eWallet or digital robbery

This entry is part 3 of 7 in the series Digitial Economy

Reasons given by Modi for demonetization of 500 rupee and 1000 rupee notes, such as eradication of black money, counterfeit notes and terrorism have become untenable now. Modi government and its supporters now talk about digital economy or cashless transactions through digital means. In this regard eWallets are much touted about and promoted with huge ad spending by the state, banks and corporates.

Normally, we have a leather wallet or cloth purse to carry around our money. We take out money from wallet and pay for purchases. What will happen when money from our wallet goes invisible and gets into intangible eWallet?

To understand this easily, let us see what happened in Kenya where a digital payment method was widely implemented for the first time in the world. Now, 83% of the country’s population (around 1.9 crore persons) uses mobile wallet. 24% of GDP is transacted through digital channels.

With around 4 crore people, Kenya is burdened with a history familiar to India, colonial oppression, transfer of power to domestic ruling classes, indirect exploitation by imperialist powers, structural adjustment program under world bank/IMF, weakening of state institutions, corporatization of economy, politicians brokering for corporates and mushrooming of self-help groups to serve the interests of global finance so on.

படம் : இணையத்திலிருந்துIn addition, the Kenyan state and political parties have become bankrupt. Rival factions of ruling class maintain their own mercenary gangs and settle their power tussle through street fights. The police and judiciary were corrupt and the state was defunct. During the nationwide violent riots following elections in 2007, people have lost any security in day to day life. Various banks were in the clutches of rival warring groups.

A cell phone service provider Safaricom dominated the market with 70% of the market under its control. It was offering the facility of sharing one’s talk time with others. For example, if you have 500 rupees of talk time, you can send 100 rupees of talk time to another phone number.

Under the unstable situation mentioned above, people started sending money to their family members and friends in other parts of the country, using talk time transfer facility. Taking cue from this, Safaricom converted this facility into a money transfer service and branded it as m-pesa. Central bank of Kenya obliged and granted licence to Safaricom. Today, out of all the digital transactions in Kenya, 90% take place through m-pesa.

After Kenya, other countries where this has become prevalent are Afghanistan & Tanzania. All these countries are ruled by mercenary gangs and the governments have failed. According to online journalist Peter Vanham “It is the sheer misery and lack of infrastructure that makes the world’s poorest and most troubled places the most fertile ground for M-Pesa, the mobile payment service that was first launched in Kenya in 2007”. (M-Pesa and the M-Payment Boom in the World’s Most Troubled Places)

What will happen if such a system is implemented? A worker’s salary will be sent to his phone number. He will pay money due to his grocer, milkman and others from his phone. Doesn’t that sound simple and convenient? What are its ramifications and benefits? Who really benefits?

Firstly, the essence of this change is that a private company will control our money instead of the state. Wages earned by working class is under individual’s control in the form of cash. But as a digital currency it will go under the control of banks or corporates.

The state withdrawing from provision of services making way for profit grab by domestic and multinational companies has been going on full speed for the past 25 years. The government says, “we will close down ration shops, you buy food grains from private shops, subsidy will be credited in your bank account”, “pay full price of the cooking gas, you will get the subsidy in your account’, “let the poor children go to private schools, we will pay the fees to the school”, “let the poor go to the private hospitals, charges will be paid under state sponsored insurance scheme”. With eWallets the state is opening up even the currency management to private players.

Second, the private companies will levy a charge for the security needed for a currency system, which is borne by the state in the case of cash. The private players add a profit margin to the expenses. In a ‘cashless economy’, working people will be more and more burdened and the capitalists will get more and more fattened.

Third, details about all transactions, who pays whom, where the money goes, will be stored in databases. For example, details like how much salary a worker gets, how much he spends on groceries, in which school his children are educated, how much he spends to buy ‘Puthiya Jananayagam’, which places he travels to etc will be recorded in computers.

Technologies to enable the state, banks and corporates to access these data the way they want will be deployed. Government can use this data to monitor the political activities of citizens and repress them. Corporates and banks can use this data to snoop on our economical activities and do surgical marketing and lending to entice us into debt trap.

Fourth, government will be able to tax even the smallest transactions. For example, now we pay 15% service tax and education cess, when we recharge our mobile account. With digital money, the state can even tax every day purchases like groceries, milk, vegetables ec. With each purchase a small amount (say a few paise or a rupee) will be taken away, amounting to significant sum for the month. This will enable the state to cancel income taxes on corporates and the rich.

Fifth, the meagre savings of working class and the reserve cash they keep for expenses, will be aggregated in bank accounts. Supposing, 50 crore workers with savings of Rs 5000 each and average reserve cash of Rs 5000, the aggregate sum of these amounts will be Rs 5 lakh crore. If all the cash is deposited in banks, an additional 17.4 lakh crores deposit base will be created to give even larger loans to corporates.

For capitalism, stuck in a deep, unending crisis, every rupee it can catch hold of is important. Whatever they can get, they will use it for expanding their gambling circuit to prolong its life for a few months or years. eWallet is an arrangement to fuel this capitalistic gamble.

Service charge on each transaction, monthly rentals, tax on transactions, monitoring of our expenses and actions, political repression, commercial exploitation, entrapping our money for gambling in financial markets. This is the future held out by Modi government in league with the corporates. Can a government serving these interests be the representative of people?

Why should we put up with Modi’s rule which caused 100s of deaths due to its demonetization? Even now, BJP and the government claim that working masses are behind this move. How can we teach them otherwise?

article from Puthiya Thozhilali, December 2016

Translated by : Nesan

Series Navigation<< Online theft: Capitalism’s illegitimate childYour smart-phone can be used to trap you >>

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