Perfecting The Surveillance Society – One Payment At A Time

Wolf Richter   www.testosteronepit.com   www.amazon.com/author/wolfrichter


Governments and corporations, even that genius app developer in Russia, have one thing in common: they want to know everything. Data is power. And money. As the Snowden debacle has shown, they’re getting there. Technologies for gathering information, then hording it, mining it, and using it are becoming phenomenally effective and cheap.


But it’s not perfect. Video surveillance with facial-recognition isn’t everywhere just yet. Not everyone is using a smartphone. Not everyone posts the details of life on Facebook. Some recalcitrant people still pay with cash. To the greatest consternation of governments and corporations, stuff still happens that isn’t captured and stored in digital format.


But there is one place in the world where their wildest dreams are coming true, one place that is getting closer to the ideal where every purchase is tracked ... by a single device. That place isn’t a well-organized dictatorship or an overly paternalistic state where everyone is required to possess a national ID. In fact, it’s barely a state at all, dysfunctional in many aspects, catastrophic in others, decades behind in many ways, with people who are often desperately poor and illiterate: Somaliland.


There are barely any classic telephones – those devices with cords hanging out incongruously. Or banking services. Fiber-optic cables? Hardly. Copper cables? They’d just get stolen and sold for scrap. Credit cards? Useless. It declared its independence from Somalia in 1991 but hasn’t been recognized. Yet, payment by cellphone is becoming standard.


This phenomenon – widespread use of cellphones for a broad array of services, including mobile payments – is new, rapidly expanding, and for Africa, revolutionary. It has allowed people to leapfrog decades of painstaking technological development. And it has been widely reported with a mix of admiration and head-shaking; the latest in The Globe and Mail, which recounted how easy and common it is to use a basic cellphone for nearly all purchases, at stores or street vendors, to pay for a bus ticket or a shoeshine or some khat for a torpid afternoon high.


“We never handle a single dollar in cash,” explained Moustapha Osman Guelleh, COO of Coca-Cola’s local bottler. About 80% of its sales to distributors are handled via Zaad, the mobile payment service of the largest cellphone operator, Telesom. The rest are handled via bank transfers. “We don’t have any issues of having to keep cash in a safe,” he said. The company even pays its employees via Zaad. A cashless company, in an increasingly cashless society.


“What amazes me is that even illiterate people have learned how to use it,” said Khader Aden Hussein, general manager of the Ambassador Hotel in Hargeisa, the capital of Somaliland. The hotel pays all of its 300 employees and nearly half of his suppliers via Zaad.


They have their reasons. Text messages immediately confirm the transaction to both parties. Zaad transactions are in US dollars, eliminating the need to count and deal with wads of soggy crinkled shillings. It’s secure – well, at least it’s encrypted. Crime that targets cash is becoming unprofitable. Security improves. Subscribers prepay, so credit risk for the company is zero. Credit risk for subscribers is another matter, but hey. And Telesom’s servers capture every bit of data and retain it forever.


Mobile payments are becoming common in other parts of Africa: 17 million Kenyans use them, out of a working-age population (15 or older) of 25 million. What’s happening in Africa – getting rid of cash – is every government’s dream: no more anonymous transactions. It would end the underground economy, black markets, or smuggling. Small-time tax evaders would lose an important tool. Eliminating cash would be useful in the war on drugs or terror, or in any other such “war” on products or strategies. Even “anonymous” virtual currencies have to pass through internet service providers and leave a digital trail, unlike cash. If only cash could be eliminated!


But the killer technology isn’t the elimination of cash. It’s the combination of payment data and the information stream that cellphones, particularly smartphones, deliver. Now everything is tracked neatly by a single device that transmits that data on a constant basis to a number of companies, including that genius app developer in Russia – rather than having that information spread over various banks, credit card companies, etc. who don’t always eagerly surrender that data. Eventually, it might even eliminate the need for data brokers. At that point, a single device knows practically everything. And from there, it’s one simple step to transfer part or all of this data to any government’s data base.


Opinions are divided over whom to distrust more: governments or corporations. But one thing we know: mobile payments and the elimination of cash, a quantum leap for Somalis in their quest for modern life, will also make life a lot easier for governments and corporations in their quest for the perfect surveillance society.


Both cooperate in their quest. For example, Keyhole Inc., a venture-capital funded startup, was acquired by Google in 2004. Its product became Google Earth. Its technology filtered into Google Maps and Google Mobile. One of the investors? The CIA. And Snowden’s disclosures shed new light on these arrangements. Read.... Tech Companies And Their Love Affair With The NSA and CIA

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