Checking Out 

Online banking hastens the cashless slave state

NEW YORK-"I don't think there are any bills for which I use a paper check," Princeton grad student Larry Lyons, 23, tells the New York Times. And he's not alone. Millions of Americans, especially young adults, prefer to pay their bills with a debit card or via the Internet. In 2003, checks accounted for just 45 percent of non-credit card payments, down from 57 percent in 2000. "Checks over the next two decades," reports the newspaper, "are likely to become as prevalent as electric typewriters."

While it comes as a surprise to customers hit by big fees for bounced checks and low balances, high processing expenses have caused banks to view the checking account business as a "loss leader"-an unprofitable line of business they only maintain because people expect it. So banks are dangling carrots-Citibank charges lower fees to customers who agree not to write checks-and swinging sticks-refusing to return canceled checks-to coax their customers into fully digitizing their personal finances.

"It's much easier to be able to point and click to make a payment," says Lyons. I don't know what he's talking about. I have broadband, a fully-loaded computer and I'm a former computer programmer-certainly no Luddite. Yet, for me, paying bills online compares unfavorably with a visit to the dentist.

First you fill out your name, address, credit card information on a long form. Don't forget the four-digit security code on your card. No, not the one on the front. The one on the back. OK. Now wait a few moments while we process your payment. What, you don't have "cookies" activated on your browser? Go reset your preferences to allow us to plant mysterious tracking files on your computer. Don't worry about all those identity theft stories on TV, just do it. Now re-enter all that stuff in the long form. Great. Now wait a few moments while we check to see if your chosen username is available. Wait-you have to enter your password twice. Four to six digits. Now wait a few moments while we e-mail you a link to verify your account. Click on the link. The link isn't live? Cut and paste it into your browser. Wait for it to reload. Now re-enter everything. Now wait a few moments while we process your payment. What's that? Your screen is locked up? Better do a hard shut-down and reboot. That should take about 10 minutes-assuming that a utility crew across town isn't about to accidentally knock out your DSL or cable connection.

Compare high-tech bill paying to the old-fashioned way: Write check. Place in pre-addressed envelope. Lick. Stick on a stamp. Total estimated time of procedure: one minute.

Bankers say you can access the Web anywhere, but they've never surfed on a PC running Windows 98 at a cybercafé in Ashkhabat. It takes five minutes just to send an e-mail. Seriously. Accessing the first page of an online banking site is absolutely impossible. There is at least some chance that the Turkmen postal service will eventually come through.

Seems like an obvious case of not broken/don't fix. But, says Edward Bachelder of Dove Consulting, "The youth of America has no interest in using checks." Hurrah.

The death of checks presages a cashless society in which employers wire salaries to workers' bank accounts via direct deposit, who in turn pay bills online and use debit cards-which account for over 20 percent of all non-credit transactions-at shops and restaurants. The next obvious step, some future politician will reason, will be to eliminate cash.

Once legitimate money flows digitally, after all, all cash will be used the way most $100 bills are today-for drug sales and other illegal activities. Economists Friedrich Schneider and Dominik Enste estimate that between 6.7 and 13.9 percent of our gross domestic product was generated by the American "underground economy"-transactions conducted in cash-in 1990, the last year for which such data was available. Whether you're selling your futon on Craigslist or moving 10 kilos of Afghan heroin, the I.R.S. wants its piece of the action.

Going after tax cheats seems reasonable. But the cure would be worse than the current "lost" government revenue. You have ample cause to fear a cashless America even if you're strictly legit. As Islamic charities learned after 9/11, bank accounts can be frozen by a government acting against its political opponents. Credit and debit cards can be deactivated at a keystroke. Politicians of the future will find the power to instantly impoverish anyone, anywhere, for any reason, irresistible. And consolidation makes an online banking account ultimately vulnerable to such attacks. Your cellular provider, landlord and travel agent are scattered across the country, currently known only to you. Now it would take time and effort for a government agency to find them to cut you off. Not so if you pay your bills online.

Of course, there's no reason to worry if you trust all politicians and government agencies, including those not yet conceived, appointed or elected, to do the right thing. Oh, sure, the Social Security guys just admitted giving away "secret" information to HomeSec goons, no warrant requested. But that was just a fluke. Go on, do whatever they tell you. Keep pointing and clicking-and save those 37-cent stamps.

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