Posts Tagged ‘google wallet’

Google Wallet not necessary for VRM realization @dsearls

Doc Searls, a thought leader for whom I have tremendous respect, and has most recently been the driving force behind the concept of VRM (Vendor Relationship Management) through the ProjectVRM initiative at Berkman Center, authored a blog post today on Google’s new wallet initiative titled “Google Wallet and VRM“.  To say that he thinks this is important is an understatement when he makes the bold claim that, “I think it’s the most important thing Google has launched since the search engine.”  Coming from Doc, this is a significant statement.  However, when reading through the first four reasons he provides for this, I was left wanting, and felt like the technological fascination of what could be done with this ignored some of the practical realities of our global village.  With each of the initial four reasons provided, I felt a visceral objection arise, and that’s what led me to writing this blog post.  It’s also evident that perhaps our main difference of opinion on this matter is that I see the possibility of doing everything he suggests without the need for our phone to act as the main instrument used to effect a transaction.  To me, it’s the issue of taking our existing distributed cards systems and turning them into a centralized point of failure.

The best way for me to go through is to follow Doc’s reasons for why he believes in the importance of the Google Wallet initiative and provide my counter arguments on each of these.  The discussion below will only make sense in the context of Doc’s post, so you may want to read that first or have it open in another window for reference.

“Reason #1: We’ve always needed an electronic wallet, especially one in our mobile phone.”: Sorry, but this is a techies wishlist item.  No, normal people have never “needed” an electronic wallet much less one on their mobile phone.  Smartphones may be all the rage here, but in many of the most populous countries this has not been the case and they seem to be doing fine without it.  In Africa, entrepreneurs have innovated around the minutes currency which achieves a nice balance of anonymity and the ability to transact in a low-tech environment.

“Reason #2: We’ve needed one from somebody who doesn’t also have a hand in our pocket.”: Perhaps I’m misunderstanding this point so I’m open to being corrected, but the line that didn’t set well with me was, “List the things Google does but doesn’t make money with, and you’ll have a roster of businesses that needed commodification.”  Would Gmail or YouTube or Maps fall into this category?  Would their efforts with Google Books fall into this category?  What exactly are the businesses that Google does not make money with?  Last I checked, Google was in the “monetizing attention” business and all of their efforts focus around collecting information on users in order to better monetize their attention.  Is this a 2nd or 3rd order effect?  Perhaps it was at first, but now they have perfected this monetization machine so I’d argue that it’s very much of a first order effect.  In other words, Google also has a hand in our pocket and the currency they’re extracting is information, the most valuable currency of them all.  It’s actually a more dangerous hand in the context of an e-wallet application since it gains tremendous advantage and control from learning about our transaction history.  Control over its users, advantage over its competitors and every other company selling anything.

“Reason #3: This reduces friction in a huge way.”: This is the bill of goods online users of applications and services have been sold since the beginning of the commercial Internet (I’ve been along for the ride the whole way).  But what is not discussed are the tradeoffs users have made for all of this convenience and removal of friction.  The tradeoffs have come in no smaller ways than in forfeiting of Constitutional rights we were afforded before all of this.  Yikes!  Can’t believe I went there 😉  OK, I’ll discuss this point further at the end of this post, but for this section let me get back to the more specific points that are raised.  Wallets slow us down at checkout, whether it’s from pulling out cash or cards.  Loyalty cards are a cumbersome addition to the checkout process.  How about if we talk about the current state of the best smartphones (never mind the mobile phones used by the unwashed masses, for now)?  How many times have you tried to locate an app on your iOS, Android, Blackberry, Windows, etc. mobile device and either not found it quickly (it’s on the third swipe screen at the bottom right), or touched the screen but it was non-responsive even after multiple taps, or had to reboot your mobile device, or saw a pop-up flash showing some sort of exception error, or ran out of power because you forgot to plug it in before leaving the house, or forgot it at home altogether, or watched someone struggle typing on the screen keyboard, miniature keypad or numeric keypad?  I dread the idea of being in line at a Starbucks and watching people struggle with their devices in any of these ways, and that would be a relatively simple transaction, never mind something more complex.  Already I see the lines at the self-serve checkouts in grocery stores getting longer than the ones with human cashiers.  Now, on the flip side, with a credit card you or the cashier can always type in your number if the reader doesn’t work (worse case scenario the cashier can even call in the card number to the credit card processor), no power to your card is required for this.  While the idea of being able to carry everything in your device sounds appealing, the practical issue is that we become incredibly dependent on a single point of failure.  When there are problems with the device (and I defy anyone to name a device that has never had a problem), it’s not just one payment instrument or loyalty card that’s affected, they all are and all at once.  The tradeoff between a point solution for reducing the friction in our transactions, versus the greater systemic failure that could increase the friction in our lives (imagine loosing the smartphone or having it remotely hacked or other nefarious acts done to it because it will be worth a lot to the attacker), is not worth it.  At least not as discussed here.

