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New York Is Proposing the Creation of a 'Public Venmo' (vice.com) 161

Posted by BeauHD from the ambitious-plans dept.
pnutjam writes: New York is proposing a statewide virtual currency aimed at helping unbanked citizens get access to day-to-day financial transactions without predatory fees. Since there are an estimated 14 million U.S. adults without bank accounts, lawmakers in New York are trying to fix this with a new bill that "would create a 'public Venmo' system designed to include more people in the formal economy and stimulate local economic growth," reports Motherboard. "In November, New York State Assemblymember Ron Kim, Senator Julia Salazar, and Cornell law professor Robert Hockett announced their Inclusive Value Ledger (IVL) proposal. If passed, it would create the country's first publicly owned electronic banking platform, as well as a digital currency that can be exchanged for goods and services within the state."

"The IVL plan calls for New York State to distribute the $55 billion per year in uncollected individual tax credits through a 'public Venmo,' a publicly-administered, non-extractive payment system that would allow recipients to spend freely within the state economy without transaction fees or delays," the report says. "Every business and individual residing in New York would be issued a virtual wallet, connected to a state government-controlled master wallet, that could act as a viable alternative to a bank account without the fees of a for-profit bank." The proposal does not include any specifics as to how the payment system will be secure, nor does it address the specific privacy needs for certain groups the lawmakers hope the system will serve, such as people who are undocumented.
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New York Is Proposing the Creation of a 'Public Venmo'

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  • Venmo = PayPal for phones only. (Score:3)

    by The New Guy 2.0 ( 3497907 ) on Tuesday January 07, 2020 @08:06PM (#59597646)

    Venmo is a spinoff of PayPal designed to only work with smartphones.

    Now, from the story of PayPal we've learned that to do these things, you have to be a bank. So there it is, they want a city-owned Bank of New York State that has "mobile banking" and effectively Zelle.

    Only news here is that NY is entering into this game.

    • Re:Venmo = PayPal for phones only. (Score:4, Insightful)

      by nonBORG ( 5254161 ) on Tuesday January 07, 2020 @08:41PM (#59597716)
      They are thinking about entering into this game. Typically if there is something that business does ok or even bad at the Tax payer funded version will be worse. There is a reason that these people do not have bank accounts, creating a State owned bank will probably do little to address those reasons.

      • Re:Venmo = PayPal for phones only. (Score:5, Insightful)

        by rtb61 ( 674572 ) on Wednesday January 08, 2020 @01:28AM (#59598180) Homepage

        Now theres a greed based comment and modding. Simply when the body paying welfare, creates a credit payment system, they can supply it free of charge to recipients and thus logically get the most bang for that buck, they pay those corporate fees and the welfare recipients has to do with less, so psychopathic billionaires can make more, in corporate profit taxes. Not taxes corporations pay but fascist taxes corporations earn by government mandate on all transaction citizens have to make.

        It is appropriate for government to provide corporate tax free payment methods for citizens on welfare and thus extend the tax payer dollar.

        Also they track, recipients and spending patterns. So the payment system is a little big brother more than it is costly, it fact it will save hundreds of millions of dollars applied upon a broad basis.

        Corporations should not really earn profits on tax payer dollars, that just means citizens need to pay more taxes to pay those corporate profits, it really makes no sense what so ever. Do it for government, do it at cost, don't want to, let government do it at cost, more bank for the citizens pockets and less corporate tax profits at tax payer expense. They never do it cheaper, they always end up charging more and provide terrible services to citizens.

        Profits are evil when they come out of citizens pockets as taxes.

      • Re:Venmo = PayPal for phones only. (Score:4, Informative)

        by AmiMoJo ( 196126 ) on Wednesday January 08, 2020 @02:33AM (#59598256) Homepage Journal

        Not having a bank account makes life hard. Banks have commercial interests. In the UK they are informally obliged to provide almost everyone with free banking services anyway.

        A basic account, no overdraft or credit card. Minimal risk, no profit but a very valuable service for some people.

        The main problem is that if it's not attractive to people who could get a normal bank account then it becomes associated with poverty and discriminated against. Still better than nothing though.

