Digital payments make many people’s lives easier. However, there is a large section of society that does not have access to the infrastructure required to engage in digital payments, or reject the advancements rolled out by banks and Big Tech companies that they mistrust.

Now more than ever, technology governs large swathes of our lives. However, technological progress and its development are primarily carried out by senior executives and affluent, highly educated developers living in urban centers. It therefore often does not serve people with a differing lifestyle or those with limited access to smartphones, who have no say in its development.

What are the issues with digital payments?

Firstly, it is important to ask why people are locked out of digital payments.

The smartphone-less are most at risk, and payment super-apps may only further exacerbate their isolation. Not participating in digital payments can also be an active choice if the advantages are of little value. This is felt by people who do not need fast transaction speeds integrated across multiple platforms, or who simply prefer to use cash.

This includes gig economy workers, such as taxi drivers, who struggle with the longer times to receive payments as more customers pay by card. Furthermore, those developing fintech solutions do not provide for people who distrust banks. The rise of digital payments is therefore intensifying the difficulties these groups have in accessing parts of society.

Digital payments are often described as more convenient than using cash. However, this argument has significant flaws. It is difficult to imagine that many people found cash particularly inconvenient before cards came along. Added to that is the fact that banks are closing ATMs, thereby reducing access to cash.

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Another common concern surrounds data and privacy. By adopting digital payment systems, banks and Big Tech firms have access to more and more consumer data. This provides another way to monetize their platforms as data provides actionable insight from our daily habits and spending routines. For many people, this access to their personal affairs is a simple breach of privacy.

Technology’s ‘Law of Amplification’

These are not arguments to dismantle digital payment systems. They are popular with many people who enjoy the convenience, and with governments that want to digitize to cut cash infrastructure costs. However, consumers and regulators should not turn a blind eye to the introduction of more technology without systematically evaluating the impact on all groups in society.

This impact in the case of digital payments is not just a class and income issue. Mobile usage and digital literacy are higher for men than women, particularly in lower-income countries. Their algorithms are often biased by the data that has been used to train them, so are frequently affected by sensitive variables such as gender, race, and sexual orientation. This issue is part of what is often termed technology’s ‘Law of Amplification’. The law explains that new technology tends to reinforce whatever divides are already present in society.

What should be done?

More research, surveys, and contingency planning are a necessity before rolling out technology at ever-faster speeds. This will help to counter the Law of Amplification, by ensuring vulnerable groups are not disadvantaged by new technology.

The finance industry should step up training in digital payments to promote financial inclusion. It should also increase training on how to counter online fraud. Governments worldwide must ensure regulators have the power to protect access to cash through ATMs and checkout cashback. Regulators must also be able to protect consumer data and improve data privacy education. As for the tech industry, it must develop solutions that help all members of society, not just people like them.