I asked him about the concerns that everybody here in the States asks me about. Which is, are you worried about hackers and identity theft? And if financial crime is just as bad, if not much worse, than physical crime, why are you trusting them so much? And then I'm also asking about the fee, because this company, Eko India Financial, they get a fee skimmed off the top of his transaction. Which is a super-modest transaction, by the way, and a super-modest fee. And he looked at me like I was from the moon! He said the benefit of this compared to what his financial life was like previously is just so unquestionable. Specifically on the remittances front. He was one of those people who had to ride a bus for a day and a half to go give money to family members in the countryside. And to come back is another day and a half. That's three days of lost income generation. It's the bus fee. It's risking what might happen to his shop while he's away, his merchandise.
So for him it was so much better. You're right that the fees and things are cause for concern. But I'd like to think that everyday consumers will be like this guy, Sonu Kumar, and see the benefit of it. And if they don't see the benefit, or if the fee is way too high for them, well, then they'll just walk down the street to somebody else who's offering a better payment option. I hope.
RN It may also be that the benefits for them will outweigh fees, but the fees are still going to be in aggregate terms low, but in percentage terms maybe pretty high, the same way that Procter & Gamble charges a lot more for a single sachet of Downy fabric softener than they do for a huge 23-pound box. But the single-sachet people are willing to pay the higher profit margin on the single sachet, because that's all they can afford and they want that Downy fabric softener.
I'm not saying that's wrong, I'm just saying that the fee may wind up, once again, being more onerous on the poor people, even though it's still a benefit to them because it outweighs standing on line at the bank or taking the bus for three days across India to go see mom.
DW I think that also cuts to the core of how we feel, ethically or emotionally, about the role of money or the role of payments. Is the currency is like a utility, or something the government should be providing to all of us? And processing a payment — is it fair to charge a four-percent fee to process a payment when really the merchant and the consumer are doing their part in that transaction to help grow the economy anyway?
RN There is an interesting argument to be made that the payment processing could be nationalized. And then done for free.
DW You just invited all kinds of hate mail from the Big Brother types — who have been writing me non-stop, by the way.
RN What's the difference between Big Brother doing it or the big kahuna of American Express doing it? It's still a large entity with interests in controlling and monitoring our behavior.