"The Last Leg"

“In conclusion,” “in the end,” “in closing,” “in summary”—these are the phrases that make our ears perk up.   Are you perked?  Good!  Thanks for joining me and my team on the last leg of our short journey.

 Throughout our time together, we took some scenic stops where we talked and learned more about all of the different aspects of Digital Payments in our society today.  It really is something to look into more for yourself, even after this course.  If you ever have questions or want to know more information on how you can get more involved with digital payments, skim through our blogs!  We’ve already done the research for you! (*You’re welcome*)

 

 Overall through the past several weeks, we broke the broad Digital Payment category into smaller sections for you: Credit/Debit Cards (most popular), Internet, Mobile Payments, Financial Service Kiosks, Electronic Payment Network, and Person-to-Person (P2P) Payments.  I am sure most—if not all—of you implement  at least one of these forms of digital payments.  One form that is rising in popularity is the app geared toward payments.  So many people today (but not all of us, brave souls we are!) have Smartphones or some sort of device that can gives its user access to their personal information and their banking account. Almost convenient and creepy at the same time, don’t you think? But WAIT! It’s not! Did you not read our two blogs set aside specifically for you to be informed about all of the securities? Scroll down and do so.

 

 Digital Payments seem too good to be true, don’t they?  Would you not think that in a handful of years, we will completely go from cash to digital? Believe it or not (unless you read Cynthia’s *amazing* blog from last week below), it looks like cash is not going anywhere anytime soon. The amount of purchases and transactions with cash outweighs the digital processes by far.  But do not completely disregard digital payments now! On the contrary! Although cash still has the upper hand, the amount of digital payments users continues to steadily rise.  Below is a table that lays out from 2009 to 2016 the increasing number of users incorporating digital payments to their daily lives. Take a look!

(Lunden)

In the end, what is the point of Digital Payments?  Quite simply put, it is all about you – convenient, portable, secure, immediate, and easy!  So go out, and just take yourself and your ten dollar bills, or your Debit card, or your Smartphone with the payment app.  It’s your choice.  Which will you choose?

 

 

 

Citation

Lunden, Ingrid. "Gartner: Over $172B In Mobile Payments In 2012; SMS, Web Most Popular Routes." TechCrunch. Ingrid Lunden, 29 May 2012. Web. 4 Nov. 2013.

Are we on our way to becoming a cashless society?

As we have discussed in previous blog posts, digital payment options are increasing exponentially and as such, people are paying with cash much less often.  It is much more convenient when you can simply pay with a swipe of a card or a few clicks on a computer or smart phone. 

 

Take a moment and think about the purchases you made this week.  How many of those purchases were made with cash?  If you did use cash, did you have an option to use some form of digital payment?  You can use plastic or an online account to pay for almost anything these days.  Even vending machines now take credit/debit cards for payment. As we have been working on this project I have been convinced that we are well on our way to saying goodbye to cash. 

Then, I started researching for this particular blog post. 

It seems as though the answer isn’t as clear as I thought. 

There are many articles with headlines indicating that we are quickly on the way to becoming cashless, but once you read more closely, most agree that it will never happen, at least not completely. For example, Christopher Mims states “The problem with all of the arguments for a cashless society is that they’re rational, and our attachment to cash is not.” (1)

Even a study conducted by Mastercard concludes that we are quite a way away from becoming totally cashless.  While the value of cashless transactions is higher, the number of actual cash transactions outnumbers those without cash, as depicted in the graph below.  (2)

One reason there is constant hype and headlines convincing us that this is coming is because banks and financial institutions will win big if we were to become cashless.  Fees from debit card transactions and the high profitability of credit cards are a big income boost for them.  Also, government would benefit from a cashless society because of the cost associated with printing, storing, moving and guarding actual cash.  (3)

For the average consumer though, there is a higher personal cost of ditching cash.  Psychological research clearly shows that when we spend actual cash, we spend more sensibly.  Of all the possible forms of payment, cash is the one that actually causes us to be mindful of what we are spending.  It is more transparent and connects us to the fact that we are parting with our money. (4)

 

It is still too early to make a prediction of where this will lead, but it appears that, for our own sake, cash will be around for some time to come.  That’s not to say it will never disappear.  If you had told me 10 years ago that my phone would serve as a wallet, calendar, camera, video recorder, alarm clock, and all the other things I use it for, I would have laughed in your face.  Now I sometimes think my smart phone is actually laughing at me. 

