Who oversees credit card companies

1984 €: Without cash, but well monitored

More and more countries are restricting payments with cash. Criminals would prefer to pay cash and cover their tracks with it. In fact, however, cashless payments are opening up more and more opportunities for monitoring and monetary policy.

Buying a used car for 10,000 euros? Or just buy a ring for 7,500 euros from a jeweler? If the German federal government has its way, such business will no longer be possible in the future. According to media reports, the Federal Ministry of Finance is planning a cash limit of 5000 euros. This is intended to make money laundering and the financing of terrorist activities more difficult.

Similar cash limits already exist in different countries. In Italy it is 3000 euros, in Greece 1500 euros. In Switzerland there is an upper limit of CHF 100,000. Dealers who accept larger amounts must document the purchase and the buyer.

Sweden is considered a pioneer in cashless payment. Parish members pay their tithe via text message. In churches like Filadelfia in Stockholm there is a «Kollektomat» where you can donate with a card. The sentence "When the money sounds in the box, the soul jumps out of the fire" has only limited validity.

Homeless people in downtown Stockholm take alms with a card reader. And even the Abba Museum, the place of remembrance of the pop band that wrote the song “Money, Money, Money”, has only accepted card payments for a long time.

The days when dandies casually had a few bills in their pockets could soon be over.

Bills and coins only make up around two percent of the Swedish economy, compared with 7.7 percent in the US and 10 percent in the euro zone. In progressive Sweden, where the streaming service Spotify and the developers of the smartphone game “Candy Crush” are based, people are increasingly paying with credit cards or banking apps. The largest banks in the country, SEB, Swedbank, Nordea Bank, no longer issue any cash or accept savings accounts. Cash machines are being dismantled.

The days when dandies casually stuck a few bills in their pockets or traders carried large amounts of money in their wallets could soon be over. The great promise of cashless payment is that transaction costs will be reduced and payment transactions will be safer.

The main aim of the abolition of cash is to dry up the financial flows of organized crime. Kenneth Rogoff, a proponent of the abolition, pointed out that the arrest of drug lord Joaquín Guzmán ("El Chapo") found $ 200 million in $ 100 notes. Money is dirty, claims the credit card company Mastercard.

Every transaction, no matter how small, is stored in the databases of the credit card companies.

Paying by credit card may be convenient. But every transaction, no matter how small, is stored in the credit card companies' databases - and thus provides an instrument for monitoring. The credit card reveals a lot about our lifestyle. Although only the metadata such as date, place and time are recorded, it is relatively easy to draw conclusions about individual persons from the data.

A team of researchers from the Massachusetts Institute of Technology (MIT) and the University of Aarhus, who analyzed the credit card purchases of a total of 1.1 million people over a period of three months, found that information on four payment transactions was enough to anonymize 90 percent of the people in one Identify list. For example, if you know that someone bought their coffee on Monday, went to a restaurant on Tuesday and went to the cinema on Wednesday, you can clearly assign this financial data to a person.

Tell me what you are buying and I will tell you who you are. The citizen becomes transparent and predictable. Data protectionists and economists criticize that it is less about fighting crime and more about surveillance.

Should the central banks introduce negative interest rates, one would be systemically forced to consume in a cashless society.

FAZ co-editor Holger Steltzner, a profound expert on money and banking, wrote in a comment: “Politicians dream of transparent voters and taxpayers, Internet companies want to know everything about all customers, banks need new sources of fees, and some central banks want people with penalty interest drive to consumption. That is why there is a lot of talk about black money or tax evasion and pretend ISIS terrorists are buying their Kalashnikovs in bar in the corner or as if the mafia laundered their money in the pizzeria instead of in their own bank. The truth is more terrible: the enemies of cash seek total control. "

The economist Daniel J. Mitchell from the Cato Institute in Washington, who has already published on the subject on various occasions, sees it similarly. In an interview he says: “The obvious purpose of this measure is to give the government the power to monitor private transactions. This is worrying because governments have extremely poor human rights records. Wouldn't it be wiser to focus resources on traditional policing to thwart criminals' plans? "

Politicians have an incentive to get rid of cash. Should the central banks actually introduce negative interest rates, with the result that you have to pay for deposits, in a cashless society you would no longer be able to simply withdraw your savings from the savings account and put the money under your pillow. One would be systemically forced to consume.

In a cashless society with linked records, it would be possible to refuse the diabetic from buying Coke.

This will radically change our relationship to money. The cashless society wants to break with the archaic ideal that money is something - and replace it with the idea of ​​a rating system. Banks are already calculating creditworthiness based on social media activities such as tweets and Facebook likes. Anyone who likes the “wrong” band or lives in the wrong neighborhood may not get a loan. In a cashless society with linked records, it would theoretically be possible to refuse the diabetic to buy Coke.

The computer scientist Jason Hong of Carnegie Mellon University has been studying the matter for years. He does not believe that abolishing cash will prevent money laundering. "Organized crime will always find ways to circumvent the system," he says in an interview. "The upper limit only means that criminals have to be more creative in keeping accounts and how they launder money."

In addition, resorting to credit cards does not necessarily make payment transactions more secure. There are always reports of hacker attacks or data theft from credit card companies. The crypto currency Bitcoin, which manages without intermediary actors such as (central) banks, allows anonymized purchases, but it also facilitates the acquisition of illegal goods, according to Hong.

The assumption that one only has to pull the cash out of the money cycle to drain ominous financial flows is an illusion. In the end, the winners are the state and the credit card companies, who gain even more data - and thus control - over their customers. With the abolition of cash, the consumer loses some of his freedom.