Raúl Carrillo

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Today, financial institutions, technology companies, and government agencies constantly coordinate to collect data to share, sort, store, score, and sell. Moreover, banks and financial technology (fintech) companies channel nearly all payments between agencies and the public via thousands of different programs, increasingly collecting more data while doing so. Most policymakers, scholars, and industry stakeholders agree the dominant data-intensive public-private partnership model makes the financial system more inclusive, safe, and accountable, thereby “democratizing finance.” However, despite its benefits, standard operating procedure exacerbates identity fraud, civil and criminal punishment of poor people (especially impoverished people of color), and mass surveillance of the general public without the knowledge, much less consent, of the governed.

The U.S. government is now reconstructing its payments technology, explicitly exploring “Digital Dollars”—public money native to government rather than private sector computers. Some experts oppose Digital Dollars entirely. Other experts argue government agencies should use Digital Dollars to improve transactions with select financial institutions and technology companies. Still, other experts argue agencies should bypass their former partners and issue Digital Dollars directly to individuals, households, and businesses (perhaps by also offering public bank accounts or digital wallets).

Joining the call for universal public payments infrastructure, I take up the challenge of digital privacy and data governance. While examining mass financial data collection via existing public-private partnerships, I identify material harms from the perspectives of consumer law, poverty law, and other bodies of law already defining the lives of precisely the people many experts aim to include in a Digital Dollar system. I argue that because of these background laws, new infrastructure could cause similar or worse harm, undermining efforts to democratize finance.

To mitigate the misuse and abuse of payments data in a reconstructed system, I argue the U.S. Postal Service should provide not only public bank accounts, but additional devices for using Digital Dollars. These “smartcards,” similar in size to existing debit cards, would not make payments over the internet. Instead, they would store money “offline”’on the card hardware rather than softwareand transfer money directly between devices. People would use the cards for everyday small-dollar transactions, but the cards would not be cable of generating data that companies and agencies could exploit. We can incorporate a privacy-protective layer within a genuinely universal “public fintech” system.

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