The prepaid backlash

[Dave Birch]  I once decided that I wanted to move to New Zealand after I saw an excerpt from an NZ "most wanted" kind of programme where the lead crime was the theft of some sheepskin car seat covers.  But perhaps more criminals will be attracted to NZ by the latest threat to civilisation as we know it, the pre-paid card.  Since last November, NZ Post has been distributing what sounds like an excellent product, pretty similar to pre-paid Visa cards distributed by the post offices in Italy.  The pre-paid Visa card lets anyone make anonymous purchases over the Web and is encouraging more people to shop online, but "fears are being voiced" that the cards may be misused by children and could aid criminals.  They didn’t mention terrorists.

Technorati Tags: payments

NZ Post has marketed the card primarily as an alternative to gift vouchers or giving cash, branding it as the "Prezzy Card".  Customers key in the number and expiry date on the card when buying online and type "prezzy card holder" into the name field, if required.  NZ Post has so far sold 40,000 Prezzy Cards and more than 10 per cent of the transactions have been online purchases, Mr Jamieson says.  One appeal of the disposable card is that customers need not disclose their credit card or bank account details when buying online, and the most any customer could lose through fraud would be the outstanding balance on their card.

The card have also be taken up by kids to pay for subscriptions to online games.  If grandma and grandad give you old fashioned cash for your birthday, what us is that?  You can’t use it for anything important, like World of Warcraft.  Why not give mum and dad a credit card linked to the kids Prezzy Card, with cashback in World of Warcraft gold instead of boring NZ dollars.  I want one for my kids: I don’t want them giving credit card numbers or their real names out on the Internet.

The moaning about pre-paid cards is, however, only one front in the backlash against e-cash.  The use of mobiles to make payments is clearly a boon to terrorists (or, at least, terrorists who have never heard of 500 euro notes) as Rachel Ehrenfeld, founder of the Terror Finance Blog has noted.  She calls the hook-up between the GSMA and MasterCard a “terrorist dream”.  David Nordell, another finance terror blogger, says, “Person-to-person transfers via mobile phones will be almost anonymous, and completely uncontrollable unless the regulators intervene and block these new services until ways are devised to track the flow of funds.”  I’m not, however, sure that Mr. Bin Laden will be moving his account to his local GSM operator.  If I’m a known terrorist suspect and I use, let’s say, text messaging to transfer money to another terrorist colleague, then not only will the authorities know where I am, they will know where my colleague is as well (since he will have to switch on his phone to get the text message).  In real time.  And they will also have a handy record of transfers and movements.

My opinions are my own (I think) and are presented solely in my capacity as an interested member of the general public. [posted with ecto]