Tuesday, September 20, 2011
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Let's face it: We are a mobile society. We are constantly on-the-go.
So it wasn't really so far fetched to watch Captain Kirk speak into his handheld device, commanding Scotty to beam him up. A little ahead of its time, no doubt, but a technology that already had gears turning in the heads of techies and trekkies alike.
SmartPhones are commonplace today. And they offer far more functions than merely a device to play Angry Birds.
Our mobility is simply a result of the pace we keep. The computer age has allowed us to churn out more productivity in less time. So imagine what we can accomplish in equal time.
We squeeze so much into any given day that routine chores have to be accomplished as we run from one task to the next.
So where do we schedule, shop, bank or pay bills? From the palm of our hand.
This is not new in Europe and Asia where consumers have been using their cellphones to make purchases for close to a decade already. But mobile payments have not really hit the mainstream. Yet.
As the average home now has three smartphones, get ready to see this trend shift rapidly. Combined total for all types of mobile payments is expected to reach more than $600 billion globally by 2013 according to a Juniper Research report.
Mobile payments provide an alternative method to pay for goods or services. It encompasses several categories; including SMS based transactions, direct mobile billing, mobile web payments and contactless transactions.
There are already companies marketing a credit card reader that allows small businesses to swipe credit cards right to their phone. The app works with iDevices and Android systems. Plug a small device into your microphone jack, launch the app and either swipe the card or key in the digits.
Near field communication (NFC) devices will soon reach the marketplace. Wave your phone at a terminal and transaction is complete. Certain credit card companies are already testing the technology. This has an edge over RFID (radio frequency) devices in that your account is refillable on the spot once funds deplete.
NFC payments are also popping up in the person-to-person market late this summer. PayPal is launching an Android app that allows two people with properly equipped phones to transfer money between them by merely tapping their phones together. The first person requests a specific amount from the second. They tap their phones together. The person making the payment enters a PIN and Voila! Transaction complete.
What if the person you're trying to pay isn't standing right next to you? Transfer money to anyone using only their name and email address or mobile number with a personal payment service like Fiserv's ZashPay. You can send money directly from their website or download a mobile app available for iDevices and Android. It's free to sign up and receive money and only 75 cents to send cash to anyone, anywhere, anytime.
Perhaps one of the most innovative products to date was quietly launched yesterday, September 19th. Google Wallet just may revolutionize the way we conduct business.
Today, it's only available for Sprint's Nexus S 4G. This will change as new generations of smartphones emerge featuring NFC technology. And it only works at establishments that are equipped to handle these transactions. This, too, is changing as new vendors are being added even as I write.
Wave your Android phone at a compatible card reader and your payment credentials are transferred to the merchant without swiping a physical card.
It's more secure than handing your credit card to an unknown salesperson. If your phone's screen is off, the transmitter chip can not be powered. It stores no data so can't be hacked by a passing scammer. A PIN is required if Wallet has been inactive for 30 minutes or if you manually lock it.
If you lose your phone, you can swipe your data clean to prevent it from falling into the wrong hands. You can't do that if you lose your wallet.
With every new technology, there's a learning curve on both the part of the consumer and the manufacturer. Bugs can't be detected until the product has reached the masses and faced most every possible scenario. And you can bet consumers will find new ways to put even those products that survived the most rigorous examination to the test.
For the time being, it's best to carry your physical wallet with you on-the-go. But keep an eye out for that time in the near future when your phone will be all you need.
Safe, Secure, Online
Online banking is nothing new. So the results of an American Banker's Association (ABA) survey finding consumers believe online banking 'just makes life simpler' struck me as one of those "duh..." moments. It left me wondering why anyone would waste resources on researching something so obvious.
It also left me wondering where folks could find a job conducting this type of study. Surely it would help remove a few of the unemployed from the weekly statistics. But that's the subject of a different article.
What stood out in the survey was that 62 percent of those polled favored online banking over visiting a branch, ATM, mail, telephone and mobile banking. In 2010, the number who preferred banking online was only 36 percent.
The age group most responsible for the increase was 55 and up. Older Americans are increasingly more comfortable with the technology now that they've learned to connect with their grandchildren via Facebook.
I'm thinking there's another reason for such wide acceptance. And that's the fact that governments have finally begun to take cybercrime seriously.
Security issues were a prime concern for many who hesitated to try their hand at banking online. Yet those same people wouldn't think twice before leaving a check in the mailbox for pickup and raising a red flag to alert passersby that they had done so. Or hand their credit card to a waiter they had never met before to be taken out of their sight for processing.
Both situations lead to more fraud than online banking ever has. But the anonymity of that invisible scammer lurking inside your screen was frightening enough to keep customers in the branches and away from their keyboards.
Education has been key in reducing phishing incidents. Until someone explained the dangers of clicking on links embedded in unsolicited email, one could not be aware of the risk involved. Until countless people were scammed into buying fake anti-virus software, nobody realized their computer wasn't really infected when those pop up boxes magically appeared. Or that a suddenly sluggish computer could be a sign that keystroke capturing malware had been unknowingly installed on their system.
