Comparison of the degree of privacy protection of various payment methods: cash vs bank card vs the third party vs digital currency

Comparison of the degree of privacy protection of various payment methods: cash vs bank card vs the third party vs digital currency

This article will visually compare the degree of privacy protection of cash payment, digital currency payment, bank card payment, and third-party payment in tabular form, and then conduct a detailed analysis.

With the continuous development of information technology, a variety of payment methods have emerged. These payment methods include cash payment, bank card payment (including credit card, debit card), third-party payment (such as WeChat, Alipay, Apple Pay, etc .), and digital currency payment (including private digital currency, such as Bitcoin, Libra coin Libra; And legal digital currency, such as the digital currency DCEP to be issued by my country’s central bank). However, the development of payment methods has also brought challenges to privacy protection while facilitating payment.

Accordingly, this article will first visually compare the degree of privacy protection of the aforementioned various payment methods (cash payment, digital currency payment, bank card payment, and third-party payment) in tabular form, and then conduct a detailed analysis of this.

The degree of protection privacy of cash payment among

 all payment methods, cash payment is the oldest and most traditional, but it has the highest degree of privacy protection. For transactions completed by cash payment, such as buying a bouquet on the roadside with cash, the transaction parties do not need to disclose any identifying information (such as name, ID number, contact information, etc.) The three parties record the specific circumstances of the transaction (such as transaction time, amount, and subject matter). As a result, cash payments are often difficult to trace and are favored by criminals.

The degree of protection of privacy of bank card payment

In the early 20th century, the development of information technology and monetary credit gave birth to bank card payments (including credit cards and debit cards). Identity information began to be tied to payment methods, and transaction records began to be recorded electronically. While this change facilitates regulation, it also reduces the degree of privacy protection.

At the bank level, the bank can not only grasp the identity of the bank cardholder and other personal information but also know the relevant information of each transaction. Specifically, opening a bank card account usually requires real-name authentication (such as providing ID documents, mobile phone numbers, etc.); the information of each transaction using a bank card (such as the account numbers of both parties, date/time, amount, etc.) is also It will be recorded in the system of the account opening bank in electronic form.

At the counterparty level, the counterparty is usually able to learn part of the identity information of the counterparty. For example, when a POS machine is used to pay with a card in a shopping mall, the POS machine will print a small ticket, which details the name of the merchant, the number of the issuing bank, the number of the acquirer, the bank card number used for payment (usually some numbers are hidden), transaction type, Transaction date/time and transaction amount, the remarks column will also require the cardholder’s signature. Therefore, merchants can usually learn the cardholder’s name, bank, and other information.

The degree of protection of privacy of third-party payment

In recent years, third-party payment represented by Alipay and WeChat Pay has become a popular payment method. However, while third-party payment makes a payment more convenient and fast, it also brings a series of privacy risks. The following will take Alipay as an example for a brief analysis.

According to Alipay’s privacy policy, when registering an Alipay account, users need to provide basic identity information (including name, nationality, gender, occupation, address, contact information, and valid identity documents by the requirements of the “Administrative Measures for Online Payment” Services of Non-Bank Payment Institutions”). type, number, and validity period) for real-name authentication; a mobile phone number or email address is required as the account login name. Therefore, Alipay can grasp the user’s identity and other personal information in detail. In addition, the account login name of Alipay is also the transfer address. When the transfer amount is large, you may also need to enter the name of the payee. The payer can easily know the mobile phone number/e-mail address and name of the payee. The level of anonymity of the other party is low.

In addition, similar to bank cards, Alipay will also record transaction information in detail in the form of bills. If paying with Alipay balance, only Alipay will record the payment information. However, if Alipay is used as an intermediary platform and the bank card bound to Alipay is used for payment, both Alipay and the banking system will record the relevant transaction information. It is worth noting that the Alipay platform not only provides social services such as personal homepage, “find me through mobile phone”, “smartly recommend people you may know”, “allow others to see my real name” and other social services but also associates with Ant Forest, Taobao, Fei For many third-party services such as Pig and Ele. me takeaway, compared with bank card payment, users are more likely to click consent and authorization inadvertently, allowing Alipay to disclose and share users’ personal information with third parties.

Fourth, the degree of privacy protection of digital currency payment

In 2009, the birth of Bitcoin opened the era of digital currency. Since then, the digital currency has become a trend. In the field of private digital currency, in June 2019, Facebook released a white paper saying that it intends to issue a digital currency called Libra (Libra) to the world. In the field of legal digital currency, in August 2019, relevant officials of my country’s central bank spoke out several times, introducing the central bank’s digital currency to be issued in my country – DCEP (Digital Currency Electronic Payment). Overall, digital currency payment has a higher degree of privacy protection than a bank card and third-party payment, but the degree of privacy protection of different types of digital currency is also different. Given that the degree of privacy protection of Bitcoin, DCEP, and Libra is gradually decreasing, the following will be analyzed in this order.

(1) The degree of protection privacy of Bitcoin payment

Bitcoin is a virtual cryptocurrency with open-source blockchain as the underlying technology. The degree of privacy protection of Bitcoin payment is higher than that of DCEP and Libra payment, and second only to cash payment. The specific manifestations are as follows:

First, users do not need to provide any identifying information to open an account on an online bitcoin exchange. In other words, Bitcoin exchanges do not hold the identity information of users. If users do not voluntarily bind physical objects such as bank cards that can be linked to identity information, it will be difficult for regulators to track them.

Secondly, after opening an account, the Bitcoin system will randomly generate two strings of long characters consisting of numbers and letters as the user’s private key and public key. The private key is similar to the private password for receipt and payment, and the public key is similar to the public account address, both of which have nothing to do with the user’s identity information. To pay or receive bitcoin, the user only needs to enter the other party’s public key in the transaction system to complete the transfer. Correspondingly, the transaction party information recorded in the transaction record is only the public key. Therefore, neither the transaction party nor any other third party can know the identity information of the transaction party.

