mobile money and digital payments, regulation, agent networks, remittances, G2P transfers, insurance, start-up capital, and the blockchain. While the number of delegates was kept small to allow for in-depth discussion among the delegates, ‘virtual participants’ from across the globe could follow the sessions via a live streaming platform and submit their comments and questions online.

The consensus that emerged from the lively and highly interactive discussions – frequently extending beyond the allocated time slots – was that there is a strong need for innovators, regulators and academics to engage in regular and interdisciplinary debate. While most innovators are aware that the technological feasibility of an invention does not guarantee that it will be socially beneficial, they do not always have the expertise to consider the wider implications of their technological prowess. And while humanities researchers can provide these insights, they do not always fully understand the technological complexity involved or the financial and regulatory challenges faced by innovators. Finally, regulators need to balance the interests of governments, banks, and FinTech start-ups with broader concerns about social and economic development. This difficult task requires insights into both the technological and the social implications of FinTech innovations and new financial products.

As one of the delegates put it: “Every innovator in Africa should have a Humanities scholar, such as an anthropologist, alongside them for the journey. The insights that emerged when we brought innovators and academics together were exceptional and far exceeded anything we could have imagined.”

Nnamdi Oranye, founder of Disrupting Africa

Other noteworthy points made by the delegates included the need to incorporate FinTech-related topics into academic curricula in order to prepare students for their future in a digital and globally connected world in the context of the Fourth Industrial Revolution. Further, the participants emphasized the need for a focused, interdisciplinary research agenda that explores both the technological and the social implications of FinTech innovations in different geographic, cultural and regulatory settings.

With these goals in mind, the organizers would like to encourage individuals, companies and institutions with an interest in these issues to join our emerging network of scholars, innovators and regulators (contact details below). The highly successful format of this Colloquium lends itself to replication in other parts of the world where innovations such as mobile money have already had a transformative impact or will do so in the near future.

From left to right, back row: Mari-Lise du Preez (i2i), Olufunmilayo Arewa (Temple University), Ubuhle Zwane (MFS Africa), Sean Maliehe (UP), John Sharp (UP), Dare Okoudjou (MFS Africa), Peter Vale (JIAS), Stephen Mwaura Nduati (FinTech consultant), Sechaba Ngwenya (Creditable), Nnamdi Oranye (Disrupting Africa), Solène Morvant-Roux (University of Geneva). Front row: Observer, Hennie Bester (Cenfri), Sibel Kusimba (American University), Lena Gronbach (UP), Marc Wegerif (UP), Mario Fernandez (Gosocket), Mesfin Fikre Woldmariam (University of Addis Ababa).  

The detailed deliberations of the Colloquium will appear in the form of a conference report in early 2019. Recordings of the sessions and the opening event are now available here. Regular updates on the progress of this emerging project will be made available on the conference website.

Be on the lookout for an upcoming blogpost from IMTFI alums on conference insights!

Authors:
Lena Gronbach, Researcher/Administrator: The Human Economy Research Project (Lena.gronbach@up.ac.za)

Prof. John Sharp, Programme Director: The Human Economy Research Project (John.sharp@up.ac.za)

Photo credit: Riaan de Villiers, acumen publishing solutions

Wednesday, November 14, 2018

Understanding fintech from the U.S. to China

By Melissa Wrapp and Bill Maurer

On September 28-29, the 2018 California-Shanghai Innovation Dialogues hosted by UC Irvine brought together scholars, policymakers, and industry professionals from across the globe to discuss the ethics and broader social impact of emergent technologies, from insurtech to blockchain to roboadvising. Filene’s newest Fellow, Bill Maurer, gave a talk analyzing the burgeoning cryptocurrency ‘ICO’ phenomenon focusing on the power of big data and digital platforms to create seemingly totalizing systems. Here, Maurer teases out some of the major financial innovations headed our way and the socioeconomic implications that credit unions should be attuned to.

Photo credit: Marilyn Nguyen

What changes are happening in the international fintech space?
We are living in an increasingly digital world. The decreasing costs and rising quality of smart devices is accelerating fintech use. More and more we can expect to see technologies developing around what some are calling the ABCDs: AI, Blockchain, Cloud, and big Data. In China in particular, apps that create an ecosystem of different utilities, such as WeChat Pay and Alipay, are becoming giants in the mobile payments space—and reaching beyond payments into transit, bike sharing, credit, dog walking, you name it. Although their rise in China is in part linked to particularities of the local context, it is important for us to understand these technologies as companies like Facebook, Apple, and Google make moves toward integrating payments, social media, news, and other applications.

