There has been a great deal of attention paid to small digital devices which could replace the numerous magnetic strip cards held by shoppers, and potentially replace cash itself. Yet these devices face a significant obstacle in Canada, as they may facilitate significant invasions of privacy, and without legislative care, they might even prevent the poor and disenfranchised from obtaining societal benefits.
To really be useful, the digital device should:
- Maintain a strict separation between all vendors - they must not know about each other, and information must not be shared between them through the card.
- Allow anonymous transactions - this would be analogous to using cash.
- Protect the interests of the owner - thus merchants should not be allowed to withdraw more than the authorized amount. In addition there should be a credible mechanism for consumers to present their side of the story in case of disputes.
Maintaining a Strict Separation Between Vendors
The devices used by vendors must comply to regulations stating that they can only ask certain questions of the device. The device itself must have security mechanisms that prevent unauthorized access.
Allow Anonymous Transactions
The device should be able to maintain its own records of transactions, without reference to an outside organization, and should have an "anonymous mode" which does not disclose its identity to vendors.
Protect the Interests of the Owner
Digital devices can be used to level the playing field with merchants for consumers. The cards should not only provide a more convenient way to carry money, but would also facilitate improved record-keeping and keep the transaction system more accountable.
For example, high-volume merchants currently have electronic records of items purchased, price and date (as well as shelf time and transaction profits). However, clients currently have access only to paper copies of receipts, which are not only cumbersome and prone to disintegration, but also generally lack a standard format and are resistant to being scanned or photocopied because they are so small.
This is unfair. While it is readily understood why merchants would not want clients to be able to easily maintain accurate and up-to-date price/availability databases, or even how they would want to save paper, it is equally understandable that clients should have privacy concerns and fairness concerns about the largely hidden and unauditable information being stored about them.
Electronic devices carried by consumers, such as personal shopping assistants, have the ability to reverse this situation in the following ways:
- Itemized data about purchases can be automatically collected in a usable format by the devices at the time of purchase.
- Clients could then import this data into Quicken or their favorite money management software to accurately understand their own spending patterns.
- Clients could also anonymously and optionally send their transaction data to a large, publicly managed, publicly accessible transaction database that shows itemized pricing details or other key performance indicators across merchants.
- Utilizing this database, consumers could optimize their shopping patterns to take advantage of their preferences concerning price, convenience, or other factors.
- Furthermore, this public database could be used to audit the accuracy of the privately maintained databases of merchants.
Concluding Thoughts
Will such a system ever be implemented? Perhaps. Resistance to the idea could come from privacy concerns, technical difficulties surrounding implementation of secure e-cash, conflict between the public interests of consumers and the private interests of merchant shareholders and investors, industry lobbies, and many other factors.
In addition, such a project may lack the concentration of funding required to make it a reality - when a project benefits a large number of people in a diffuse way, who will be its champion?
Yet, the step is a necessary one that would preserve a balance between the interests of merchants, of consumers, and of society at large.
