How technology creates new frontiers of payment

In the beginning it was the barter.
Exchanging goods and services is dated thousands of years. It was perfect for a while, when the needs to be satisfied were primitively basic. But it soon became impractical as the units varied largely.
How many chickens for a sheep? 20? And what if I only had 10? And even if I had 20, how can I sell “half a sheep”? It was the first liquidity problem.
So titles were created as a promise to pay, but of course were easy to default as it was easy to “disappear”. So banks were put in place to guarantee the credit and gold was chosen as store of value.
Hence a piece of paper begun to carry precious metal value. It lasted for very long. It was an almost perfect system.
But then in 1971, all money came to an end. The world became flooded with currency.
In fact, with the unilateral cancellation of the US dollar exchangeability for gold, President Nixon paved the road for “valueless” paper called currency. With no longer the need of storing physical value in order to back the paper currency, governments begun to print currency as if it was not going to create any impact on economy. Wrong. Inflation grew pretty much globally, making goods progressively more expensive.
As a result, some governments spiralled down into printing and/or issuing new currency without real value.
The US dollar value decreased 3 to 4 times since 1985. At the extreme end of the scale, Zimbabwe saw the price of all goods in the country doubling every 25 hours, with the largest currency inflation in the history of mankind.
Currency-cash as a form of payment is simple and reliable, but carries a few risks.
The first and most obvious is the total lack of security. It is ironic how access to a mobile banking nowadays requires PIN and One Time Password sent through SMS or USSD, while cash… Well, cash has no security features. It can be stolen as easily as it can be easily spent.
In form of paper banknotes it can also be ruined, burnt, wet, tore or simply invalidated with a pen scribble on it.
Once stolen, cash can hardly be tracked.
Only freshly minted cash stolen in a bank before its release have some sort of serial number traceability, but other than that, stolen cash is gone for good. Despite the total lack of security, cash has been around for millenials.
Hence security cannot be a determining reason for new technologies to succeed in replacing cash. However, when startup companies meet up, they see payment as a huge problem — although I do not fully understand why — and so they become more and more creative in generating transactions based on increasingly creative triggers.
In fact, from programming perspective, a payment is nothing but an IF/THEN condition being satisfied. And with so many data that nowadays we can track, anything could be linked to a payment.
So, for example, IF my body temperature reaches 37.5 degrees Celsius, THEN pay the pharmacy for my medicines that I need to collect.
And since I recently bought a new steps tracking device, I could decide to reward my health and wealth by setting a trigger, so that IF I have walked my daily target of 5,000 steps, THEN a $10 charity donation is made to a designated organisation.
These are just fantasies for now, but today’s technology indeed allows both of the examples to be implemented in no time and with little IT development cost.
At the Fintech Festival 2017, organised in Singapore by the Monetary Authority, many startups displayed in which direction is payment going. More than one startups were offering sound driven payment solution. One of them was focused on ultra-sounds not audible to humans. Another one with sets of sounds.
Another one associating the sound of our voice to a transaction… In simple words, IF my voice sounds like the sample that I have recorded upon signing up, THEN release the payment.
Lastly, startups and large organisations in the same way, are pushing towards face recognition payments.
So, in future, we could enter into our favourite restaurant and while passing in front of the cashier being charged the bill by a camera that filmed us entering the restaurant and having dinner.
IF the person in the restaurant looks exactly like me, THEN pay the bill.
Or paying with our face while ordering takeaway food at our favourite drivethrough. Or settling the water bill, by looking into the camera and smiling.
And so who needs to carry a wallet around anymore? It could be so convenient that we could only buy or sell if our face is recognised by the system.
And if not… Well, we do not know. I find this idea frightening.

Stefano Virgilli
stefano@virgilli.com