Tags: Shay | cashless | card | money

Signature Bank's Shay: Cashless Society Threatens Our Freedom

By    |   Friday, 13 December 2013 11:02 AM

Cashless transactions — combined with advanced technological snooping capabilities and big data manipulation — will give government powerful control over human behavior, writes Scott Shay, chairman of Signature Bank, in an article for CNBC.

Most of the technological tools are already available, says Shay, a partner at Ranieri Partners LLC.

Credit card and debit card companies are already using advanced algorithms to instantaneously reveal everything about consumers' transactions — not just where and when but also their nature and appropriateness. You see the technology in use when receiving fraud alerts after purchases that seem out of line compared with your usual spending habits.

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The companies also use the tools to control consumer behavior. Responding to government pressure, Visa and MasterCard banned online betting payments from their systems — even though no federal or state law required them to do so, he says As a result, online gambling sites found it almost impossible to operate, regardless of their jurisdiction or legality.

Shay even foresees a day when overweight consumers will see purchases of sugary drinks denied.

Can't consumers just use cash?

"This may be the case for the moment, but we are well on the road to becoming a cashless society," he says.

A MasterCard study found that 80 percent of consumer transactions in the United States are electronic. In Sweden, where only 3 percent of transactions are made with physical money, beggars were given card readers to receive alms.

A cashless society poses a sinister risk, Shay maintains. Governments will have unprecedented access to information and power, and, based on past history, will probably use it.

The government could seize money based merely on suspicions of government staff. The Supreme Court recently heard a case in which the government seized the money of a family-owned grocery store on the suspicion of money laundering because its cash deposits were below $10,000.

By leveling compliance burdens, the government could stop banks from dealing with a customer or group of clients, effectively exiling them from the financial system, he warns. While some say Bitcoin, a private electronic currency, is a solution, Shay notes that it can also be regulated and monitored.

Other experts see benefits of a cashless society. Although banks and credit card companies would benefit the most, the entire society would benefit because cash is more expensive to handle, Niklas Arvidsson, a researcher at the Royal Institute of Technology in Stockholm, told the Oman Daily Observer.

"We'll probably not see a totally cashless society in the near future, but a society where cash is reduced to a minimum and used in very few situations, is probably quite realistic."

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Cashless transactions — combined with advanced technological snooping capabilities and big data manipulation — will give government powerful control over human behavior, writes Scott Shay, chairman of Signature Bank, in an article for CNBC.
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2013-02-13
Friday, 13 December 2013 11:02 AM
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