        • Comment removed based on user account deletion

        • There are many reasons people do not have bank accounts. And none of those will be addressed by making these people accept a government-run bank
          account.

          Since New York won't be creating a bank to do this, be sure this is about capturing transaction fees and generating revenue for their partner. If the account holders don't pay the fees, someone else does - merchants, other banks via transfers, etc.

          No, this is not quite the same thing as EBT. It's a scam. The only question is who pays in the end, and in NY,

          • It's not about transaction fees. It's about being able to trace and tax people who deliberately use cash to avoid that sort of thing. It's absurd on the face of it.

            The underground economy is underground, not because it's entirely efficient... it isn't... but for reasons that seem quite adequate to many people.

        • Economist have been recommending for decades that the Fed start offering free checking accounts for americans. There are large numbers of people who don't have them and are incurring fees every time they cash their paychecks and then incurring money order fees when they pay their bills, not to mention that having to cut physical checks is costing the government lots of money that we, the taxpayer, are on the hook for. Not to mention there are a whole range of consumer services it is nigh impossible to eng

          • Of course this ALSO...allows the government to better TRACK the spending of its poorer citizens.....and how about after it works with the poor, then it is mandated ALL US Citizens have to have one of these to deal with the government.

            And after that goes awhile...it is mandated to be the ONLY method of $$ usage in the US.

            Sounds to me like a nice step towards forcing a cash-less system upon us where everything is tracked even more so than today.

      • Typically if there is something that business does ok or even bad at the Tax payer funded version will be worse.
        Strange that it is in Europe just the opposite around ... give some public property, like telecommunications to a private business and they ruin it ... infrastructure wise and prices wise ...

      • There is a reason that these people do not have bank accounts

        A lot of it is cultural. And a lot of it is also because banking can be made extremely difficult. In other countries, you can open a bank account at a post office (just think of it.) In others, they allow you to open accounts with meager deposits. OTH, in our country, there's little incentive for banking to expand to those who do not have an account. That's where the government can come in.

        The sure government can fuck things up, but there are also examples (here and abroad) where government initiatives a

  • m-Pesa has been a real benefit to Kenyans (Score:5, Insightful)

    by caseih ( 160668 ) on Tuesday January 07, 2020 @08:07PM (#59597648)

    In Kenya m-Pesa has been quite a boon to rural Kenyans especially, who have had no access to banking in the past. I read an article that talked about how many of these people had a hard time managing their money when it was just cash, since cash in pocket gets spent quickly. Now that most things are done with m-Pesa, it's on their cell phones and somehow that extra step helps people manage their money better.

    Anyway I'm in favor of these sorts of plans. I just wish the media would stop referring to it as virtual currency because it's not. It's still going to be US dollars. It's not a bitcoin that has speculative value.

    • Real dollars have primarily speculative value, as well, since the end of the gold standard and silver standard. I do agree that dollars are more stable and reliable that bitcoin.

    • Cash is (relatively) untraceable -- shit like m-Pesa is logged, data-mined, sliced, and diced.

    • The marketers have done the research on what people spend with different payment methods. McDonald's, for example, did their homework and got the numbers.

      Psychiatrists, too, have done research on this. They found that when someone hands over cash money, there is a flash of activity in the posterior insula - the pain center of the brain. People especially don't like to hand over a $20 bill, and will ask their friend for a quarter to avoid breaking a twenty.

      What the research shows is that when people have t

      • Re:Cash, debit, credit, Apple Pay - in that order (Score:4, Interesting)

        by caseih ( 160668 ) on Tuesday January 07, 2020 @11:03PM (#59598000)

        Oh sure westerners have a real problem with credit cards.

        The situation in Kenya, and indeed the situation of may people who would be the focus of this project, is nuanced. m-pesa is helping and leading to improved financial management in part because it helps people to keep their hard-earned money in a more individual way. For example, in many rural families, men spend the money their wives earn, frivolously. M-pesa empowers women while hopefully teaching the men to be more responsible.

        There've been plenty of articles exploring the effect of m-pesa on Kenyan society, and generally speaking it's been positive. More so than straight cash. Maybe they are an exception to the rule, but I suspect similar things might be found in this NY experiment.