Awareness has made online banking safer than ever. Consumers have learned safe browsing habits and developed strong password creating skills. Both traits keep the bad guys at bay.
Online fraud is not quite so anonymous anymore. Crooks are traced, arrested and prosecuted. This was no easy task, as cybercrime had no geographic boundaries. Countries had to agree on how this crime was addressed. Some chose to ignore it altogether, as despot governments often got a large piece of the spoils.
Eventually, more and more countries joined forces to prosecute fraudsters that made victims out of their constituents. There is now a law against cybercrime in most every developed nation.
The problem must be addressed on an international scale. Russia is leading efforts for drafting a United Nations Convention on combating cybercrime and cyberattacks.
Here at home, Senator Richard Blumenthal (D-Conn.) has introduced the Personal Data Protection and Breach Accountability Act of 2011 that would force companies that hold information for more than 10,000 people to follow strict guidelines ensuring the data is stored properly. This was in response to the Sony breach that put the personal data of more than 100 million customers at risk.
Crime has been around since the beginning of recorded history. It's evolved along with cultures and society. Education and awareness has reached new levels as well, enabling us to utilize new technologies without fear of identity theft.
For more cyber safety tips, visit our Security Center.
The Great Recession
It was about a year ago that our current economic slowdown began to be widely referred to as "The Great Recession." This characterization is intended to associate the economic period with the mother of all slowdowns, the 1930s "Great Depression." Make no mistake about it, the Great Recession pales in comparison to the decade long severe economic contraction of the 1930s. During that troubling period, unemployment was three times higher than the current level, and GDP shrunk by nearly a third. Still, the Great Recession is now undisputedly the greatest economic turmoil this country has since faced. And it ain't over.
Technically, the Great Recession lasted 18 months (Dec 2007 to June 2009), which is the longest contraction since the 1930s. The second place recession on the severity list was the recession of the early 1980s, which lasted 16 months. From a duration standpoint, there does not appear to be much difference between these two events.
However, this is deceiving. The recession of the early 1980s was triggered by a rapid contraction of the money supply by then-Fed Chairman Paul Volcker. Volcker believed, with Ronald Reagan's concurrence, that tough medicine was in order to "break the back" of the double digit inflation of the Carter years. Reagan also sharply reduced the size and scope of government to free up capital for private investment, what he knew to be the engine of growth. Following this tough medicine, and aided by sharp reductions in marginal tax rates, the economy exited the recession in November of 1982 to enter a decade long period of very robust growth (just as Volker and Reagan predicted).
Unfortunately, a different set of circumstances now persists. The Great Recession ended technically more than two years ago. And since that time, GDP growth has remained positive, albeit barely. Most quarters have seen little or no job growth, and the unemployment rate remains near the highs for the period. Whereas the 1980s saw GDP growth rates of as much as 5 percent, the two quarters thus far in 2011 have seen average growth rates well below 1 percent. The rapid expansion of the 1980s saw huge employment gains, the current period virtually none. The two "recoveries" couldn't be any more different, despite the duration of the recessions that preceded them.
So while the economy remains technically in recovery, millions of Americans are still suffering. Remember, it takes GDP growth rates above 2 percent to begin to reduce the unemployment rate, even by a little bit. That's fact. And we are a long way from that. So what to do?
First of all, the Federal Reserve is doing their part, with EXTREMELY accommodating monetary policy. If there is one bright light it is this: The economy is so weak, inflation fears are currently nil (deflation is actually a bigger risk in the short term). Hence, Fed Chairman Ben Bernanke has left the money spigots wide open, flooding the economy with liquidity. This is a good thing. He has taken it one rare step further and used the Fed's Balance sheet to buy securities and thus create even more money. You may have heard this referred to as "quantitative easing." It was actually employed twice, the most recent round known simply as "QE2" (no relation to the famous ocean liner).
Professor Benjamin Shalom Bernanke, Ph.D is an avid student of the period of the Great Depression, and firmly believes the U.S. central bank's contraction of the money supply during that period fatefully triggered deflation, astounding unemployment, negative growth and a decade of misery. Ask anyone still around who lived through the Great Depression and they will universally agree it was no picnic. In fact, it took the extreme STIMULUS (both monetary and fiscal) of World War II, to "break the back" of the deflation of the time. And a World War is an absolutely terrible way to exit an economic slowdown.
History has proven Ben Bernanke is right. In fact, if the Fed were not being so accommodative, the Great Recession would have been far, far worse. There is much empirical evidence to support this conclusion. Yet the economic pain persists, as the Fed can not go it alone. How do we achieve the much higher growth rates required to put the unemployed back to work? I bet Ronald Reagan would advocate sharp cuts in marginal tax rates - across the board. Reduce spending and the size of government. It worked in the 1980s and would work again now.
History is often the best teacher.....
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