Arnold Kling

Electronic Payment

Arnold Kling, Great Questions of Economics
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MIT Technology Review surveys new digital payment technologies.

No single technology will likely dominate; rather, radio tags, chip buttons, and smart cards will catch on wherever their qualities are best suited.

The payment itself is nothing but a set of instructions from the consumer to the vendor. Those instructions could come from any device--a cell phone, a smart card, or what have you. The challenge is authentication--verifying that the instructions came from you and not from someone else. The trend is to replace alphanumeric authentication techniques (PIN numbers) with biometric techniques (such as fingerprints).

Discussion Question. Which problems will these new systems solve, and what new problems could they create?

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