Filene Fellow Bill Maurer. Photo Credit: Marilyn Nguyen.
Americans sometimes struggle to understand what they see as Chinese consumers’ relaxed attitude toward data aggregation. What is the appeal of these apps?
For many in China, it is the same as the reason we in the US unthinkingly click through user license agreements without reading: convenience. Analysts are often quick to jump to a framework of surveillance and oppression in conceptualizing Chinese financial innovations. This isn’t unreasonable given the government’s proclivities toward censorship. There are already signs that “social credit” schemes (think Uber ratings, but for everything in your life) may be used to silence political dissidents. And products like Zhima Credit (also known as Sesame Credit), a new social credit scoring system offered by Ant Financial, coincide with broader government plans to collect citizens’ social credit data. However, as scholars at the conference pointed out, these possibilities for algorithmic governance fit into a much broader system of regulation geared toward promoting and maintaining trust in China’s low-trust market environment. So it is important to keep in mind that “convenience” in China is bound up in the social value of stability, concerns over fraudulent goods, and transparent pricing; and that it means something completely different than it does in the American context.

What is something unexpected social scientists have discovered about how people are engaging with new fintech?
People in the tech space often pitch their products in terms of revolutionary, wholesale disruption. However, what we are finding is that rather than entirely replacing things that came before, fintech is creating new layers of possibilities. Turning again to social credit schemes in China, for example, researchers have found that migrant workers are using new apps to access credit in order to extend longstanding patterns of informal lending to friends. Migrants’ efforts to improve their credit scores, therefore, are not linked to a desire to consume more for themselves, but to be able to lend to relations and friends. It is important to pay attention to the way new technologies mix up formal and informal practices, as well as older traditions and tendencies around money with new delivery channels, interfaces, and possibilities. All these continue to be informed by culturally specific moral logics around money, as well as existing financial practices.

Insurtech panel (LtoR): Lei Guang, Liz McFall, Xian Xu, Robert Collins
Photo Credit: Marilyn Nguyen 
What do participants in the credit union movement need to understand about new fintech products?
Despite our best efforts to channel our customers’ behavior toward certain ends, humans will always find workarounds. No matter how “intelligent” roboadvising becomes, for example, it will never fully exclude affect and emotion. No matter how much data is collected by insurtech companies, there will always be a smoker who lives forever and a marathoner who dies young. Sociologist Liz McFall reminds us that the origins of the word risk are related to “things to avoid in the sea.” There will always be things to avoid in the sea: sea monsters, rocks, and reefs lurking beneath the surface that are not fully known. It is better to recognize when people are tinkering, subverting, and otherwise creatively repurposing our technology and try to understand what they are up to and why, than to assume they will adopt tech the way we intend.

Take this conversation to the next level with Filene Fellow, Bill Maurer, when he speaks to how credit unions should analyze the risks of adopting new fintech with its promises and opportunity costs at big.bright.minds.2018. big.bright.minds. brings together experts from each of Filene’s Centers of Excellence to help us redefine consumer financial wellness. Join Bill Maurer and Filene in San Diego on December 6-7.

See original post - https://filene.org/blog/understanding-fintech-from-the-us-to-china

Melissa K. Wrapp
PhD Candidate, Department of Anthropology
University of California, Irvine

Bill Maurer
Dean, School of Social Sciences; Professor, Department of Anthropology and School of Law; Director, Institute for Money, Technology and Financial Inclusion
University of California, Irvine

Tuesday, October 23, 2018

On the Media: Money, Then and Now

The origins of money are in bartering, right? Not so, explains IMTFI Director, Bill Maurer speaking with Bob Garfield at On the Media, "in the beginning was not the coin... in the beginning was the receipt."

Stone money from the island of Yap.
(Bartosz Cieślak/Wikimedia Commons) 

Most schoolchildren learn that money arose when barter proved insufficient for meeting everyday trade needs. People required more complex transactions, so they invented currency: a medium of exchange, unit of account and store of value. It's a compelling story...but a false one. Instead, most evidence suggests that money arose from recordkeeping. In this segment, Bob speaks with Professor and Dean Maurer at UC Irvine and Brown University's Mark Blyth about past and present myths about money, and what the history of money might suggest about its future.

To listen to the interview or read the full transcript, please visit On The Media: Listen | WNYC Studios | Podcasts: bit.ly/2yKLLq2

Friday, October 19, 2018

How Software Ate the Point of Sale: Or, why paying for stuff is so complicated now

By ALEXIS C. MADRIGAL in The Atlantic

Photo credit: Adam Hunger/Reuters

I’m standing at the counter of a Vietnamese restaurant in Berkeley, ordering a pork bun. There was a time when I knew exactly what would happen next. I’d hand over my card, the cashier would swipe it, a little receipt would curl out of a machine, I’d sign it, and I’d crumple the bottom copy into a pocket. Easy.

