A few people got excited about the news this week that Mercedes-Benz had launched in-car fingerprint payments in partnership with Mastercard. I didn’t. In fact, it still amazes me how little we have developed since my days at NCR, then owned by AT&T. This was the 1990s and AT&T had this fantastic set of adverts voiced over by Tom Selleck (a well-known star back then). The advert I remember best is where he narrates: have you ever paid a toll … without slowing down.
That advert is from 1993, and I guess the issue with people predicting the future is how long it takes for the rest of the world to catch up. In the 2000s, I remember a joke at the end of one of my presentations that, in the future, payments would be made using DNA and that’s great, because then I could spit on my bank. In fact, the Mercedes announcement also made me laugh as now I can give my bank the finger.
It’s all about biometrics and sensors yet, if I predicted the future of payments today, it is purely about sensors.
What is weird is how many ways we have to pay today.
Pay-by-cash (if you want to catch Covid); pay-by-check (if you’re an American); pay-by-card (as long as you remember your PIN); pay-by-app (if you’re a Millennial); pay-by-crypto (if you’re GenZ); pay-by-finger (if you’re driving); pay-by-face (if you’re an Apple person); and, coming soon, pay-by-DNA.
The problem with all of the above is that it requires the user to do something. They have to give a specific movement to pay. Then I look at China, as I often do, and pay-by-face seemed to be a big thing. When Ant launched this technology, I thought it was incredible.
But it hasn’t taken off, according to The Wall Street Journal:
The payment technology has largely failed to gain popularity, analysts say, as some consumers have found the sign-up process cumbersome and had concerns about how their images and data would be used. It shows that even a major fintech innovator with a large customer base can face privacy concerns and struggle to change user habits.
It’s that old nugget of privacy. Obviously it would be easier to pay without having to think about it, but if you do that and lose your privacy there is an issue. This means that, if we zoom out, most payment systems today are broken. The only system that is private is cash – as it is anonymous – and all the other ones have layered more and more options, complexity and technology on top of what was there before.
Therefore, the real question is: how can we have a sensor-based payments system that does not compromise the customer’s identity. That’s a really tough question as almost every technology in payments is focused upon grabbing the customer’s identity. We need identification, verification, authentication and every other ication you can think of. Could we ever have a digital payments system that does not demand such structures?
Well, the nearest you get to this is maybe something like Monero, which advertises itself as “private, decentralised cryptocurrency that keeps your finances confidential and secure”. But Monero has a problem because, like bitcoin, you have to mine coins, and the mining pools — individual miners who pool computing power and rewards — has grown to control 44% of their computing power, known as hash power, putting it far too close to a majority stake for comfort.
So, we have no solution today … or do we?
The solution is a Monero-styled decentralised currency that is truly private and truly distributed. Don’t worry. There will be one coming one day soon and, when it does, it will be a government and bank killer system as it will be the first truly digital payments system that is truly anonymous.
What happens then? Regulators will go crazy on behalf of their governments who have lost control.
Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...