Be they US dollars, Euros or Yens, paper bills are becoming anachronistic, as we use more and more credit cards, smart cards or even completely virtual currencies such as Linden Dollars in Second Life. But is this increase in the type and form of payments confusing for people? How do designers should approach topics like digital payments and virtual currencies?
These and many other issues concerning digital money are being investigated by a collaboration among different researchers which include Scott Mainwaring and Wendy March (Intel Research), Bill Maurer and Yang Wang (University of California, Irvine), Hsain Ilahiane (Iowa State University).
They are presenting two papers today at CHI 2008, I’ve talked with Scott about it and you can find a lot of interesting information in the following:
Digital money, Virtual currencies, smartcard payments in the physical world, electronic payments in virtual worlds,... How many forms is money taking in the 21st century?
“One might imagine, with developments like the Euro and the growth of world-wide networks like Visa and Mastercard, that the number of different forms of many and ways of making payment will become ‘rationally’ reduced into a small set of preferred standards. And indeed there are important trends in this direction; for example, in Toyko, commuters are generally quite thankful that a single kind of transit-based money, PASSMO, is now accepted across the wide range of different subway and rail companies operating there, each of which formerly required their own form of ticket or pass.
But what's been really striking to me in the research I've been doing for Intel on monetary innovation is how the same information and communication technologies (ICTs) that make standardization possible also seem to be allowing all sorts of groups and institutions to create
their own forms of moneys or quasi-moneys like loyalty points, airline miles, mobile phone airtime minutes, volunteer hours, etc. How many are there? It's an excellent question, but I don't think anyone really knows or is tracking these systematically. If you count non-digital
forms like those "buy 10, get one free!" paper punch-cards independent cafes and so forth give out, it must be many thousands. And I suspect it is growing every day.”
Is this confusing people? How?
“Well, it's certainly filling up many people's wallets with all sorts of plastic and paper payment and membership cards! I'd invite readers to look through their own wallets and count the number of different kinds of cards and credentials they're carrying, and why. I think future ‘digital wallet’ interfaces could help people manage and access of all the different forms of money and types of payment that they currently carry in daily life, and will for the forseeable future.
And it's certainly frustrating to feel compelled to carry multiple forms of payment technology, in order to meet the dictates of different service providers. To use Tokyo again as an example, different convenient stores currently require different, non-transferrable varieties of digital cash, which made some of the people we talked to question the usefulness of digital cash entirely.
But I also want to acknowledge that a certain level of complexity can be desirable and even delightful -- efficiency isn't necessarily the most important value underlying people's monetary behavior and choices. People often like to have multiple bank or card accounts, for example, to assign each with a different use and meaning, and perhaps to keep some private from their spouse or significant other. And some of the people we interviewed were a bit proud to show off the schemes they had developed to link together multiple forms of payments so that they could get double or triple ‘points’ for a single purchase; learning about and dealing with the complexity of money systems can become a kind of game, or at least be a bit playful. There's quite a bit of research in behavioral and sociological economics showing that people are quite good at designing their own ideosyncratic schemes for making sense of the multiple ‘pots’ and flows of money around them.”
You have studied forms of electronic payments in different countries. How do cultural aspects affect the perception and the success or failure of these solutions?
“Cultures certainly vary quite a bit in how money is popularly understood, and how safe people feel in taking a chance on some newfangled payment, investment, or transfer scheme. Cultural differences -- across or within countries -- can be rooted in all sorts of factors, from the strength of banking and consumer protection regulations, trust in public or private institutions, historical experiences with hyperinflation or other economic traumas, and even in
different word-of-mouth ‘folk theories’ about how credit cards differ from debit cards, for example.
The relation between the success or failure of any particular financial technology to the culture tries to serve is really complex, but looking at individual cases can start to uncover some important themes – themes that might be quite widely relevant, not just to the culture in which they are easiest to see. That's the approach we took in looking at e-cash systems based on a particular technology called FeliCa in Japan. FeliCa is a system that allows you to load money onto a smart card, which you can then use instead of cash for making small purchases (typically around 10 Euros or so) in convenience stores or what have you. Loading the cash is a fairly cumbersome process, but paying is kind of cool: you touch your card to a reader, which instantly lights up and plays some sound effects, and, voila, you're done, no fumbling for bills, no making change.
We found two aspects of Japanese culture to be particularly important for understanding FeliCa's success. One is termed ‘meiwaku’ – the importance of not being a public nuisance. These payment cards, unlike credit cards, were seen as socially responsible, even morally good; they help speed up the lines at cash registers, easing the burdens on the sales clerk and one one's fellow customers as well. The other cultural underpinning of FeliCa's success we called the ‘tokushita!’ effect -- that's a Japanese exclamation of happiness meaning something like "I've made a profit!". Because, behind the scenes, paying with FeliCa typically meant racking up some kind of loyalty points, like airline miles. One might be stuck in the crowded urban grind of daily life in Tokyo, but through FeliCa, be reminded periodically of your dreams of a vacation in a tropical paradise like Okinawa, dreams you're a few miles closer to with each little transaction.
‘Meiwaku’ and ‘tokushita!’ are, I think, Japanese expressions of pretty universal human ideas: smoothly operating within one's culture, on one hand, and finding little moments of delight in the drudgery of daily life, on the other. I think lots of technology designers could learn
from Japan in these respects.”
Do you think we will get rid of tangible coins and bills soon? What sorts of new applications do you imagine for the future of digital money and currencies?
“I don't see them going away any time soon, but I think they are going to face increasing competition from electronic forms, and maybe disappear entirely in certain contexts. For example, I recently came across a pizza place in Nashville, Tennessee, which was no longer accepting cash payments at all, just debit cards or credit cards. In this case, it was the result of tragedy: the owner's son and another employee had been murdered in a robbery at the restaurant months ago, and in the new policy seemed like it was a kind of a "never again" memorial to them. Cash has many other kinds of costs associated with its handling, though perhaps none so dramatic as this life-or-death example; these costs are inevitably, I think, going to little by little eat away at its everyday ubiquity.
The trick for developers of digital alternatives, I think, will be to make them as trustworthy, flexible, and understandable as cash. The field of human-computer interaction is only starting to look at the potential for entirely new ways of understanding and using money that technology is making possible. The next phase of my research will be focusing on using design and prototyping techniques to sketch out what these new possibilities might look and feel like.”
© 2008, Il Sole 24 Ore. Web report from CHI 2008.
NOTE: The opinions reported above are Scott’s personal opinions as a researcher in the field of digital money, and do not necessarily represent the views of his employer (Intel Corporation).