 

(1) Mims, Christopher. "Why We'll Never Get a Cashless Society." MIT Technology Review. MIT Technology Review, 28 Feb. 2012. Web. 29 Oct. 2013. <http://www.technologyreview.com/view/427088/why-well-never-get-a-cashless-society/

(2) Mims, Christopher. "We Are so Far Away from the Cashless Society, Reveals New Study from Mastercard." Quartz. N.p., 27 Sept. 2013. Web. 29 Oct. 2013. <http://qz.com/128891/we-are-so-far-away-from-the-cashless-society-reveals-new-study-from-mastercard/>.

(3) Jones, Alex. "A Cashless Society May Be Closer Than Most People Would Ever Dare To Imagine." Infowars A Cashless Society May Be Closer Than Most People Would Ever Dare To Imagine Comments. Free Speech Systems, LLC Company, 30 Mar. 2012. Web. 29 Oct. 2013. <http://www.infowars.com/a-cashless-society-may-be-closer-than-most-people-would-ever-dare-to-imagine/>.

(4) Burkeman, Oliver. "The Cashless Society Is Coming. More Reason than Ever to Use Cash." Web log post. The Guardian. Guardian News and Media Limited, 27 Sept. 2013. Web. 29 Oct. 2013. <http://www.theguardian.com/news/oliver-burkeman-s-blog/2013/sep/27/cashless-society-spend-money-clinkle>.

Protect Yourself - Information on Card Skimming

Are you cautious about your debit/credit cards? 

Do you take the highest privacy settings on your computer or at the grocery store? 

Have you ever heard of card skimming?

Card Skimming

Card skimming has been going on for a while, and it only involves the swiping of your cards. This is when your credit/debit card is swiped and your information is scanned to a card reader and recorded. From there, it is sold to scammers on the black market or made into a forgery credit card and used to make fraudulent purchases. Card skimming can happen from a device that is purchased for $50 online. It is installed on the swipe machines at the grocery stores, department stores, gas stations, or anywhere else that you can swipe your cards. It is installed on the machine, and then they watch you type in your PIN number.  The most common way card skimming happens is in ATM machines.  Hackers will install a faceplate over the place where you slide your card in, and it will read the magnetic strip. They will also have someone hovering around you to get your PIN number or have already installed a hidden camera that records you putting in your PIN number into the ATM machine. Make sure you take precautions whenever you use your debit/credit cards.

Protect Yourself

1.     Review your Bank Statements – You’ll never know if someone has stolen your credit card unless you check your statement or balance every day. Get into a habit of checking your balance online every night and review your bank statement to check balances or suspicious activity.

2.     Watch your card – If you’re handing over your credit/debit card to an employee, never take your eyes off of it. Make sure they don’t swipe it into other machines other than their computer.

3.     Cover the keypad – When typing in your PIN number, cover the keypad. Put your hand over the numbers. Do whatever you can for other people not to be able to see your PIN number.

4.     Be aware of your surroundings – If the ATM you are going to use or the store you are at does not look safe or secure, make sure you think about this before using your credit/debit card. Trust your instincts. If you notice something suspicious, make sure you tell whoever is in charge of either the ATM machine, or store.

5. Pay in person - If possible, instead of giving your card to the waitress/waiter, take your card to the cashier and watch them swipe your card. Make sure they don't write down numbers or swipe it on another machine. 

Sources:

Datko, Karen. “10 Tips to Save you from an ATM Skimmer.” MSNMoney. MSN, 7 July 2010. Web. 20 Oct. 2013.http://money.msn.com/identity-theft/article.aspx?post=00000065-0000-0000-0724-1b0000000000

“Debit and Credit Card Skimming.” PrivacySensenet. PrivacySense.net, 2011.

            Web. 20 Oct. 2013. http://www.privacysense.net/debit-and-credit-card-skimming/

Lipka, Mitch. “5 Ways to Protect Against ATM Skimming.” MSNMoney. MSN, 1

            Apr. 2013. Web. 20 Oct. 2013.http://money.msn.com/saving-money-tips/post.aspx?post=bc3e8768-ca31-41e9-8459-95715b8ab06a

Are We Safe?

