“We the people want our money safer than our selfies.”
This is the text at the center of a full-page PayPal advertisement that appeared on September 15th in back of the New York Times‘ Business section.
The ad ran less than a week after Apple announced that its new mobile payment system, Apple Pay, is set to launch this month. The announcement received immediate buzz from top money and business blogs, resulting in increasing numbers of articles with estimates of quick popularity for the new program, along with speculation that it would soon surpass PayPal in user preference.
The current leader in online payments is pointing at Apple’s recent iCloud security leak as reason for future potential Apple Payers to be wary of trusting the company with their sensitive information. In essence, it’s a smear ad that seems more likely to harm than help PayPal’s reputation.
Aside from the common notion that public trashing is tacky, the ad’s declaration also seems hasty. You’d think PayPal would consider that “we the people” would likely do our own research before allowing ourselves to be swayed by a clearly biased remark.
Not only was the iCloud scandal arguably due more to advanced-level hacking than a security oversight, but Apple has also already stated it’s working to preemptively minimize the possibility of hacks. And what’s more, there’s no legitimate reason for linking the iCloud leak to a possible future lack of security regarding payment. Apple Pay uses a system called “tokenization,” an advanced data encryption method, whereas iCloud is a server. They’re two totally different systems with totally different anatomy.
All that said though, PayPal’s reaction isn’t difficult to empathize with.
The company has managed to remain the leading electronic payment system for more than a decade despite market competitors like Google Wallet, MasterCard PayPass, and Square seeing a fair amount of attention over the years. If you’ve ever sent or received online payments, you’ve probably used PayPal.
I remember buying a CD burner on eBay as a teenager in the year 2002. The World Wide Web had only been common in homes for around five years. Dynamics involving privacy, relations, and security were rapidly taking new shape, and folks were (slowly) becoming comfortable with the idea of “giving away” personal information over the Internet.
The seller preferred electronic payment through PayPal, and somehow (looking back I really can’t believe she did this), my excessively monetarily cautious mother let me use her credit card information to create an account with PayPal. The system was pretty new to the public at the time, and my mother (who, like so many of her Baby Boom generation, made it a rule to be overly mindful when dealing with money) never even made it a point to read up on data encryption or anything specific about the method used by the site before letting me proceed.
You know why a single mom working to make ends meet agreed to hand over her info? Because PayPal was good, and they still are. And as a long-time customer myself, I can attest to the ease of use, helpful customer service, and sense of legitimacy and security portrayed throughout the site.
But now, for the first time since electronic payments gained mainstream popularity, a new system poses a series of threats to the popularity that PayPal has enjoyed for so long.
And even if PayPal decides to accept defeat and try to team up with Apple, it won’t have an easy time doing so. In the same announcement that brought the news of Apple Pay was a list of tech and financial organizations with which Apple is working on the launch. The list included several noteworthy names in the business and finance sector, but one significant company was missing—Braintree, the financial company that has owned PayPal since its beginning.
No matter how business savvy you are or aren’t, it’s easy to imagine why Apple is getting a strong vote of confidence from all corners of the blogosphere. People not only trust well known names, especially when it comes to sensitive stuff like spending, but it’s likely Apple will make it super easy for current iTunes account holders to hop on the new mobile payment platform—and Apple CEO Tim Cook recently announced that the company currently has 800 million iTunes accounts. For a comparison, Amazon has around a quarter of that many.
And PayPal? It has just 110 million active accounts. You can see why they might be running scared.
So what could this mass adherence to Apple Pay mean for our society’s spending?
A likely possibility is the total eradication of credit and debit cards. Financial experts are already supposing that within a few years the little plastic cards we’ve used for decades will be nothing but a memory and that cash spending will also see a big drop.
When I imagine a marketplace where tapping my phone next to another small device completes a payment, it’s hard to imagine any use for cash beyond 1) paying someone who refuses to jump on board with current technology or 2) deliberately avoiding a paper trail.
This in itself could create a new dynamic where the act of withdrawing money from an ATM is considered enough to raise a government eyebrow. Similar to booking a last minute flight or joining a radical political party, using cash could become one of those activities that, when performed seldomly or in isolation doesn’t necessarily yield any penalty, could nonetheless result in placement on the “sketchy” radar.
But this level of money monitoring also has incredible promise for the future of our society’s well-being.
For one, we’ll probably experience way less theft. Identity theft will be more difficult to pull off with additional security measures like pre-purchase fingerprint verification, and the ease of constant financial management will also reduce the occurence of all the microaggressions carried out daily by banks (i.e. overdraft fees).
And what I personally find most exciting: It seems that we’re soon due for a groundbreakingly transparent economy.
Already the records and tracking made possible by the Internet era are playing a huge role in creating transparency around financial conduct within otherwise long-standing opague arenas, such as federal/public policy and big business. By increasing the amount of societal transparency to the point where all spending is tracked (and the spending that isn’t draws attention), there will be drastically less opportunity for corrupt money handling in our near future.
It’s probably not going to be swift and seamless, but it certainly stands to reason that we just might be at the front of a totally new spending era.
Photo via 401(K) 2013/Flickr (CC BY S.A.-2.0)