“Reason #4: Now customers can truly relate with vendors.”: This one is a hot-button item for ProjectVRM and I like it, but not in the context of Google doing it.  This intermediary role needs to be handled by either a non-profit or a company that works on behalf of consumers because consumers pay for the service (note, I’m not specifying how they pay, but only where consumers are the primary customer of this service provider’s will they be able to trust that their needs and interests will be respected first and foremost).  Google’s efforts to know everything about me and in turn be able to use this information in ways that as a user I never intended, does not sit well.  The temptation to use this information in ways that may not necessarily be in the best interest of the consumers, but may be in the best interest of Google shareholders, is too great a power to bequeath to any company who’s objectives are not primarily aligned with or focused on, serving the individual.  Also, in their current state, privacy laws do not sufficiently protect users from how their information is used nor provide them enough transparency and control to have confidence and trust in such services.  Having said this, today email and a hosted service where the info from all of one’s payment and loyalty instruments can be brought to bear (something more closely resembling what Minthas done) make sense, but I would keep all of these aggregation services independent of the device.  In other words, there should be no need for the Google Wallet to accomplish this.  When positioning this as a Mint-like service, we see that Reasons 5, 6, 7, 8, 9, 10,11 all still apply, but we’ve separated ourselves from being at the mercy of our device for the actual transaction.  Today, when I withdraw money with my ATM card, instead of getting a receipt at the machine it emails me that info.  When I make a purchase at the Apple store, they email me the receipt.  We may need open standards around portability for making those emails machine readable and for them to be sent to our personal transaction aggregating services (ie. Mint or other similar services), but we can accomplish this without the need for the Google Wallet per se.

None of the other reasons really require the Google Wallet to be realizable, and I’d argue that it’s not by turning our phones into the means for making payments that we benefit, but by creating a transaction aggregating services focused on respecting the user, that we make the gains.  Where a true wallet application for payment would have been interesting is when the prospect of something like David Chaum‘s Digicash(let’s see who’s awake and remembers them from back in the day).  The ability to perform truly anonymous cash-like transactions.  This was something for which a device would be needed at the point-of-sale, though with today’s smartcard technology, I could see it being possible without the need for the phone as payment device.  These could still provide useful transaction data for the user, though the merchant would not necessarily have information on the transacting user other than knowing that the transaction was good and money was transferred into their bank account.

Perhaps now is a good time to elaborate on the more general concerns with hosted and aggregated transaction services.  Service providers that would be maintaining transaction data for us constitute a third party in a transaction (first party = me; second party = merchant; third parties = credit card bank and any transaction aggregating services).  Given the state of the ECPA (Electronic Communications Privacy Act), the idea that government could gain access to this info in a nice neat package, at will (OK, maybe with a subpoena, but certainly no warrant requirement), is truly frightening.  While we can try to divorce the wish list of capabilities we would want from transaction aggregating services, from the laws around us, the fact of the matter is that by using many of the SaaS services today we are slowly diluting our Fourth Amendment rights.  It’s nice to push the envelope on ways of making life better for individuals, but in a setting where governments have made been attacking what few privacy rights we have online, using industry to carry out their assaults (see Amazon shutting down Wikileaks servers and Paypal, Visa & Mastercard shutting down their merchant account), and making more and more changes that advantage industry in its quest to have unfettered access to people’s information, I’m concerned that by making it easier for people to manage their info we are also making it easier for governments to control and coerce their own citizens.  We need to get the privacy statues in place *before* radically facilitating the aggregation of information on citizens, otherwise our best intentions risk putting us in prisons of our own design.  Sorry for the heavy ending here, but there doesn’t appear to be any indications that governments around the world are relenting in their desire to legislate every aspect of our lives, in and out of bedrooms, so we shouldn’t make it easier for them to monitor us.  The world Kafka imagined in The Trial, is sadly coming to life, most recently exemplified by the DOJ’s refusal to make its interpretation on the recently renewed Patriot Act clear.  We have be awake and more alert to this as we develop the next generation of online services.