Is there privacy in a cashless society?


Canadians are increasingly using credit and debit cards instead of cash, and we are embracing new payment technologies, too. In fact, Moneris, Canada's leading credit card and debit card processor, predicts a 70 per cent drop in cash transactions by 2030.

"More Canadians - especially younger ones - are tapping their cards to pay as opposed to inserting them into payment terminals," said Rob Cameron, chief product officer at Moneris. "We've seen the number of contactless transactions more than double this year, which is a strong indication that mobile payments are going to see a huge lift."

But as Canada becomes increasingly cashless, are we trading privacy for convenience?

"It's definitely something Canadians using credit and other digital forms of payment should be aware of," says Meghan Sali, communication specialist for OpenMedia, a non-profit organization dedicated to keeping the internet open, affordable and surveillance-free.

"We know that everything we do online is tracked and logged, and that does have implications for privacy, certainly," Sali says.

"I wouldn't go so far as to say, ‘Use cash!' or ‘Don't use credit cards!'" Sali says. But people should be aware that their transactions are likely stored and are potentially accessible, she says, and transaction history can reveal a lot about you.

"If anyone was aware of everything you ever bought, where you've been and the places you've used your credit card, it can create a very detailed picture of who you're communicating with, where you are going and what you're doing at all times," she says.

What service providers know and how they know it
If financial service providers aren't tracking us now, they likely will be soon.

The rise of e-commerce and EMV chip transactions corresponds to an increase in card-not-present (CNP) fraud - fraud in which there is no physical card present. The Canadian Banker Association reported a $360.3 million loss from CNP fraud in 2014, which was a 180 per cent increase from 2008.

To fight CNP fraud, Visa is rolling out its Mobile Location Confirmation service as a means of authentication. The service will use geolocation technology to track cardholders through their phones to verify their location when a purchase is being processed. The service likely would be embedded in mobile wallets and banking apps.

"People want the convenience to shop from their phones, and they want the confidence that it's a secure transaction," Gord Jamieson, head of payment system risk at Visa Canada, told "We're trying to stop relying on passwords and IDs and come up with dynamic solutions in the card-not-present space."

Meanwhile, credit card reward programs such as Air Miles collect personal information on those enrolled. This information helps to administer the programs, research enrollment habits and member preferences, and lets members participate in promotions and contests.

However, the Air Miles privacy policy states that the Air Miles Rewards Program "does not give, rent or sell collector lists to any organization or individual other than its affiliated businesses, sponsors, suppliers and companies contracted to process and manage collector transactions, redemption requests, research, analysis and communications and in all cases, only to fulfill the specified purposes."

Plus, all members' personal data is "processed and stored in secure, dedicated and confidential databases."

That doesn't mean your information is safe in all circumstances.

"I think we should take those assurances with a grain of salt when it comes to all digital transactions," says Sali. "There is always the possibility for there to be leaks, for there to be hacks, or for your government to request that information and potentially share it with foreign governments."

You also cannot assume that all companies guarantee privacy.

In a study examining the data collected on drivers by vehicle telematics technology, the B.C. Freedom of Information and Privacy Association (FIPA) found that drivers agreed to data being collected on them simply by purchasing and using cars with these systems in place.

"It depends on the terms and conditions agreed to," says Vincent Gogolek, executive director of FIPA. "There's a lot of legalese, and some of these terms have negative options where you're agreeing to it - unless you don't."

Gogolek says the car study found that it was nearly impossible for consumers to know what they were agreeing to.

"Some of the stuff wasn't even on Canadian websites, and you'd have to go to the American website to find out who the telecom partner is of your car and then find out who that U.S. telecom company's partner is in Canada and then check that company's privacy policy," Gogolek says.

In some cases, Gogolek warns that some of these companies may be conflating security with privacy. Sure, an unauthorized person won't be able to track you or get hold of your data - but what about the people you did authorize?

"One of the problems with a consent-based system is consent can really be an illusion," Gogolek says.

How to balance privacy with convenience
So how can you protect your privacy without walling yourself off from the connected world? Gogolek's main piece of advice is to use cash.

"Spread things around and use cash where you can because the more you use cash, the less information there is about you out there," he says. "Plus, cash isn't hard to carry. ... You can use it anywhere, and it doesn't leave a trail."

If you don't want to go back to cash, it's important to read the terms and conditions and privacy policies before you sign up for anything.

You also can encourage companies and governments to remain transparent and vigilant when it comes to protecting citizens.

"We can demand that our privacy regulations are as strong as they possibly can be," says Sali. "We can work with the government to ensure that when information is collected, it's properly stored, and that it's shared with foreign governments in a way that won't compromise the safety and security of people in their countries.

"This demand is something we see increasing, and Canadians are starting to get involved in the conversation around issues that affect their digital privacy more and more frequently."

See related: Payment trends to watch for in 2017, How to secure your phone to keep financial data safe, Are you being safe with your account info -- or paranoid?
Published March 17, 2017

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