DW This also gets at premium on utility, among these people who in many ways who are just getting by. Robert, you mentioned this in your recent Wired interview [, that these people don't think of themselves as underground operatives. They're generating income so they can take care of their families and put food on the table. That segment of the population will jump to options that provide increased efficiency in their economic lives, or the corollary to that is reduced friction in their economic lives. And that's why the airtime minutes thing is so popular, and for example the mobile-money stuff that is so popular in many parts of Africa now, especially the M-Pesa program that just took off like wildfire in Kenya. I hate the business-speak of this turn of phrase, but it's real: the value proposition of it is so clear to those people.
For us, we can toggle between cash and electronic money fairly freely and we don't really sense that friction quite as much. But people over there, it's just so glaringly apparent.
RN I was going to ask you, do you think that frictionless environment will change over time? The guy you wrote about in India, the transactor, if you will, of all these mobile apparatuses that create savings accounts with the State Bank of India, he's collecting a fee, right?
RN I've noticed here in the States that sometimes when I try to make a payment electronically, transfer funds from my bank to somewhere else, suddenly credit-card companies want to charge me, for that. So instead of what started out as a frictionless place where you're not getting interrupted by these excess fees — which basically make it more cumbersome and more difficult and more like cash, if you will — you're getting extra fees put on. I see the same thing going on at gas stations, where if you want to gas up a car, you can now pay less if you pay in cash and more if you're paying electronically. Do you think it's natural that the people who administer these things — because right now they're being administered by for-profit entities — are going to ramp up the fees, which take away the very benefit of the frictionless environment that is supposed to be so much better.
DW I think it'll be a cost-benefit analysis for each case. My book is not a Valentine to the credit-card companies. Their outrageous fees are a huge problem. But I actually think that as the question of cash's shelf life comes into the sunlight, maybe people will actually scrutinize the operations of credit-card companies more as they learn about and demand better payment options that don't charge such steep fees.
But more specifically, back to the guy in India whose company is sort of the "software" between the mobile-phone user in the poor slums and the no-frills bank account at the State Bank of India. There's a guy who I write about in the slums who I was talking to at a local pharmacy while he was doing a transaction, about the value proposition of this thing that he's doing. He's depositing some cash in his bank account by just taking some earnings after repairing somebody's radio and he walked across the street, and with a little bit of texting from him and from the pharmacy owner, suddenly that money is now in his bank account.