Physical Wallets are Shrinking in Relevance in UK, Claims Survey Commissioned by Mastercard

A convenient finding given Mastercard is in the process of piloting a biometric-authenticated payments system in the UK, after first testing the system in Brazil, the Middle East and Asia.  

The roll out of biometric-enabled digital identity and payments systems threatens to radically reconfigure the way societies function, in ways that are largely undesirable for the vast majority of people. Yet there is virtually no public debate on the matter. And what little debate that does occur is lar  gely informed by surveys and opinion polls commissioned by the very firms that stand to benefit most from the roll out of the new systems.

A case in point: Mastercard, the world’s second largest payment processing company, recently announced the findings of a survey it had commissioned on payment trends in the UK, one of Europe’s most cashless economies. Unsurprisingly, those findings point to an ongoing decrease in cash usage in the UK, which, as luck would have it, aligns perfectly with the company’s broader agenda, exemplified by its current slogan: “World Beyond Cash”.

Around 60% of payments in the UK were made using cash a decade ago. By 2021, that figure had slumped to 15% and could fall as low as 6% by 2031, according to estimates from banking lobby group UK Finance. The Mastercard survey highlights a corresponding increase in the adoption of digital payment methods globally, with 93% of consumers saying they will consider using alternative means of payment such as contactless, QR code, biometrics, and cryptocurrency transactions in the next year.

Shrinking Wallets

One of the questions Mastercard posed to the survey’s respondents is whether they believe physical wallets — those leathery or faux leathery things we keep our cash and cards in — will lose relevance as digital payment alternatives gain further traction. Just over half (51%) said yes. Twenty-one percent said they don’t expect to carry a wallet or purse within the next five years. This increased to 38% among Millennial respondents.

“In contrast to a decade ago, many who still carry wallets are now seeing them more as a site of personal archive rather than a vessel for physical cash and cards,” said Kelly Devine, president of UK and Ireland at Mastercard. “As technology continues to evolve, wallets shrink, and people increasingly embrace digital methods of payment, our focus remains on delivering choice, convenience, and speed for people around the country.”

Given Mastercard’s main line of business since its founding in 1966 has been credit and debit cards, which are invariably stored in non-digital wallets, one might assume that this would be bad news for the company. But apparently not. You see, Mastercard is in the process of reinventing itself, and indeed has been for years. As part of that process, it is piloting a biometric-authenticated payments system in the UK, albeit after first testing the system in Brazil, the Middle East and Asia.

As I reported in Mastercard Pushes Biometrics Even Harder on Consumers in Increasingly Cashless UK, the company ultimately wants to roll the program out worldwide to small and large retailers.

Card payment giant Mastercard appears to be determined to wean consumers off not only cash, its eternal rival, but also credit and debit cards, its main line of business until now. To that end, it is about to launch a pilot “biometric checkout program” in the UK. The so-called “Smile to Pay” system will allow shoppers to purchase goods and services in store by smiling into a camera or waving their hand over a reader and is optional for the moment.

The UK is already the fourth most cashless economy in Europe, according to research by personal finance website money.co.uk. In 2017, debit card payments overtook cash for the first time.

Mastercard is also staking a claim to a wider role in the emerging biometrics payments ecosystem. Ajay Bhalla, Mastercard’s president of cyber and intelligence, told the FT that Mastercard could act as the “enabler of the ecosystem”, setting unified privacy and security standards for a technology that has raised concerns among privacy activists and data protection campaigners.

Tis is a company that, like its biggest competitor, Visa, has been maintaining “a strikingly permissive relationship” with companies accused of credit card fraud, according to a recent expose by Buzzfeed. It also faces the biggest class action lawsuit in British history, for allegedly charging excessive “interchange” fees — the fees retailers pay credit card companies when consumers use a card to purchase a product — between May 1992 and June 2008.

Biometric Payments “Ecosystems” in Africa

Mastercard already has extensive experience of developing biometric payments “ecosystems” in other parts of the globe — most notably Africa. In December, the U.S. International Development Finance Corporation (DFC) pledged $50 million to support financial institutions and service providers that work with Mastercard’s Community Pass network, which is already up and running in remote areas of Mauritania, Uganda, Kenya, Tanzania and Mozambique.

At the same time, the company has been helping to fund the activities of the Better Than Cash Alliance, a UN-hosted partnership of governments (all of them in the so-called “Global South”), companies and international organizations. Funded by the Bill & Melinda Gates Foundation, Citi, the Ford Foundation, Omidyar Network, the U.S. Agency for International Development and Visa Inc., its mission, in its own words, is “to accelerate the transition from cash to digital payments globally.”

Mastercard has also played a core role in developing the Nigerian government’s all-encompassing digital ID system. The so-called National Identification Number (NIN) is ostensibly intended to enable easier access to public and private services as well as tackle the insurgency in the north east of the country. Much of the funding for the program, initiated in 2014, came from the World Bank’s Identity for Development (ID4D) program, founded with seed money from the World Bank, the Bill and Melinda Gates Foundation (again!), the French, British and Norweigan governments and the Omidyar Network (again!).

As of March 31, 2022, some 73 million adults did not have a national identity number, with many citing privacy concerns. A month later, the government barred all 73 million of them from being able to make outgoing calls or send outgoing texts from their mobile phones, until they got with the program.

Yet citizens’ concerns are more than warranted. As the NYU School of Law’s Center for Human Rights and Global Justice (CHRGJ) warned in a report last year titled Paving the Digital Road to Hell: A Primer on the Role of the World Bank and Global Networks in Promoting Digital ID, “digital ID systems can lead to a wide range of urgent human rights issues.” They include, but are not limited to, “the violation of the right to nationality; limiting access to health care, food, and social security; a multitude of concerns about privacy and data protection, surveillance, and cybersecurity; and fundamental changes to models of democracy, participation, and citizen-state relationship.”

Nigeria’s government is yet to enact a data protection law, despite having had access to and control over the biometric data of tens of millions of Nigerian citizens for the past eight years. So too, for that matter, has Mastercard. In September last year, the World Bank finally made the enactment of a data protection law a prerequisite for release of further funds for the program — a mere eight years too late.  

Backlash Begins in UK?

The roll out of biometric-authenticated payments is just the latest example of the accelerating encroachment of biometrics into everyday life. Most national passports these days include biometric identifiers. Meanwhile, hundreds of millions — perhaps even billions — of people have volunteered their digital fingerprints or face scans to log into their smartphones and other digital devices. In other words, people are already offering up their most private data to communicate, work, cross borders, or board planes…

Read the full article on Naked Capitalism

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