Have you ever been skeptical to let someone use what is yours because you’re not sure whether or not your privacy will remain protected?

The main thing that concerns those who use digital payments is the possibility of identity theft. No one wants their information to fall into wrong hands; therefore, as you may know installing virus protection software and fire walls is very important.  Firewall, like a barrier, can protect your home network and your family from offensive and likely hackers.

Almost all of us have smartphones, iPad, or some kind of tablet. We all use Wi-Fi at some point. Have you ever considered whether or not the server you’re using is secure or not? A lock or a key icon in your browser shows if you are using a secure server.

I wonder if it will make you feel safer if you knew that retailers use a data encryption that encodes your information in a way that only the key holder has the ability to encode. We all in some way have personal information like credit card numbers, financial records, social security numbers and other personal details that can be accessed by others. Saving your information on a removable or external hard drive or USB can be one way to secure our data. The more complicated your password on your computer, the harder it is for others to steal your records.

How about you? Do you feel safe using your phone or tablets anywhere? How would you feel safe?

Citation
 Hord, Jennifer.  "How Electronic Payment Works"  19 October 2005.  HowStuffWorks.com.
<http://money.howstuffworks.com/personal-finance/online-banking/electronic-payment.htm>  13 October 2013.

Call Security!

A friend allows you to borrow their brand new Camaro.  Realizing that you are the one who will be responsible for it while it is in your care, you devise a way to show your friend how you are going to protect their sports car so that they will be confident of your protecting it, resulting in most of their skepticism vanishing.  Next week, we will look at how your friend, as the owner of the Camaro, can put up securities to ensure you are doing what is right when it is in your possession.

It is the same with merchants who are responsible for their customers’  money, checking accounts, and all of their personal information through Digital Payments.  Some customers may be skeptical about either the process itself or about the merchant company that provides the service in general; therefore, it is up to the company to gain their customer’s trust as they go through the process of being the one responsible.  They must show their customers that they care about their customer’s safety and are willing to put up securities in order to protect their customer’s assets and information.

 

Companies have a number of ways of setting up protections for their customers.  For example, by using automated systems to process checks and online payments, the possibility of deception, scams, miscalculations, or simple mistakes can be reduced, if not fully avoided.  Companies also “maintain, monitor, and check files against negative account databases that store information about individuals or companies that have past records of fraud to help decrease fraudulent activity. (Intuit Merchant Service)”

Validating whether the customer providing payment information has the right to disclose such information is done through a number of different processes.  This in turn gives the customer a better sense of security that the company realizes the potential of frauds attempting to gain access to their information and have taken action to prevent such occurrences. 

 

First, a company can put into action a Digital Signature system.  This prevents numerous types of programs that are designed to hack into unsecured databases.  “Digital signatures cannot be easily tampered with or imitated and are easily transportable, thereby making them a reliable method for verifying identity when implemented correctly. (Intuit Merchant Service)”  Forged digital signatures are highly uncommon, making the Digital Signature system trustworthy. 

A second way a company can validate that the informant is authentic is through a Public Key Cryptography system.  Through this technique of security, a customer would be asked to either reiterate a phrase or pattern of letters/numbers given.  This process requires that the customer engage in doing what is asked, making the system more secure.

 

Another example of how a company could be more secure is by making separate divisions for certain age groups.  By grouping ages together, it would make it easier for the company to keep track of their customers.  This creates a security “check point” that customers have to go through.  If there is a report of an unqualified “client” attempting to get into an account, the company will be notified and will be able to see whether it is an attempted hack (Schoenmakers, Berry).

Citations

Intuit Merchant Service. Intuit, Inc, 2013. Web. 4 Oct. 2013. <http://payments.intuit.com/resources/facts-about-electronic-checks.jsp>.

Schoenmakers, Berry. TU/:  University of Technology. Basic Security of the ecash Payment System. Web. 7 Oct. 2013. <http://www.win.tue.nl/~berry/papers/cosic.pdf>.