        Plus I've seen plenty of people who spend every bit of cash they get. Lock it away in an account and things get a little more under control.

        • Re:Cash, debit, credit, Apple Pay - in that order (Score:4, Insightful)

          by raymorris ( 2726007 ) on Tuesday January 07, 2020 @11:46PM (#59598078) Journal

          Granted, Kenya is not the United States, so the research in the US may certainly not directly apply to Kenya. New York is, of course, very much the United States.

          If the purpose was to help people manage money better, rather than save the state money on mailing out checks, I can think of one way an app could help. (I suspect the marketing of the project doesn't exactly reflect the reasons the state wants to do it - electronic saves the state money).

          The primary first step in getting control of money, the big thing that helps people who are having trouble, is a written budget. Even better, actually putting money into piles such as "rent money" and "entertainment", so that you can only spend rent money on restaurants or coffee if you do it ON PURPOSE. When you have to actually take money out of the "gas money" section and spend it on on a chocolate shake, that makes a difference. The app could leverage that.

          It could have 6-8 categories and whenever you make a payment you select which category it is. You'd put money into the categories when you get your monthly payment. So first of the month, the state sends you money, or your employer does, you stick some in the "rent" category, some in the "gas" category, and some in the "fun" category. Of course you can't stop people from spending money foolishly, but that would make it easy to manage a monthly budget and stupid things would only be done on purpose.

        • Comment removed based on user account deletion

    • Re: (Score:2)

      by kenh ( 9056 )

      Its un-collected tax credits, $55 Billion of them/year... At least that's what the summary said:

      "The IVL plan calls for New York State to distribute the $55 billion per year in uncollected individual tax credits through a 'public Venmo,' a publicly-administered, non-extractive payment system that would allow recipients to spend freely within the state economy without transaction fees or delays," the report says.

      What the hell are those anyway?

    • In Kenya m-Pesa has been quite a boon to rural Kenyans especially

      M-Pesa works well because it is run by profit-seeking capitalists, not the government.

  • First, is this a slashdot trick to RTFA?
    "The percentage of U.S. households that were unbanked in 2017 the most recent year of the survey, was 6.5 percent, the lowest rate recorded since the FDIC began conducting the survey in 2009. It was down from 7.0 percent in 2015, and down significantly from a high of 8.2 percent in 2011. The unbanked numbers for 2017 equate to 14.1 million adults in 8.4 million households not having a checking or savings account."

    I mean, that linked article talks about how ALREADY the

    • Re: (Score:2)

      by psergiu ( 67614 )

      Let's be honest: the "unbanked citizens" generally don't have money ANYWAY.

      Or they have money but won't open a bank account:
      Shakers, Mennonites, Amish, Hutterites, Quakers and even Libertarians

      • Re: (Score:2, Flamebait)

        by kenh ( 9056 )

        Drug Dealers, Prostitutes, people that work under the table, etc...

        • Re: (Score:2, Flamebait)

          by b0s0z0ku ( 752509 )
          People providing socially useful services that Puritanical nutters don't like. God bless the dealers and the hookers.

      • Re: (Score:2)

        by caseih ( 160668 )

        Hutterites may not have any personal bank accounts, but the colonies surely do! And I'm not actually sure they don't have personal bank accounts.

      • Comment removed based on user account deletion

        • Re: (Score:2)

          by Hodr ( 219920 )

          I saw a Mennonite lady (I assume not Amish since her blouse was blue with purple bonnet) load some baked goods from their horse cart into a range rover, get in the driver's seat, then whip out a smart phone and ask google for directions to some farm. So at least some of them do.

          • Re: (Score:2)

            by kenh ( 9056 )

            Was she in NY state?

            Do you think she is "unbanked"?

            Isn't it possible she was a driver for the Mennonites or Amish? Driving a car is an issue, riding in one is not. When I lived in NJ it was common to see Amish farmers from PA be shuttled in from PA in a white passenger van to work in a "Farmers Market" stall selling vegetables, preserves, and handmade goods.