Now all kinds of things can happen. I might stick my card directly into a point-of-sale (POS) system. Maybe I swipe; maybe the cashier does. Perhaps a screen is swiveled at me. I could enter my PIN on a little purpose-built machine; I could sign with my finger on a screen; I could not have to sign or enter a PIN at all. I could tap my phone on a terminal to pay. Usually, there’s a chip reader for my no-longer-new chip card. When I put the card in one of the machines, sometimes it takes four seconds; other times, I have time to pull out my phone and stare at it, which means I forget about the card until the reader begins to beep at me, at which point I pull it out, mildly flustered, as if I’d caused too much ice to pour out of a soda fountain. Ah! Okay. Sorry.

The act of paying for stuff is undergoing a great transformation. The networks of machines and code that let you move your imaginary money from your bank account to a merchant are changing—the gadget that takes your card, the computer that tracks a restaurant or store’s inventory, the cards themselves (or their dematerialized abstractions inside your phone). But all this newness must remain compatible with systems that were designed 50 years ago, at the dawn of the credit-card age. This combination of old and new systems, janky and hacky and functional, is the standard state of affairs for technology, despite the many myths about how the world changes in vast leaps and revolutions.

If some areas of financial technology, or Fintech, promise a new elegance, the point of sale serves as a reminder of the viscosity of the everyday technologies on which most Americans rely. If you want to divine the future of transportation, you’d probably learn more thinking about the bus than the rocket. If you want to know how money is gonna change in the future, you need to look at the cash register as much as the blockchain.

[The future of money-like things]

But the most powerful and ambitious companies in the world have tremendous incentive to take interest in the cash register. It’s there where the two great data streams of the modern world flow together: what people do on their phones and what they buy in the physical world. In the first stream, the tech one, the rule is that data becomes money, after it is fed into machine-learning systems tuned to show you better ads. In the other, the data is money. If these two streams fully merged, a company could have a perfect ledger of what you saw and then everything you bought. The ads would get better, so you’d buy more stuff, and in buying more stuff, you’d make the ads better. Online, Facebook (and others) can already track all kinds of activity. But about 90 percent of purchases are still made IRL. Imagine the vast sums of money that could be made if every transaction became part of the ledger. Unsurprisingly, the big tech companies want a piece of this action—as do the banks, as do many start-ups and established, niche players.

So Americans are living through what Bill Maurer, the director of the Institute for Money, Technology, and Financial Inclusion at the University of California, Irvine calls the “Cambrian explosion in payments.” The “point of sale”—once a poky machine or just a person with a calculator or a pencil—is now a computer like everything else, tied deeply into the operations of the restaurant or store. The labor of making a payment could fall to the cashier, as in the old days, or to me, the customer, but we’re both accessing a complex, evolved system of reckoning between banks and their attached remoras, feeding on whatever money ends up in the water.

For the full story, please visit:
https://www.theatlantic.com/technology/archive/2018/07/when-software-ate-the-point-of-sale/565919/

Tuesday, October 16, 2018

Market Watch: How artificial intelligence could replace credit scores and reshape how we get loans

“In the abstract, having access to credit is better than not having access to credit and certainly better than having access to really predatory credit at extremely high interest rates,” said Stephen Rea, IMTFI Fellow cited in Market Watch, Oct. 15, 2018. Still, he cautions that while increased credit access has the potential to meaningfully improve the standard of living in emerging markets, companies and consumers must tread carefully.

Image credit: Peter Grundy

Market Watch: How artificial intelligence could replace credit scores and reshape how we get loans


Alternative credit scores — using data, in part, from customers’ smartphones — will be migrating from emerging economies to the U.S.


by Emily Bary

You may not think the number of words in an email subject line says anything about you, but at least one company is betting that the metric can help determine your likelihood of paying back a loan.

LenddoEFL, based in Singapore, is one of a handful of startups using alternative data points for credit scoring. Those companies review behavioral traits and smartphone habits to build models of creditworthiness for consumers in emerging markets, where standard credit reporting barely exists.

In addition to analyzing financial-transaction data, Lenddo’s algorithm takes into consideration things such as whether you avoid one-word subject lines (meaning you care about details) and regularly use financial apps on your smartphone (meaning you take your finances seriously). Lenddo also looks at the ratio of smartphone photos in your library that were taken with a front-facing camera, since selfies indicate youth, helping the company divide people into customer segments.

The data points are unconventional, but Darshan Shah, Lenddo’s managing director for South Asia, says the company’s overall algorithm is a reliable predictor of creditworthiness for the so-called underbanked. For those who lack formal credit histories, Lenddo and others say artificial intelligence can help sort through a variety of data points that, in sum, indicate financial responsibility.