May 22, 2019

Dis-topia or Dat-topia?

A very brief video from Bloomberg on the most disturbing aspect of the current Chinese payment system.

Now, being Bloomberg reporting on a tech issue, they are completely and utterly wrong. However, in an unusual twist, their facts seem to be correct. It's their analysis that's 180 degrees off course.

The most terrifying thing about the basically cashless society in China is (contra Bloomberg) not that the banks are being cut out of their lucrative middle-man fees. It's that every transaction shows up in your social credit score and if Tencent is told by the government that you don't need your money, well, then you starve.

Of course, being Bloomberg, they miss the schadenfreude of companies that have behaved like like Mastercard loosing their middleman privileges. 

Also, I don't think there's any reason for this to be of terrible concern for the Big Banks in the U.S.. I think they're going to loose some market share to companies processing their own payments, but the banks already have e-payment infrastructure in place and many of their ricebowls are protected by S.E.C. regulation.

I do wonder if even a very decentralized system would really help bypass the worst of this social credit system. I'm skeptical. Even today in the U.S. there are scary stories. The attempted defenestration of Subscribe Star late last year has already been noted here, and the system is fairly decentralized now in theory. In practice, the payment processors go to the same parties and hate the same people (us).

Perhaps the best near term solution is the opposite of the bitcoin utopians propose. Make it illegal to refuse actual cash that is a countries legal tender if offered in lieu of a card or ap. This wouldn't work for online payments, but it would at least allow people a chance to eat.

I just don't know.

Does anyone actual IT knowledge have any suggestions?

Posted by: The Brickmuppet at 02:03 PM | Comments (1) | Add Comment
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1 I don't know what the ultimate solution is, but I do know that the phone vendors tried this several years ago.  It failed, at least in large part, because people hated their mobile phone company more than their bank.  I think it's also telling that the only third-party payment processor who isn't a bank to get a foothold has been PayPal.  I don't think banks are quaking in their boots right now.

Posted by: StargazerA5 at Thu May 23 10:33:51 2019 (jl9eJ)

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