It is worth noting that although the transaction record of Bitcoin payment does not contain any identifying information, the transaction information (including the public key of the transaction party, transaction time, and amount) can be obtained by everyone. This is because Bitcoin adopts Open source blockchain technology. The so-called blockchain, also known as distributed accounting, is a decentralized accounting method. Unlike bank cards and third-party payments that store transaction records in a central location, blockchain technology enables transaction records to be stored in all nodes synchronously. Because Bitcoin nodes are open source, there is no need to obtain special authorization to become a node, so every user can become a node through the Bitcoin software client and obtain all Bitcoin transaction records. This also means that once public keys are mapped to real individuals through data mining, public transaction records can be mapped to specific individuals.

(2) The degree of privacy protection of the central bank’s digital currency

The digital currency to be issued by the central bank is called DCEP (Digital Currency Electronic Payment), which is a digital currency and electronic payment tool. According to Mu Changchun, director of the Central Bank’s Digital Currency Research Institute, the functions and attributes of DCEP are the same as cash, but the form is digital. DCEP adopts a traditional two-tier operation structure. The upper layer is from the central bank to commercial banks, and the lower layer is from commercial banks to users. That is commercial banks open accounts in the central bank and pay 100% of the reserves. Banks or commercial institutions open digital wallets to exchange DCEP.In general, the degree of protection privacy of DCEP payment is higher than that of bank card and third-party payment, and slightly lower than that of Bitcoin payment.

The reason why the privacy protection of DCEP payment is higher than that of bank card and third-party payment is that DCEP can realize value transfer without an account or binding any bank card, and the transaction parties using DCEP payment cannot know each other. identity information. The specific transaction method is that two mobile phones are equipped with DCEP digital wallets touch, and the DCEP in one digital wallet can be transferred to another person without the need to connect to the Internet.

The reason why the privacy protection of DCEP payment is lower than that of Bitcoin is that opening a digital wallet in a commercial bank or commercial institution requires personal information for real-name authentication. That is to say, commercial banks or institutions can master personal information such as the identity of DCEP users.

It is worth noting that, unlike Bitcoin and Libra, DCEP adopts a centralized two-tier operating structure with central banks and commercial banks or institutions as the core. Transaction records will only be stored in a specific center, that is, the commercial bank or institution that opened the DCEP account, and cannot be arbitrarily obtained by other individuals or institutions.

(3) The degree of protection privacy of Libra payment

Libra is a digital currency that Facebook intends to issue using authorized blockchain technology, backed by real asset storage, and governed by the Libra Association composed of 28 institutions. Libra’s payment tool is the Calibra e-wallet, which is Facebook’s subsidiary for Libra payments. Among the three digital currency payments, the privacy protection level of Libra payment is the lowest, but it is also higher than the current bank card payment and third-party payment.

The reason why the privacy protection of Libra payment is lower than that of Bitcoin and DCEP payment is that according to the Libra white paper, to open a Calibra wallet to use Libra, you need to submit government-issued ID information to Calibra for real-name authentication. That is to say, Calibra can master the identity information of all Libra users. The white paper also states that Calibra will share user account information it collects with Facebook and other third parties with the user’s permission. Considering that the members of the Libra Governance Association are business giants from all walks of life (such as Facebook, PayPal, Visa, Uber, etc.), the fundamental purpose of issuing Libra is to seek profit, and the cost of maintaining the operation of the Libra system is very high and cannot be trusted. Supported by low fees. It can be reasonably inferred that in this era when data is oil, Calibra has more motivation and desire than banks to obtain user consent through various means to share users’ personal information with third parties to earn profits.

The reason why Libra’s privacy protection is higher than bank cards and third-party payment is that Libra also adopts anonymous blockchain technology, and the transaction parties cannot know each other’s identity information. An account address with no identifying information is sufficient. But unlike Bitcoin, Libra uses permissioned blockchain technology, and only specific, authorized institutions (currently limited to Libra’s 28 founding members – Mastercard, PayPal, Visa, Uber, etc.) It can become a node and store all transaction records synchronously.

Privacy challenges brought about by technological development

As mentioned above, among the four payment methods of cash payment, bank card payment, third-party payment, and digital currency payment, cash payment has the highest degree of privacy protection, and no bank or institution can obtain the identity information or transaction records of the transaction party. ; The degree of privacy protection of digital currency payment is second, or only a specific account opening institution (DCEP: account opening bank/institution; Libra: Calibra) can learn user identity information, or no institution can learn user identity information (Bitcoin), transaction The parties cannot know the identity information of the other party, and the transaction information will be stored electronically in one center or multiple nodes; the degree of privacy protection of bank card payment is low, and both the account opening bank and the transaction party can obtain the identity of the card swipe. Information and transaction records are stored in the banking system; third-party payment has the lowest degree of privacy protection, third-party payment institutions and transaction parties can obtain more personal information such as identities, and transaction records may be stored in banks and institutions at the same time.

Looking back at the development of payment methods, it is not difficult to find that in today’s society, people are no longer accustomed to using traditional cash payment, but prefer convenient bank card payment and third-party payment. In the future, digital currency payments may become mainstream, and cash may even disappear completely. It is worth noting that, other than cash payments, no payment method cannot be electronically recorded and tracked. This also means that if cash is used less and less and disappears, it will be impossible for anyone to remain anonymous, and there will be no privacy in this regard. Today, when the development of technology has made people’s lives more and more convenient, it is worth thinking about how to balance the relationship between privacy and technology. 

By aamritri

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