America has lagged behind much of the world in terms of digital wallets. Elsewhere, people routinely use phones instead of credit cards. There are several reasons for this.
Partly, it is because North America saw mobile phones so early. When other regions finally rolled out mobile phones, infrastructures were more modern. The larger reason, however, is that there is so much at stake.
Right now, there are a limited number of players in the lucrative payment network world. Visa, MasterCard and American Express would like to move to your phone. They fear, however, that enabling electronic wallets in phones would allow aggressive young players onto their turf. PayPal, Amazon and Google are, in fact, financial networks, and they would love to do your banking.
So far, progress has been slow, but the emergence of Android is opening up new possibilities. Work is being done by the Mobile Payments Industry Workgroup that would establish standards. What we know for sure is that the established payment networks will do their best to keep out upstarts. We also know they will fail.
Part of the reason for this is political. Part is cultural.
The politics are that Wall Street and the major banks have never enjoyed lower public regard and support. Consumers sense that the bailout profited rich bankers more than consumers. The customer base is not going to support politicians who continue to put the interests of favored banking institutions above those of consumers.
Eventually, market forces always win. Currently, retailers are capable of dealing with only a few credit and debit card companies. This limits competition and keeps prices higher than they would otherwise be. A sophisticated mobile payments infrastructure, which is inevitable now that the Android has broken free, will arise. In fact, it will arise before most people know it’s happened.
The cultural factor I referred to is the difference between the old-school financial institutions and the new electronic services. I have little confidence that Visa or MasterCard is going to do what’s necessary to exploit the convergence. They’re too habituated and institutionalized.
PayPal, Amazon and Google, however, are populated by people who want to transform the financial world. They will find a way to force themselves into an industry that has lost serious credibility and clout due to its participation in the ongoing subprime mortgage fiasco.
Fortunes will be made by financially sophisticated app developers.
Finally, I’d like to get a little speculative and tell you what I think the real long-term consequences of the Linux/Android revolution will be.
It’s not well known, but Peter Thiel, one of the founders of PayPal, was motivated by quite subversive goals. His initial purpose was to create a mechanism for financial transaction outside the reach of governments. He has written:
As an entrepreneur and investor, I have focused my efforts on the Internet. In the late 1990s, the founding vision of PayPal centered on the creation of a new world currency, free from all government control and dilution — the end of monetary sovereignty, as it were.
Obviously, he has not succeeded. Nor do I think we’re going to see such a purely private system in the near future. However, we are moving very rapidly toward developing an electronic infrastructure that would enable brand-new forms of banking. Given our recent experience with the federally controlled financial system, the need is clear.
I won’t detail here how I think this new banking will function. For now, however, I’d just like to warn you that you shouldn’t be too surprised to see completely transformed financial institutions arise from the current rubble. Who knows? Maybe Thiel will be proved right. For extra credit, you can read F.A. Hayek’s Denationalisation of Money: The Argument Refined online here.
for The Daily Reckoning
Patrick Cox has lived deep inside the world of transformative technologies for over 25 years. This expertise lead him to Mauldin Economics, where he now heads Transformational Technology Alert.
Creating alternative banking systems is pretty much suicide. Look to Libya for an example.
I could see paperless currency becoming mandatory but it would still be under the control of national central banks.
Pingback: jazda konna()
Pingback: plantacja lawendy()
Pingback: how to win the lottery books linked web-site()
Pingback: european roulette free()
Pingback: find houses()
Pingback: name lookup()
Pingback: manhattan home inspection()
Pingback: Merle Dixon()
Pingback: new country music()
Pingback: logo gifts()
Pingback: slot machine bar()
Pingback: make money online()
Pingback: multi port serial()
Pingback: driving lessons milton keynes()
Pingback: accellent cardiology()
Pingback: gkV7M7tOFy gkV7M7tOFy()
Pingback: cirugia plastica de nariz()
Pingback: Thomson 3()
Pingback: handyman atlanta()
Pingback: Atlanta home builders()
Pingback: Love Letters For Her()
Pingback: check out now()
Pingback: cambogia garcinia dr oz()
Pingback: garcinia cambogia reviews dr oz()
Pingback: rachel ray weight loss()
Pingback: visit website()
Pingback: koszenie trawnika()
Pingback: plots in nairobi()
Pingback: very good cover for your movie()
Pingback: pure garcinia cambogia extract()
Pingback: Best Blu-ray cover modern service covercity()
Pingback: garcinia cambogia does it really work()
Pingback: doctor oz()
Pingback: where can i get garcinia cambogia()
Pingback: Strategic Campaigns Incorporated()
Pingback: nishiyama ryokan kyoto()
Pingback: employment background check()
Pingback: pure garcinia cambogia side effects()
Pingback: ecommerce web design()
Pingback: deer antler spray()
Pingback: SEO Services in West Delhi()
Pingback: electric cigarettes sample()
"There has been an issue that has preoccupied my mind for a long time," writes Dr. Marc Faber. "In economics, it is generally accepted that if the quantity of money and credit is increased, prices will rise… However, since economics is so complex… I question whether the expansion of central banks' balance sheets and policies of zero interest rates could have a deflationary impact…" The good doctor wrestles with the question, in today's essay...
The Biotech iShares ETF is up 23% since the Oct. 15th bottom. No, that is not a typo. Biotechs have torched the S&P over the past two months--more than doubling the returns of the big index. And biotechs as a group are up more than 38% year-to-date. In fact, since we first highlighted the June comeback, the Biotech iShares have gone nowhere but up.
The oil market has been under siege for six months. From service providers to producers this downturn has been painful. Of course, we’ve known all along that oil prices were a little toppy over the summer. In fact, when asked just how low oil prices could go I usually answered with a simple “lower than you’d expect…”
Our forecast that Cuba would be open and integrated within 5-10 years is on track after yesterday's big announcement. Ahead of schedule, even. Click here to see how some investors have profited and what the island's likely future is...
The opportunity to sell and install LEDs is enormous. We’re talking about over a billion lighting fixtures. And the areas with the largest potential -- like parking lots -- have barely begun to change. Banker to the presidents Chris Mayer says you could triple your money in this new tech trend. Here's what you need to know.
It's a theme we've shared with you since April. And it's only gotten worse. The gaming industry has come under all sorts of pressure--a situation I first noticed in the charts. The powerful, multi-year uptrends started showing cracks. And it wasn't long before those cracks turned into gaping holes you could drive a friggin' truck through. That's where things stand today.