From those days long gone by of traders depositing gold in exchange for a certificate to the more modern Visa and Mastercard payment systems; it is clear that banking and payment systems have come a long way. No doubt as with most any technology that continues to be relevant innovation is inevitable especially with growing competition and changing markets as online technologies evolve and consumers demand more seamless alternatives for making payments and trading.Electronic currencies are not all that new, though it would seem that we continue to see more of them being introduced into the market. In South Africa the number of electronic currencies is somewhere between 15-20. I do believe that it is time we started asking more questions about these currencies. How much is being done to protect the consumer? One of the challenges that faces this industry in South Africa is that there is currently no standard, so we find each of the various banks developing their own service in order to remain competitive, but often these currencies can not be used across the various systems. And it is not only the banks that are developing these services, other telecoms and internet companies such as BlueLabel are also producing these products.
My knowledge of this particular industry is very limited, and to be quite honest I'm not so sure that I always understand the relevance and the need for such products. It is true that in African markets where you have large numbers of unbanked people, that electronic currency can play a major role in helping to improve the lives of many individuals and families. By offering a means for a labourer who is in a mining town 200km away from his family to send money home as electronic currency in real time from his cell-phone that can be redeemed for real currency at a general dealer such as a franchise supermarket you invariably change peoples lives.
I have many questions about these products that I wish to put out there.
Since most of these are not interoperable and are generally not accepted among all merchants. How are consumers being protected from being locked in to products much like we saw people being locked into cellphone networks for the fear of loosing their phone numbers?
How secure are these currencies, as a consumer how certain can I be that the level of security around the computers that manage these currencies is matched by those that the banks would use for all their customers trading in real currency?
What governance levels are there around these technologies and how much is being done to develop a set of standards?
Do these systems not open up a gap for criminal activity and anonymous (or pseudonym) payments of large sums of money?
I think that if anybody has answers it would be helpful for those of us who may already be using some kind of electronic currency or those of us that may consider doing so in future.