    • Re: (Score:2)

      by DogDude ( 805747 )
      Does it really make sense to let the government take over EVERY service? You think that's wise?

      Who's suggesting that? I didn't read that in either the summary or the article.
      • Personally I am not against government services and prefer them to private monopolies, but in the case of banking, it's unclear to me what market failure is being addressed? The banking industry has undergone a lot of consolidation but there are still choices.
        • Comment removed based on user account deletion

          • Both are monopolies. Why do you think the government is more competent? Why is one group of humans more competent than another simply because they convinced someone to vote for them?

            In a word, yes. In a representative government, at least you get a vote. In a monopoly, you get no voice.

            Public pensions are a whole different issue. I am sure there are instances where they get out of hand, but soldiers, firefighters, police... are somewhat justified because they are signing up for a field in which ther

    • Re: (Score:2)

      by AHuxley ( 892839 )
      Is that code for illegal migrants so they dont get detected when entering the traditional bank system via new federal citizen/criminal database sharing?
      A city will further protect illegal migrants from reporting/detection at the banking level by providing bank "like" services?
      The more banks and a federal gov work to detect a lack of ID, junk/shared/a lack of citizenship, the more a city moves in to hide the illegal migrants?

      What is an unbanked citizen?
      Can a bank not offer a "free" charity like gov ba
    • As opposed to Goldman Sachs or Amazon?

  • Credit Union (Score:3)

    by alvinrod ( 889928 ) on Tuesday January 07, 2020 @08:11PM (#59597658)

    Every business and individual residing in New York would be issued a virtual wallet, connected to a state government-controlled master wallet, that could act as a viable alternative to a bank account without the fees of a for-profit bank.

    Do they not have credit unions in New York?

    • They could solve this easily, without implementing a costly ridiculous state system - require all banks to offer a no-frills checking account, with ATM card and online access, for free for anyone who earns less than a certain amount per year. Thats how its handled in the UK (Im not sure about the rest of the EU, but I think its the same) - every consumer orientated bank is required by law to offer free banking for everyone (and yes, you can still get paid accounts with frills and benefits) and this law is

  • that's the solution you're looking for. Works great in other countries. Just like Single Payer Healthcare. Why Americans always have to ignore evidence and what's been proven to work is beyond me.

    • Re: (Score:2)

      by AHuxley ( 892839 )
      Lets take the worst situation a US citizen could be in.
      No ID, ID that is not accepted anymore... a person who does not like been in a bank, in a gov building... due to reasons..
      let some gov service, NGO charity work on getting that citizen ID.
      It takes months for the expert to walk the citizens life and collect all the needed documents.
      Photo ID is finally done.
      A bank worker, gov worker and the NGO/city/charity worker all get together and create a "free" bank account for the citizen as they now have ID.
    • Comment removed based on user account deletion

  • Bitcoin (Score:3)

    by beepsky ( 6008348 ) on Tuesday January 07, 2020 @08:41PM (#59597718)
    They mean well, but why the fuck would you make the jump to virtual currencies but not make them fully decentralised?
    The last thing the world needs is government issued and controlled virtual currencies, the idea gives me shivers as to how badly it could be abused by corrupt authorities.

  • Accountability (Score:5, Insightful)

    by stikves ( 127823 ) on Tuesday January 07, 2020 @08:46PM (#59597734) Homepage

    No transaction fees, no profits. Then who will pay for the service?

    A) The merchants who accepts these payments. Yet, the proposal seems to make it free for them too.
    B) "Invest" the money in the accounts. That might sound good, however I have no example of government successfully doing this
    C) The public.

    I would guess (C) is the most likely option. However given the current state of public transport as an example, I am not sure how good the public payment system would be. If you neglect transit maintenance, the worst thing that could happen are delays, and people using the facilities as public bathrooms. If you neglect financial security, you have really bad results.

    • The surplus that US social security system had made in the 80's and 90's was used to invest in US treasury bonds. That money was promptly paid into the general fund, covering up some losses. Guess who is on the hook to pay off the bonds when they come due?

      • Re: (Score:2)

        by kenh ( 9056 )

        Guess who is on the hook to pay off the bonds when they come due?

