The deal announced this week between Square and Starbucks is exciting but worrisome. Square streamlines the transactions that define our everyday economic lives — just say your name and you’ve paid. Partnering with the coffee colossus helps to expand the acceptability of the company’s Pay With Square service, which is key because when it comes to payment tools, acceptability is everything. Put another way: A barrel of chicken feed stirred together with $5 bills is a payment mechanism, as is a major credit card, but one is more widely accepted than the other.
I’m all for technologies that reduce the friction of money. Cash is anachronistic, cumbersome, and costly. Credit cards are OK but hardly novel. Recent innovations like Square, pay-through-Twitter services like Chirpify, person-to-person money transfer systems like PayPal or Dwolla, and mobile check deposit are all mitigating that friction even more, enabling faster transactions and lower fees and charges for consumers. Saving time and money is a hard thing not to like.
But amidst all the enthusiasm for the latest digital money technologies lies a disquieting omission. Although we want, and should want, to make transactions friction free as far as costs, we don’t necessarily need technologies that make it easier to part with our funds. Many of us need just the opposite.
Thus, the perennial question: What can we do to keep our spending in check? For millions of people—and the famous personal finance gurus they frequently turn to—one easy answer is cash.
Remember: Money is merely an abstraction. It powers transactions by hypnotizing you into accepting this worthless thing from me (paper or digital form), in exchange for a burrito or a boat. It’s worthless because you can’t eat units of national currency, or gold bullion for that matter. Yet the physical nature of cash can still be comfortingly straightforward. Its tactile reality gives the impression of exchanging something of value for something of value, despite the fact that that’s not the case.
It also doesn’t take a genius to know that it’s harder to part with $100 in cash compared with a $100 charge to a credit card, swipe, or by clicking an online “buy” button. Psychologists call this “pain in spending,” and it’s this pain that people who swear by cash want to preserve. They’re not masochists. For better or for worse they see cash as an ally in the struggle for better financial management.
We certainly need it—better financial management, that is. Americans are currently on the hook for about $800 billion on their credit cards, to say nothing of student loans, mortgages, and all the rest of it, right on up to the national debt.
The good news is that the absence of any Weight Watchers equivalent for the digital money future means huge opportunities for technologists. We need to hack our biases for the better so that we’re not just eager users of tools like Pay With Square, but also more financially prudent economic actors.
What might those kinds of hacks look like? One lesson comes from a friend of mine who recently got a new credit card. It wasn’t yet another one that she could use to spend beyond her means (phew); this was just a renewal. But this time she decided to go with one of those personalized designs. Like many banks, hers allows customers to upload an image or choose from among hundreds in an online collection. She clicked the category for “environmental,” thinking she might like to use a cute picture of a dolphin.
But then she stumbled upon an odd choice: a close-up shot of an orange biohazard symbol. You know the one, with those three interlocking circles that look like a deadly ninja weapon and make you think of stuff like used syringes and Ebola. Upon reflection, she decided this might be a smart image for her credit card, hoping that the sense of concern—if not DEFCON-5 alarm—it engenders might make her more cautious when it comes to using the card.
Another example comes from the online banking startup, Simple. One of the services the company plans to offer is called Locked Goals. This feature allows you to budget for specific goals, which isn’t new but it comes with a twist. On some future afternoon, when you try to pay for that expensive jacket with your Simple-issued VISA card, the charge won’t go through. It won’t go through because weeks or months ago, you told it not to, based on your own budgeting. Although you can, right there and then, take out your smartphone, log onto Simple’s mobile app and change your parameters to enable the charge, the painful experience of having your credit card rejected has already taken place.
A less harsh example comes from the design firm Humans in Design. Whenever you make a mobile payment, you see banknotes on your screen floating away — as in, you can’t get ’em back. But my hands down favorite idea for recreating the pain of parting with cash is one that is more… literal. For a project about financial transactions of the future, Dimitrios Stamatis, a recent graduate in design from Brunel University in London, became interested in the security of money in cyberspace. “How can we know when something malicious happens to our finances when we don’t have the proximity and feel of physical currency?”
He began by investigating ways that negative information is convincingly communicated to the brain. Physical pain, it turns out, is very good at this. It’s immediacy and close correlation to negative experiences, as well as its role in catalyzing protective behavior means that it doesn’t just deliver messages — it delivers them hard, loud, and fast. Stamatis then looked to nature for inspiration. When he saw pictures of a beetle with ferocious looking pincers, he knew he had his natural model. He would build a network device that would literally bite you every time money left your account. And what better way to make that gizmo portable, unobtrusive, and close to the body, than to embed it in a piece of jewelry?
The Biting Ring is obviously tongue in cheek — or tooth in finger, rather — and it’s meant as a conversation starter. (Stamatis also insists that it doesn’t hurt; it delivers light but noticeable pressure.) Yet it shows just how much possibility there is for innovators to come up with technologies as game-changing as Square, but engineered not necessarily for paying, but for improving people’s financial well-being.
Wolman (@DavidWolman) is a contributing editor at Wired and the author, most recently, of The End of Money: Counterfeiters, Preachers, Techies, Dreamers—and the Coming Cashless Society (Da Capo Press, 2012)