N.J. could soon ban stores from making you pay with a credit card or your phone by not accepting cash

By Brent Johnson, NJ Advance Media for NJ.com
(Posted Feb 1)

It may soon be illegal for New Jersey stores to keep you from paying with cash and force you to pay with a credit card or your phone instead.

Both houses of the state Legislature on Thursday passed a bill that would make New Jersey only the second state in the U.S. — and the first in 40 years — to bar no-cash policies at businesses.

It’s now up to Gov. Phil Murphy to sign or veto the measure.

Experts say it’s becoming more common for businesses to require electronic payments — especially in cities — thanks to credit cards, debit cards, self-service kiosks, and mobile devices like Apple Pay being more readily available. It’s quicker and more convenient for stores.

But experts and lawmakers say cashless businesses disenfranchise people who don’t have the means to set up a bank account or can’t afford credit card debt.

Experts say it's becoming more common for businesses to accept only credit cards and
electronic payments and banning cash. (File) - (Dec 2 post)

Bill Maurer, a professor at the University of California-Irvine who directs the school’s Institute for Money, Technology and Financial Inclusion, said about 25 percent of the U.S. population doesn’t have access to credit cards or similar technology.

State Sen. Nellie Pou, D-Passaic, a main sponsor of this measure, cited a federal survey from 2015 that shows 7 percent of American households had no checking or savings accounts — and the number was twice as high for black and Latino households.

For the full story, please visit: https://www.nj.com/politics/2019/02/nj-could-soon-ban-stores-from-making-you-pay-with-a-credit-card-or-your-phone-by-not-accepting-cash.html

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/

No Shirt, No Swipe, No Service: Cash is a miracle. So why are more businesses refusing it?

By Henry Grabar in Slate, staff writer for Slate's Moneybox

Photo illustration by Slate. Photo by paulprescott72/iStock.

For years, small businesses have asked customers to pay cash, set credit card minimums, or added a surcharge onto card transactions, in an effort to defray the premiums imposed by companies like Mastercard and Visa. Now, an increasing number of businesses are doing the opposite. Head out of Slate’s offices for lunch and you might wind up at Dos Toros, a local burrito minichain; for coffee you might pick Devoción, a Colombian-born coffeehouse with an airy storefront. In either case, you’d be confronted with the same demand: Pay with plastic.

Stores are eliminating cash registers and coin rolls in pursuit of what they say is a safer, more streamlined payment process—and one that most of their customers want to use anyway. At Dos Toros, co-founder Leo Kremer said that more than half of the shop’s customers used cash when its first location opened in Manhattan in 2009. By the beginning of this year, that number had fallen to just 15 percent. At that point, the various hassles of dealing with cash—employee training, banking fees, armored-truck pickups, and the occasional robbery—outweighed the cost of credit card fees on those transactions. The shift wound up being more or less revenue-neutral, Kremer said, but saved a lot of time and trouble. Dos Toros’ New York locations have been fully cash-free since the winter.

And what about customers who don’t carry a card? “You agonize over that,” Kremer said. “After talking to the team and absorbing the flow at the register, we felt like almost everyone who used cash had a card. It just hasn’t been an issue.”

Read original post and see what IMTFI Director Bill Maurer has to say here: https://slate.com/business/2018/07/cashless-stores-and-restaurants-are-on-the-rise-to-the-delight-of-credit-card-companies.html

Marching into Hong Kong: Maurer Plays Marco Polo (Part 2)

By IMTFI Director and UC Irvine School of Social Sciences Dean Bill Maurer

The first thing I noticed when coming into Hong Kong from China was that the cab drivers wanted cash. No cab driver was using an app to receive payment. The second thing I noticed was the cash: the HK$100 note is the same size and color as the Chinese 100 RMB note. Instead of a portrait of Mao, it has an image of Chinese soldiers marching into Hong Kong to commemorate the 20^th anniversary of the establishment of the Hong Kong Special Administrative Region (HKSAR). Oh, wait, it’s not exactly soldiers. It’s a military marching band, holding musical instruments. Soooo much nicer.

With cash as an everyday reminder of Chinese rule, cash and cards dominate the payment landscape in Hong Kong. Overlooking the harbor we saw a giant lit-up ad for Samsung Pay during the nighttime lightshow, but I never saw anyone use it, and no one I met had ever used it (and several had never even heard of it). Lots of cash, a fair bit of bargaining, and some credit card use. Union Pay ads adorn walkways and public areas, as well as the airport, celebrating your ability to “make your choice” and touting Union Pay’s “global payment network.”

Union Pay ad in Hong Kong.

This seems to be a selling point, at least for now. WeChat Pay can’t be used outside of China by non-Chinese citizens (and I haven’t yet seen any merchant in the US who accepts WeChat Pay – but I’ll be looking, and Rutgers graduate student Jing Wang shared with me this photo of a vendor who accepts WeChat Pay outside of the NYU Stern School of Business!). My Chinese students at UC Irvine are all using WeChat for social networking, chat, news and more. It may only be a matter of time and regulation before WeChat Pay also goes global. When that happens, I have to wonder how much more data might be available to WeChat—and the Chinese government—about residents and citizens of the United States.