        Those obligations are included in the National Debt total (est. $22 Trillion) and are owed by the organization that borrowed it.

        There is nothing surprising here, everything is accounted for.

        • Comment removed based on user account deletion

          • Re: (Score:2)

            by kenh ( 9056 )

            The last several administrations have doubled the national debt - Bush did it, Obama did it, going back further Clinton did it, and so did Reagan - Bush '41 gets a pass, as does Carter, since they were one-term wonders/Presidencies.

            The SS "debt" is part of the $20 Trillion, and as we spend down the SS surplus over the next few years it will be repaid as the Treasury converts IOUs in the so-called SS "lockbox" into cash by selling the debt to a foreign nation, simply transferring the debt currently held by S

    • Re: (Score:2)

      by Cyberax ( 705495 )
      Taxes pay for the system upkeep. Since it's basically a simple payment system the required upkeep is low.

    • The public pays for everything, including that other people need to handle cash. Cash is not free.

    • Then who will pay for the service?

      What service? Why do you have to pay to be able to pay? With all the different payment methods, the only thing the banks deliver is an anti-service. Payment only got harder. Now you have to find out what payment methods are accepted and if you agree with that. In the days where cash was still accepted everywhere I could just walk into a shop and buy something.

  • WeChat Wallet (Score:4, Interesting)

    by BlazeMiskulin ( 1043328 ) on Tuesday January 07, 2020 @08:47PM (#59597742)

    This is one area where China managed to surpass the US. In the US, there are multiple competing "virtual wallets"--none of which are (to my knowledge) cross-compatible, and all of which require a bank account (and PitA verification--I've had to deal with it).

    WeChat [wikipedia.org] includes a "wallet" that does NOT require a bank account for basic use, is accepted everywhere in China (even beggars have QR codes posted so you can send them money), allows you to pay your all your utilities, and lets you send and receive money from everyone.

    The downside, of course, is that the Chinese government is getting all of that data.

    If Google and Apple (and whomever else) got together and created a system that was as ubiquitous and easy to use, it would be.... well... ubiquitous. It's a fair bet that US laws regarding banking will never let that happen.

    • This is one area where China managed to surpass the US.

      Really?

      Good luck paying cash in China.

      • Every Chinese business I've ever dealt with was quite happy to take my cash, and nearly all of them would also accept either of my debit cards (one Swedish, one American) without any issues.

  • Once you go digital, you run the risk of being locked out, either by forgetting your credentials, or your credentials being locked out because the admin doesn't like you.

    But before that...

    They will know your every expenditure. They will judge you on which businesses you patronize with it.

    They will decide who you can spend with. Vendors whose political views may disagree with the admins can be locked out.

  • Cash is still better.... (Score:3)

    by b0s0z0ku ( 752509 ) on Tuesday January 07, 2020 @08:49PM (#59597750)

    Cash = privacy.

    More "war on cash" crap. Good thing it's only a proposal, which there are many of.

  • What could go wrong? (Score:4, Interesting)

    by kenh ( 9056 ) on Tuesday January 07, 2020 @09:41PM (#59597862) Homepage Journal

    "The IVL plan calls for New York State to distribute the $55 billion per year in uncollected individual tax credits through a 'public Venmo,' a publicly-administered, non-extractive payment system that would allow recipients to spend freely within the state economy without transaction fees or delays," the report says.

    What the hell is the " $55 billion per year in uncollected individual tax credits"?

    "Every business and individual residing in New York would be issued a virtual wallet, connected to a state government-controlled master wallet, that could act as a viable alternative to a bank account without the fees of a for-profit bank.

    So taxpayers will underwrite the operating expenses of this "no fee" bank?

    What is the real problem? Why not simply require banks to offer no-fee bank accounts to lower-income residents? Seems a lot cheaper (for the taxpayer) and easier for the "un-banked" to ease into becoming "banked", AKA customers of actual banks.

    Having the state compete with commercial banks seems like a bad idea... Think I'm exaggerating, then why are they planning on giving EVERY BUSINESS and RESIDENT a virtual wallet?

