History tends to repeat itself, and historians have lost count of how many societal evolutions served a purpose opposite to the one they were designed for. Since the end of the 20th century, transactions have increasingly departed the world of paper currency to migrate towards the electronic world. One of the main motives for the shift: secure payments. Half a century of hindsight shows that electronic payments haven’t made money safer but has in fact aggravated the problem.
Electronic payments on a long-term rise
Half the generations alive today across developed nations have always known money under its electronic form, since the first credit cards started developing in the 1980s. And before that, bank transfers sometimes used electronic systems for their operations. With the digital revolutions, the number of electronic channels available for purchases multiplied dramatically, with anything from Paypal, to e-wallets. In a handful of countries, the trend has gone so far as to almost obliterate cash, as Stephen Johnson reports for the Australian Daily Mail : “ During the past year Westpac has withdrawn 200 ATMs as ANZ closed down 130 holes in the wall while National Australia Bank mothballed 115 units, News Corp Australia reported. Mr Clitheroe, the former host of the Nine Network's Money program, said tap-and-go was replacing ATMs, and argued they were better for financial management than retaining every cash purchase receipt.”
Among the arguments in favor of going all-plastic, are convenience and, above all, security. Nathaniel Popper sums up, for the New York Times, that “There are few corners of the world where electronic transactions are not growing faster than cash. The consulting firm Capgemini recently estimated that electronic payments will grow about 10.9 percent a year between 2015 and 2020. But the movement away from cash is happening in very different ways and at varying paces around the world. Scandinavian countries are already well along the road toward cashless societies. Many banks in Sweden no longer have cash on hand, and consumers can make instant transfers directly from their bank accounts.” The entire concept of electronic cash relies on credentials to validate payments, but those locks have not prevented theft.
Follow the money
As money shifted from the physical to the virtual world, criminal interceptors saw the opportunity to seize money unlawfully, while remaining away from their victims, thus reducing the risk of being identified. The techniques vary, from scams, phishing and fake websites, to direct account or credit card detail hijacking. In the virtual world, the theft can occur either using software (such as keylogger malware, installed unbeknownst to the user) or hardware, with fake pin pads or usb vacuums. These methods were initially reserved to computer geniuses but expanded quickly, and the number of offenses rose very sharply at the turn of the century. In England alone, in 2016, an estimated 150 billion pounds were lost to fraud, both by businesses and private citizens. Camilla Hodgson reports for Business Insider that “online fraud is now the most commonly experienced crime in England and Wales, but the National Fraud Office (NAO) says not enough is being done to tackle it. Cyber-related fraud accounted for 16% of all estimated crime incidents in the year ending September 2016, with an estimated 1.9 million cases. But since fraud is under-reported, the figures could be much higher.”
Information at risk too in the digital world
The nature of crimes, along with their impact, also mutated with the digital age. In addition to the loss of funds itself, online fraud usually entails loss of control over accounts, which contain an increasing part of citizens’ lives. Once an online fraudster has control over an account, it can be exceedingly difficult for the legitimate owner to regain control over it and can sometimes helplessly witness the fraudulent operations unraveling. Computer companies have set up various fixes for the security breaches, but none are fail-safe. As an aggravating factor to the plague, credit card details can be owned by a variety of websites, each of which representing a potential security breach. Simon Parkin illustrates the risk: “In recent months, the scale of the erosion of our anonymity has become dauntingly clear. In humming, ice-cooled server farms, the monoliths of Silicon Valley gather fat troves of personal information. This much we have known for years – as early as 2010, an investigation found that Facebook apps were routinely collecting information for internet-tracking companies without our consent – even from private accounts. But the recent Cambridge Analytica scandal brought new clarity. Those who downloaded their personal data files found that Facebook and its associated apps had been tracking phone calls, reading messages and plundering phonebooks.” In 2011, Sony reported to have lost control of sensitive data belonging to almost 100 000 customers.
Just like regular and legitimate markets, fraud follows the money trail. As normal businesses adapted to the fact that customers resorted to electronic money, fraudsters also found new ways to intercept money from its holders. But contrary to the previous situation, where only the cash at hand was at risk of being stolen, the identity of the holder is now also jeopardized in the case of fraud, because our finances are now intertwined with our details. If theft occurs, it may not be just a single event, but a long streak of lost control which the legitimate citizen may struggle to gain control over.