Financial Service Kiosks, Electronic Payment Networks and Person to Person Payments

Financial Service Kiosks

While the term “financial services kiosk” may sound like some specialty, business type of machine, it’s actually something very common. One example, something I would say everyone has used, is an ATM (automatic teller machine). This is one of the first, and more basic, forms of these kiosks, which have now blossomed into a new way for businesses to reach customers in a new, and more convenient way. There are so many brands and varieties that it would be virtually impossible to name them all, and they have changed the way we, as consumers, take care of our daily transactions.

Think about this, you are planning to see a movie at the mall cinema but the traffic was much worse than you had planned. You are now running about 15 minutes behind and when you get to the theater there is a huge line. At this rate, you’ll never get in and seated before the lights dim. But alas, all is not lost. In many of the larger theater complexes now, they have kiosks set up where you can purchase your tickets with your credit card, without having to stand in line at the box office. Another example is the self service checkout stations at many chain establishments, and even some smaller, local stores. You can scan your own items, bag them and pay for them all without needing a personal cashier. And at most of these kiosks, you can pay with cash or various card types. There are kiosks for turning coins into bills or gift cards, paying bills, and renting DVD’s, just to name a few more.

Electronic Payment Networks

Another type of digital payment that a lot of people utilize, but may not know it, is the Electronic Payment Network.  The business dictionary lists the definition of Electronic Payment Network as  “A type of financial clearing house that operates electronically and is used by private sector individuals in handling various types of electronic transfers of funds such as dividends or wage payments to a company's employees.” (1) The Electronic Payment Network handles numerous types of credit and debit transfers, such as payroll payments, dividends, loan payments and insurance premiums.  The Automated Clearing House (ACH) system is the only one to serve the private sector in the U.S.  (2)  It is self described as “a low-cost, flexible and highly reliable payment network that uses national standards and is the only payment system that handles a wide variety of credit transfers, like payroll, dividends and more. ACH also handles debit transfers like loan and bill payments and insurance premiums.” (3)  Many of the everyday electronic transactions we do each day are handled through the ACH system.  These include having your paycheck deposited directly from your employer into your bank account, using the "bill pay” feature whereby your bank pays your bills directly instead of you writing a check, and when you use your checking account information to pay other bills electronically.  (4)

Person-to-Person (P2P) Payments

Person-to-Person (P2P) Payments allow an individual person to pay another person, using an account, a prepaid card or another source of funds. These are online services that you send or receive money, from virtually anyone with an e-mail address, who's enrolled in the service. The most common in the U.S. is PayPal, which actually started as a way for individuals to transfer money to one another through Palm Pilots and other PDA devices.  EBay users started asking each other to open PayPal accounts as a secure way for money to be transferred between buyer and seller.  As PayPal saw this happening, they quickly made changes to enable these payments through eBay, as a way to process even more transactions.  (5)  As with most technology, this type of payment has continued to evolve and many other businesses have followed suit.  There is now a vast array of electronic ways for people to transfer money between each other.

(1) Luthra, Vijay. "Electronic Payments Network (EPN)." BusinessDictionary.com. WebFinance Inc., 2013. Web. 28 Sept. 2013. <http://www.businessdictionary.com/definition/Electronic-Payments-Network-EPN.html#ixzz2gDx0z6Nr>

(2) "Electronic Payments Network Announces Industry’s First Centralized OFAC Screening Service for Cross-Border ACH." Http://www.accuitysolutions.com. Accuity Solutions, 17 Oct. 2005. Web. 28 Sept. 2013. <http://www.accuitysolutions.com/en/Media1/Electronic-Payments-Network-Announces-Industrys-First-Centralized-OFAC-Screening-Service-for-Cross-Border-ACH/>

(3) "Overview/ What Is ACH?" Http://www.epaynetwork.com. The Clearing House Payments Company L.L.C., 2013. Web. 28 Sept. 2013. <http://www.epaynetwork.com/cms/about/001453.php>

(4) Http://www.electronicpayments.org. NACHA — The Electronic Payments Association, 2013. Web. 28 Sept. 2013. <http://www.electronicpayments.org/individual>

(5) "PayPal History." Https://www.paypal-media.com/. PayPal, 2013. Web. 28 Sept. 2013. <https://www.paypal-media.com/history>