On one level, it seems like it should be much easier, simpler. How difficult could it be to have both the convenience of credit cards and a reasonable facsimile of privacy? After all, we pay for that convenience, don’t we? If not in monthly interest payments then in fees of one sort or another.
In one way, it is simple. Sure, having a credit card allows us the ability to do things we otherwise wouldn’t. Credit, for one. But, beyond that, we enjoy the ease of use with a card, its acceptance – our acceptance – virtually anywhere. We may be lulled into the false sense of believing it’s about us, making our lives easier.
To whatever extent that is true, we are not the only, or even the main, beneficiary. The credit card companies obviously make money off us and so do the merchants who accept the cards. But, there is much more going on behind the scenes. The real money may not be in the straightforward credit card transactions but in the data that is gleaned from them.
That is where the privacy issues really burgeon. While a merchant may collect a customer’s personal information, there is a limit to what they would or could do with that. On the other hand, if others can gain access to it, the sky is the limit. Using that information, selling it, renting it, data appending, sharing information with government agencies and so on. Privacy seems like a distant memory.On the other hand, if others can gain access to it, the sky is the limit. Using that information, selling it, renting it, data appending, sharing information with government agencies and so on. Privacy seems like a distant memory. Click To Tweet
Privacy and the Data Middleman
So, why don’t we have more privacy for our credit card use? Again, that’s simple. Competing interests. Ginormous profits. When it comes to credit card companies, banks, most businesses today, even the government, we are not the customer. We are the product. This happens on such a large scale, it is difficult to grasp.
Here’s more on that:
“A big reason that electronic payment systems threaten privacy is that they introduce a middleman. When a middleman becomes part of the process, that company often gets to learn about the transaction — and under our weak privacy laws has a lot of leeway to use that information as it sees fit.
“The primary middlemen in most non-cash transactions today are the oligopolistic credit card companies (Visa has around 60% of the credit and debit card market, MasterCard has 25%, American Express 13%, and Discover 2%). Mobile apps such as Apple Pay, Venmo, and Square are also gaining a foothold.
“But, regardless of who plays that role, Congress has bent to the will of the financial industry and refused to enact adequate privacy protections. In 1999, Congress passed the Gramm-Leach-Bliley Act (GLB). Although it has often been described as a “financial privacy law,” Gramm-Leach created nothing more than a weak “fig leaf” privacy standard. The real effect of the law, which manages to be both extremely complex and weak, has been to ratify the abandonment of customer privacy by an industry (banking) that, once upon a time, prided itself on discretion…”