Food truck vendor in front of NYU Stern School of Business.
Photograph by Jing Wang, used  with permission

This may be why there is so much interest in Hong Kong—and in China, among those I spoke with—in blockchain technology. While I was in China, the government banned bitcoin and shut down some bitcoin exchanges. Nevertheless, several of my interlocutors in China wanted to know more about the cryptocurrency and blockchain. They were ready to disparage the (ridiculous) monetary theory behind bitcoin, but were deeply interested in the potential use of blockchain for “accountability.”

I was surprised to see a whole display of books (see left) in a non-academic, non-tech, general readership Hong Kong bookstore on blockchain and fintech. I actually bought a copy of a blockchain book—in Chinese, just to have as an artifact of this moment in the history of payment and accounting—at the airport bookstore in Hong Kong (thank you, National Science Foundation).

What are the bigger lessons then? I’m tempted to make some big claims but they’re really too flimsy to stand on right now. Still: maybe the US’s messy, noninteroperable, non-seamless, kludgey payments infrastructures are not such a bad thing after all? Google’s got a lot of my data and the NSA can snoop around in it just as easily as the Chinese government can use machine learning to catch phrases in WeChat conversations or shut down entire groups or circles of payment or make it impossible for you to rent an Ofo bike, limiting your mobility. But if I can’t keep track of my various accounts for the different payment services I use, is my fragmentation across payment platforms a good thing for my liberty?

Mobile payment in its WeChat/Alipay app-based form, so different from the SMS-based world of M-Pesa, crucially depends on government-mandated identity as the base layer on which everything else is built. So maybe there’s something to be said about the line from authoritarianism to app-based mobile payment? And maybe, whenever I’m feeling like a blockchain skeptic, I should look at that HK$100 note to remind myself why a noncentralized, non-government controlled means of accountability might be a good thing.

I can’t thank by name but also can’t thank enough my various interlocutors and guides in China and Hong Kong. Xiè xiè!


All photo credits are by author unless otherwise noted.

Read first post: "Paying behind the Great Firewall: Maurer Plays Marco Polo (Part 1)"

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Join IMTFI Director and Dean Bill Maurer and CPRI Director Bryan Cunningham on November 14 for "Using Blockchain to Secure the Supply Chain: A Conference of Industry, Academic, andGovernment Leaders" to discuss the innovative potential of the blockchain to transform supply chain security. An IMTFI collaboration with the UCI Cybersecurity Policy & Research Institute (CPRI)~

REGISTRATION is now open: http://sites.uci.edu/blockchain/

Credit Cards, Social Relations, and Serresian Parasites in Chile

IMTFI fellow José Ossandón reports on how the use of credit cards is intertwined with complex social relations in Chile in a case study for IMTFI's Working Paper Series. Drawing upon Michel Serres's notion of "the parasite," Ossandón examines how low-income credit card customers in Chile use their "hidden" social networks to extend credit limits beyond those designed by the credit card companies. By lending cards to relatives and friends, Chileans leverage their existing social networks in complex and surprising ways, demonstrating how financial technologies are always already embedded in intricate interpersonal relations.

Read the full report here.

The Economy of the Quota: The Financial Ecologies and Commercial Circuits of Retail Credit Cards in Santiago, Chile

The following is a translation of preliminary results from research conducted by José Ossandón, with the support of Tomás Ariztía, Macarena Barros, and Camila Peralta, and funded by IMTFI.

Luisa is a 54-year-old housewife who lives in the municipality of La Pintana, south of Santiago. Seven others live in her household: her husband Patrick, her children Nacho, Paty, and Andrea, her son-in-law Rafael, and her grandchildren Camila and Cristian. Luisa also has a fourth daughter Katia, who lives with her husband Rodrigo in the same neighborhood. Luisa’s husband Patrick works as a freelance painter sporadically, and he earns on average 150,000 pesos (US$312) a month. In addition to housework, Luisa manages a kiosco or small shop in her home, which earns her between 20-30,000 pesos a month. Andrea and her husband work and take care of their own expenses. Paty, in turn, is unemployed and so receives help from her parents to cover her expenses and those of her daughter. Nacho is studying nursing with the support of a loan (called a Crédito Aval del Estado, or State-Guaranteed Credit) and recently has begun to receive his first income as an occasional worker in construction. Luisa and her family maintain their home with the money that Luisa and her husband earn and with the financial support they receive from their children.

With regards to her financial life, Luisa has a savings account, an emergency fund of 40,000 pesos cobbled together with money from the kiosk in the BancoEstado, a state-owned financial institution. Since Luisa and her husband have informal jobs, neither has access to checking accounts or bank loans. Luisa is, however, an active participant in three informal financial institutions, two pollas (rotating savings organizations) and a caja común (“common fund”) that functions as a Christmas savings club. The caja can also be used as a source of credit, but under certain restrictions. Loans must be repaid with interest, there are fines for late payments, and if a member misses her quota for three consecutive dates, she is removed from the group and the money she has contributed up to that point is not returned to her.