Over the weekend I was paying bills and reconciling accounts. Despite using Quicken I still find the whole process annoying and needlessly frustrating. Granted there are ways I could make the bill paying process more automated. For a couple years I used an electronic bill paying service called ClickPay. But eventually my credit union decided to charge $5 a month for the privilege. I opted out because I was only writing 3-4 electronic checks a month. It seemed like a lot of money for a few transactions. Quicken offers similar services. Its online bank accounts and credit cards integrate nicely with their desktop software. But these features sure don’t come free. Their credit card has relatively high interest rates. Their banking charges seem high to someone used to doing business with a low/no fee credit union. And even with all this convenience their solution is not completely paperless. In my case at least 20% of my monetary transactions would still need to be done out of its system.
I pay my bills electronically directly to my creditors when I can. But each site requires its own unique process, its own ID that must be created (and remembered) and its own password. Setting it up is often a hassle involving a telephone call. And even those businesses that offer electronic bill paying often don’t take it seriously. My ISP (cox.net) is one of them. For months I’ve been paying my bills online. For the last week I’ve tried to pay my bill electronically and their site server software still spits back ASP errors. I sent them an email to ask them when the situation will be fixed. I have gotten no response. For days the problem didn’t even show up on their network status page. Hmph! So much for making my life easier. So much for their attempts to squeeze the paper out of the process. I had to mail in my payment.
I’m anal enough to want to know how much money I have in each account at any given moment. So we carry our checkbooks around and write our transactions in the register. As check writing declines and ATM purchases accelerate the list of paper receipts that must be entered into our registers gets more burdensome. We usually miss entering a couple transactions each month. Of course we often make subtraction errors too. It is not until I type the transactions into Quicken and let it do the math that I usually find these errors.
In short electronic commerce might be great for vendors and creditors but it hasn’t made my bill paying life that much simpler. In many ways with the proliferation of paper receipts keeping track of our money has become more burdensome. When everything was paid by check the carbon copy of the check was always available as a reference. I don’t get this with paper receipts because they are easily lost.
Enter the USB flash drive. A USB flash drive is a little persistent memory stick that plugs into your computer’s serial port. Most computers these days have USB serial ports right on the front panel. So it’s a cinch to stick it in, read/write some data and pull it out. Since I got my flash drive yesterday I’ve been playing with it. The first thing that came to mind was to use it as a backup for my Quicken data. I was relieved to see my SanDisk flash drive had software built into it that allowed for automatic encryption of the data I store on it. I need to enter an ID and password to access my data.
Most people I know with flash drives use them for data storage. They take files from the office to work on at home (or in my wife’s case the other way around). But there is no reason why flash drives could not run software as well as hold data. Unfortunately there are some problems with the current architecture of the Windows operating systems that make it difficult to run applications from flash drives. (Windows wants to put information on all its applications into its registry, which is stored on the hard drive. This means that applications have to be either really simple or not written for Windows to work on a flash drive.) Firefox is one application that can be tweaked to work from a flash drive. There should be more.
I see flash drives as the nearly ideal way to enable electronic commerce. What I want is an electronic wallet. Instead of sticking in my ATM card into the point of sale terminal I want to insert my flash drive. I want it to have the current balances for all my accounts and keep details of my transactions. I should be able to plug it in, enter my PIN, select the account for payment and approve the payment amount. My flash drive should give the vendor an electronic authorization token, which the vendor would then route to my bank to complete the transaction. Instead of an annoying paper receipt my flash drive should store a copy of the transaction and all its details right down to the fifty cents I spent on a pack of gum. My balances should be updated on the flash drive (and at my bank). And I would have the electronic details of all my purchases.
My flash drive could be configured with digital certificates that could act as electronic credentials. I should have the equivalent of every ID I currently carry in my wallet in my flash drive. For example my driver’s license should be in it in electronic form (including my picture). And each point of sale terminal should have a feature that would allow me to present my electronic credential of choice to the vendor.
Clearly there are opportunities for fraud. That’s why we need to put the government, particularly the National Institute of Standards and Technology to work. They should certify the encryption standards and software to be used for electronic commerce conducted by citizens using flash drives. This way I will have confidence that the software that runs my electronic wallet is secure. (They should also specify standards for electronic voting, but that’s another matter.) Indeed my flash drive should contain the digital certificate that certifies my flash drive has the correct hardware and software for electronic commerce. I should be able to select the certificate and validate it using a browser against the NIST certificate’s public key.
Periodically I will want to download my flash drive transactions to my desktop computer. Once on my PC these details should be reflected in Quicken where I will be able to view details of transactions for micro purchases and categorize them if they are not precategorized. Perhaps it will then delete my transactions from my flash drive. But I suspect flash drives will soon be able to hold gigabytes of data so there may be no need. At some point your flash drive might be able to securely hold every transaction you make during your lifetime.
There are a few problems with my suggestion. One is that it doesn’t work well for people with joint accounts. Both my wife and I would like to pay bills from the same account but doubtless we’d use different flash drives. The balances and transactions shown in our flash drives might be different. Perhaps banks could offer a service that would hold the transactions that are not in sync on their server. When a transaction is made transactions made on the other flash drive would appear in my flash drive, and visa versa. I can see paying a small fee for such a service.
There are lots of other potential uses for flash drives. But for me electronic commerce is the one I see as a “no brainer”. I think we all win through integration. I shouldn’t need to spend a couple hours every week reconciling bank statements. I shouldn’t need to stay in an endless paper chase of knowing how much I spent by tracking paper receipts spit out from electronic transactions into my checkbook registers. I should have more granularity into my spending and be able to easily categorize my purchases. Businesses shouldn’t have to process any paper checks or wait days for money to transfer. And when I am out of the country I should be able to see money paid for in say Canadian dollars in a currency I am familiar with: American dollars.
It can all be done on top of our current computerized and networked infrastructure, hopefully using off the shelf technologies. We need to evolve beyond the ATM card and even the smart card. The USB is the first ubiquitous device that has the potential to enable complete electronic commerce. We take our wall plugs for granted. It should be the way with USB ports. They should be everywhere money is exchanged. I shouldn’t have to do more than unsnap my flash drive off my key ring, plug it in, type in a PIN, make a few simple decisions on a key pad and be done. My USB flash drive cost only $25 for 128MB of storage space. Prices will doubtless continue to decline and memory capacity will continue to increase. We need to put in place the infrastructure to make it happen. If business doesn’t do it the government should require it.