    • You missed the part where the State's "virtual bank" doesn't lend or pay interest (because it doesn't lend), but has no fees so it remains attractive. Over time it will pull more and more money from traditional banks, so those banks can lend less and less. Fractional reserve banking is a fundamental component of the economy, creating money and value to fuel everything else. Break banking and the economy breaks with it.

      • Re: (Score:2)

        by kenh ( 9056 )

        You missed the part where the State's "virtual bank" doesn't lend or pay interest (because it doesn't lend), but has no fees so it remains attractive. Over time it will pull more and more money from traditional banks, so those banks can lend less and less.

        So a state bank, which doesn't lend money, will drive conventional banks out of the lending business? Odd. Apparently you think that a vast majority of lending is because people are paying onerous bank fees, depleting them of saving for major purchases?

        It's a government boondoggle, a crypto-currency word-salad that means nothing but sounds like a great idea until you take a look at what is being described.

        Why must every New Yorker be issued an account in this service? There are 14 million without Bank Accou

  • "...a state government-controlled master wallet"...

    Pretty much says it all.

  • New York is proposing a statewide virtual currency aimed at helping unbanked citizens get access to day-to-day financial transactions without predatory fees.

    What's not to like about governmental ownership of the means of production — and service-provision? It worked everywhere else it was attempted!

  • It will consistently run at a loss with taxpayer support & patronage jobs for those who earned them.

    • Re: (Score:2)

      by kenh ( 9056 )

      It HAS TO run at a loss - it collects no fees from anyone that uses it's services. One hundred percent of all administration costs will be covered by the NY state tax payer.

  • ...nor does it address the specific privacy needs for certain groups the lawmakers hope the system will serve, such as people who are undocumented.

    I'm pretty sure this whole system is primarily for the undocumented.

  • every transaction you make, and with whom. Total surveillance.

  • This might be a felony. (Score:3)

    by sabbede ( 2678435 ) on Wednesday January 08, 2020 @08:52AM (#59598768)
    "The proposal does not include any specifics as to how the payment system will be secure, nor does it address the specific privacy needs for certain groups the lawmakers hope the system will serve, such as people who are undocumented."

    8 U.S. Code 1324.Bringing in and harboring certain aliens - https://www.law.cornell.edu/us... [cornell.edu]

    "(iii)knowing or in reckless disregard of the fact that an alien has come to, entered, or remains in the United States in violation of law, conceals, harbors, or shields from detection, or attempts to conceal, harbor, or shield from detection, such alien in any place, including any building or any means of transportation;"

    So, if NY passed a bill that "addresses the specific privacy needs for [...] people who are undocumented", it would be a criminal conspiracy for which the Sate legislature could be imprisoned for quite some time. Or even executed. No joke there, if an illegal alien kills someone else, whoever harbors them could "be punished by death or imprisoned for any term of years or for life, fined under title 18, or both." Which, if enforced, would put a number of State and municipal legislators in prison or on death row. Really, any State granting drivers licenses to illegal aliens is in violation. Non-cooperative "sanctuary" policies probably aren't in violation, but when, for example, Mayor DeBlasio announced NYC would provide free healthcare for illegal aliens, he should have immediately been arrested.

    If nobody dies, but NY is found to have knowingly or recklessly given these wallets to illegal aliens, the entire "master wallet" (including ALL individual wallets) could be seized. Which probably wouldn't happen, they'd just shut it down.

  • The government can't track cash transactions, so let's get everyone to use electronic payment systems so they can be tracked.

  • People are denied bank accounts because of irresponsible behavior. Overdrafting their accounts and leaving the accounts in the negative. (AKA borrowing money and not paying it back). Depositing bad checks, withdrawing money, leaving accounts negative after it doesn't clear. The unbanked are good candidates for things like prepaid gift cards, which provide no credit and can already be purchased by anyone. Some can be reloaded remotely. The reality is that the unbanked don't want to use them.
    • And debtor's prisons. You do realize there are communities that don't have banks. This is why Postal Banking would be a good idea. It would be able to provide banking services to areas that don't have it. The United States once had Postal Banking for this very reason. It was discontinued in 1966. Time to bring it back.

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