If you shop at an Amazon bookstore, don’t bother bringing cash. They can’t accept it. Likewise at clothing retailers such as Bonobos, Indochino, Everlane and Reformation. Then there are Drybar hair styling, The Bar Method fitness studios, and United and Delta airlines. None of them accepts cash, either. It’s a growing trend to force people to pay with credit and debit cards and their phones.
Of course, the credit card companies are all for it. Last year Visa doled out $10,000 to 50 businesses for creating videos glorifying going cashless and how it would benefit their bottom line. The trend is growing, being pushed hard by credit card companies and providers of digital wallets such as Apple Pay and Google Pay. Jerry Sheldon vice president of IHL, a firm that consults for retail and hospitality businesses, believes 40 to 50 percent of restaurants and stores will be cashless in the next 10 to 15 years.
As it is now, only about 30 percent of payments to businesses are made in cash, reports IHL, that’s down from 40 percent in 2012, with fast food leading the charge with 41.1 percent cash sales, followed by convenience stores and gas stations at 33 percent and mass merchants at 32.1 percent. At the bottom of the cash acceptors are department stores with only 12.5 percent of their sales in cash.
Indochino, a custom men’s clothing chain, began life as an online business but added brick and mortar, is “prioritizing other payment methods” besides cash. Their demographic is 25 to 44 year-olds, many of whom have grown up using digital payments, cards or phones. In fact only 21 percent of 23 to 34 year-olds pay in cash, down from 39 percent five years ago, reports a Gallup poll. Sheldon says, “Their lives are wrapped around their little phones.” In fact, some 70 percent of Generation Zers use mobile banking every day and 68 percent want instant peer-to-peer payments. They will make up some 40 percent of the population by 2020 estimates Accenture.
Businesses reasoning for refusing cash is tenuous, at best. Tender Greens salad restaurant for example says that accepting only cards shaves about 10 seconds off taking orders. Wow! Some savings. And having cash on site also involves more expenses, they say, such as armored cars, running to the bank for change, employee theft, and robberies. For customers who would rather use cash, too bad.
Some cities and states have responded. Massachusetts, for example, has had a law on the books since 1978 that prohibits businesses from refusing cash. Philadelphia and Washington, DC, are considering similar laws.
Of course, the credit card companies are ecstatic about the cashless prospect. An ad in the Washington Post from T. Rowe Price claims “Experts predict that nearly 2.1 billion consumers worldwide will use mobile wallets to make payments in 2019.” They add, “Mobile payment apps are successful because they make consumers’ lives far more convenient, saving them time and money.” What they fail to mention is that every sale made through any cashless system has a two or three percent discount that goes to the credit card issuer. Hence their ecstasy. Then there’s the advertising revenue. Every sale will be tracked and merchants will have the opportunity to buy ads touting a product or service similar to what the consumer just bought. Just the way Google tracks searches now, the mobile carriers and credit card companies will be able to track purchases.
Speaking of ecstatic, the hackers are beside themselves with anticipation. First, there are the mobile phone payments.
Is it the fantastic innovation for consumers that companies such as T. Rowe Price claim it is? John Rampton in the article “Hacking in Mobile Payments Space” wrote, “There have already been a number of mobile payment platforms that have been jeopardized.
Troy Leach, CTO of PCI Security Standards Council, states in a March 24, 2015 Forbes article, “The risk is that there are many different ways payments can move through the mobile payment platform from SIM, to host card emulation (HCE,) to in-app purchases.” Leach also said, “Each unique type of transaction requires unique risk for how criminals may attempt to circumvent controls to steal cardholder data or commit fraud.” No, I don’t know exactly what all that means, but bad guys probably do. And you know it isn’t good news for people using their phones to pay for something.
It has to do with Near Field Communications (NFC). But the problem isn’t with that but rather with the company that provided the hardware and software for the NFC in the store, states the Forbes article. Over the last few years, the number of hacks of mobile pay is frightening. Companies such as Apple Pay have supposedly fixed the problem, but crooks are always one step ahead. And they don’t even have to be particularly tech savvy.
An article on copy9.com entitled, “4 Ways to hack into someone’s cell phone without them knowing 2018,” provides easy ways to get it done providing complete instructions for getting into someone else’s phone.
But there’s more. Several apps are on the market to get into someone’s phone. They all provide reasons that are perfectly legal and probably legitimate such as watching what your kids are doing, hacking a spouse’s phone, or watching what parents are doing. But what they promise applies to much more than those instances. Just think, you have the capability to do: GPS geo-fencing & tracking, blocking of Internet access, restricting of calls & messages, keyword tracking alerts, logging of (e-mails, apps, keyboard), acessing contacts, browsing history, messages, messengers, social accounts, etc.) Other hacking products will do similar nefarious things.
The opinions of the experts is almost universal. In an article in Entrepreneur magazine, John Rampton cited an ISACA study that only 23 percent of the experts surveyed said they believed that mobile devices are secure enough to keep personal information safe, while 47 percent claimed that mobile payments are not secure. The vast majority, 87 percent believe mobile payment data breaches will increase in the next year.
Then, second, there are just plain old, run-of-the-mill data breaches. Look at the data breaches of even some of the largest companies, the most recent the Marriott breach that wasn’t discovered for four years and not reported for three months after it was discovered. The list that includes Yahoo!, Equifax, Target, Home Depot, Anthem, the Office of Personnel Management, T-Mobile, Scottrade, and many more is frightening.
Hackers will always find ways to exploit any security problem. They are nothing if not persistent. But you can’t hack cash, only steal it, and the amount is limited and far more perilous to the crook than hacking on the internet. Hacking crime is like a free pass to the bad guys, the risk is miniscule and the potential profits unlimited. How many hackers get caught? Mark Lanterman, C.T.O. of Computer Forensic Services, estimates it at less than one percent. And how many businesses have been hacked? CBS Marketwatch reports that smaller businesses (1,000 or fewer employees) are more prone with 85 percent estimated to have been hacked, while 60 percent of larger companies have suffered. What’s worse, many companies never even realize they have lost data to crooks.
Even so, mobile payments and the cashless society may be a near-future fact. It’s not the savior of society and the wonderful consumer convenience that credit business companies claim it will be.
By Robert L. Cain
