Tuesday, March 14, 2017

Cashless in India: Reality bites?

the independent blogsite Global Voices has a long article summarizing what is going on in India after they decided to go "cashless".

India stopped people from using "large" bills of money, and to prove they didn't even need cash, decided to declare certain areas fully "cashless".

Emergence of cashless villages
In the months since the demonetization, a number of villages have been declared newly cashless. In a number of cases, the transformation was driven by local NGOs with the help of banks and local authorities. Some 11 remote villages in India have been adopted by the United Bank of India (UBI) under a pilot project to transform them into cashless villages, for instance.

the Times of India article:

Here are the six villages in India are the first to go cashless. This means all adults have bank accounts, use sms-based banking and plastic money while businesses use swipe machines for cashless transactions. Banks are also linking their Aadhaar cards to accounts to ensure benefits gets transferred directly to the beneficiaries.
all of which will allow lots of smart hackers to get rich I'm sure.

I don't live in India, but I do live in the rural Philippines, with cash and vendors and open air markets. So I presume this means the small vendor won't be able to sell stuff because they can't afford a machine.

and do locals really want to go cashless?

Here in the Philippines, people just don't trust the government, and want the cash in hand. We are only beginning to use credit cards here: I had a credit card for years in the US but only got a local one two years ago, and the main place I can use it is in the upscale shops at the mall, (with two pieces of photo ID). We are also starting to use it for e commerce: for things we can't find locally... mainly my granddaughter is doing this, since you have to verify your purchase with your smartphone, and I don't own one but she does.

but twice in the US I had my purse stolen from work and had to cancal my credit card. And that doesn't include on line scams, or identity theft. I mean, if hackers can steal my personnel file from the federal government, don't you think that there will be a lot of fraud and stealing with all these paperless purchases?

then there is the question: what if the internet etc fails? Floods, electrical brownouts, typhoons, landslides are common, alas.

And what would happen if an earthquake takes out the internet cables, as one large one did about ten years ago.

The Economic Times of the Times of India wonders the same thing:

It is a myth that an advanced society must necessarily be cashless. In Germany, a country which knows the perils of authoritarianism, more than 80% of transactions are in cash, as citizens safeguard their privacy and freedom. Even in the US, 45% of transactions are in cash. Note that Germany and the US actually have the banking and technological infrastructure to enable cashlessness. In India, 600 million people have no bank account, and less than 20% of all Indians have a smartphone. Internet  .. Read more at:

so who the heck made a decision for India's one billion people? This is not China, after all: India is a democracy.

Forbes article here.

India’s demonetization scheme was a unilateral initiative that was planned in secret — in a back room of Prime Minister Modi’s home, in fact — by a small group of insiders tied-in with the upper echelons of India’s government. 

it was done to stop the hoarding of cash (invisible to the tax man) and stop the black market.

But I wonder: As my husband used to say about the Philippine politicians: they're all crooks. So, is anyone in India getting rich off this scheme? Besides the hackers and those who steal someone's identity to steal their money I mean.

this was touted as anti corruption.

One of Modi’s main brands is that of a corruption fighter, and his demonetization initiative was rushed into effect in an attempt to catch the black market off guard — which could potentially lead to a big payday for the central bank if large amounts of illicit cash wasn’t redeemed. That plan flopped, as almost all of the recalled notes were officially accounted for one way or another.
 Yup. Anti corruption... except the big shots found ways around the ban to hide their money (I posted about this in an earlier blogpost)...

more herehere and here.

Techasia has a report on being caught during the turnover. Summary? It F***s the working class but won't stop the crooks

So maybe demonetization puts a dent of mysterious size in upper-class black money movers. It’s an inconvenience to the middle class. But it fucks over the working class – the rickshaw drivers, the guy who brings you water, and the lady who owns your trusty but tiny corner store....

Finally, more money flitting around digitally means a greater risk for cybersecurity breaches. Arguably, this risk comes with the reward of a cashless society, but it’s not a fight easily won. The US$81 million Bangladesh Bank heist in February last year is not the last time digital money – and a lot of it – is going to be compromised. (And let’s not forget that last year a single power outage grounded a Fortune 500 airline.) Demonetization – crowds of people opening bank accounts, exchanging cash, and signing onto fintech services – is a hacker’s paradise.
“We invest millions of dollars a year in data security – it’s one of the big risks of digitalization,” cross-border payments startup Payoneer CEO Scott Galit tells Tech in Asia. If there’s opportunity, hackers will come – ready or not.
ah but the WashingtonPost thinks it is honkey dory and has an article how first India had to get everyone finger printed and given a identification number so they could get bank accounts (and not be part of the economy that doesn't pay taxes) and a lot about smartphone money transfer is in the article.

In recent polls and elections the problems and frustrations of ordinary Indians from this policy shows that Modi is still popular.

so presumably no one there is worried if the government is monitoring their purchases and bank account

But would this work in the prickly west, where people simply don't trust the government and big brother?

privacy? what privacy?

and when the CIA/NSA (not to mention facebook) can snoop into everything you do, why am I suspicious that this is just one more "big brother" item?

and of course, there is the problem of security.

I mean, if the Chinese hackers could steal my federal personnel file, then maybe there is a minor problem with cybersecurity that someone should worry about.

but the WaPost says that the big shots in Davos says everyone has to join the cashless society.
Nobel Prize-winning economist Joseph Stiglitz said at the World Economic Forum meeting in Davos, Switzerland, that the United States should follow Modi’s lead in phasing out currency and moving toward a digital economy, because it would have “benefits that outweigh the cost.” Speaking of the inequity and corruption that is becoming an issue in the United States and all over the world, he said: “I believe very strongly that countries like the United States could and should move to a digital currency so that you would have the ability to trace this kind of corruption. There are important issues of privacy, cybersecurity, but it would certainly have big advantages.”

my stepson, along with a lot of other fundamentalist wackos would say this is the mark of the beast and make a fuss. My geeky grandson would say neato.

As for me, well as my mother used to say: Who died and made you king?

The idea that a big shot can radically implement policies with little input fro the ordinary folk is one of the reasons for Brexit and the Trumpsters.

and when a google of the subject shows nearly every story on the subject seems to be positive stories saying almost the same thing about becoming cashless society, it makes you wonder about "fake news". 

I mean, when even "Scientific American" argues for a cashless society because there are germs on money, it makes you wonder who is controlling the news.

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