Money Is Social Media

What do payment forms communicate about their users?

New Money: How Payment Became Social Media, by Lana Swartz, Yale University Press, 272 pages, $28

As I was gathering my notes to review New Money: How Payment Became Social Media in a Google Doc, I was distracted by a ping from my connected Gmail account. Apparently, my Chase Freedom Unlimited card had not yet been upgraded to contactless technology—just wave your card over the terminal, no need to swipe!—which is critical hygienetech in a time of COVID-19. Not a huge deal, because I signed up for that card mainly to fund a trip to Patagonia with rewards points. For most expenses, my preferred card (called the Chase Sapphire Preferred) is in my Google Pay anyway, so I just wave my phone over the payment terminal without needing to fuss with plastic (or in this case metal) at all. I deleted the email.

For a certain cohort, this is a familiar vignette. To the many unbanked Americans, or to those who still visit their local bank branches in person, such arrangements might as well be the stuff of a Neal Stephenson novel. We all use money, but that does not mean we all use it in the same way.

Those who have given the matter some thought probably already appreciate that money is not merely "stuff that the government prints" but the result of an emergent (and often unevenly distributed) order. But New Money examines another facet: money as a form of social media. Its author, Lana Swartz, isn't an economist; she teaches media studies at the University of Virginia.

There is a lot of specialized jargon here. But among all the academese are interesting histories of different nonstate payment systems and a glimpse into the networks that make the parts work, all presented upon an analytical foundation positioning money as an inherently communicative development.

This is meant literally. Western Union laid its rails as a telegraph company; Wells Fargo and American Express were expedited mail deliverers. Much of what we know of whole civilizations is divined from the scratched-out ledgers and unearthed coins of long-forgotten lands. Now Facebook, the biggest social media platform, wants to get into the payments game with its proposed Libra cryptocurrency.

Whether stamped by a state or mined on a blockchain, money is a medium that carries data. New Money traces a shift from a world where money is mostly government-produced to a world where money is more networked—a shift, put differently, from mass media to social media. As the communication of data becomes ever more complex, so too will monetary transmissions, and perhaps the potential for control.

On an economic level, money communicates information about prices, demand, and relative scarcities. New Money doesn't talk much about this. Instead, the book mostly studies what payment forms communicate about their users and how their mechanics affect these payment classes.

A whole chapter is spent discussing the Chase Sapphire Reserve card, a buzzy leader in the new ultra-premium reward card market that is distinguished from my piddling Chase Sapphire Preferred card by its steeper annual fee and more generous perk schedule.

Social stratification and card envy are not new. What's fresh in New Money is the illustration of how our payment systems work and how that impacts different groups of people.

A lot of behind-the-scenes coordination goes into a simple swipe at the cashier. Visa and Mastercard provide payment networks that connect card-accepting merchants with cardholding customers. Merchants pay what's called an "interchange fee" on each card transaction to subsidize this caliber of customer. Card issuers use these interchange fees to offer the rewards that often come with credit cards, such as airport lounge access and double-triple-quadruple points bonanzas.

Premium cardholders have great credit and perhaps deeper pockets. Merchants want their business. They want their business so much that they are willing to pay extra interchange fees to bag them. Of course, these costs are borne by someone. Effectively, other customers—including less well-off ones—foot the bill for these wealthier customers' lifestyle perks in the form of higher final prices.

Then there are the partially or wholly unbanked customers stuck with fee-laden payment cards that do nothing to help them build up credit. These people get nickel-and-dimed for the privilege of being able to pay bills online—or they eschew online payments altogether. If money is communication, cash is a vernacular.

This cohort gets doubly walloped by a currency system that is also oriented to the benefit of the elite. As the recent COVID-justified monetary policy makes clear, people who are well-off and well-connected tend to benefit first from central bank interventions. Everyone else? Record stock market highs are irrelevant when you don't even have a bank account, let alone a 401(k). The regressive effect of monetary manipulations—the way they disproportionately harm the already underprivileged—is known as the "Cantillon effect."

Power dynamics also affect who is able to get paid. Merchants themselves carry risks to financial institutions: Sketchier ones may attract more requests for payment reversals or "chargebacks" that impose higher costs on banks. So high-risk merchants—peddlers of charges that customers may later dispute, such as pornography or gambling or shoddy wares—are funneled into their own market segments.

Sometimes, payment processors decide they would rather not deal with such high-risk merchants at all. As New Money points out, the platformification of online payments has imbued services like PayPal and Patreon with great social power. Whether due to social pressure or good old-fashioned aversion to "financial risk," platforms can now unilaterally decide whether someone gets paid.

It is precisely because legacy payment methods are susceptible to such controls that bitcoin was created. Cryptocurrencies in this vein are censorship-resistant by design: No party can prevent any other from transacting on the network. Better still, they are Cantillon-resistant: Elites cannot manipulate the money supply to enhance their power.

Cryptocurrency would seem of natural interest to New Money's examination, yet it barely receives passing mention. When asked by a woman in the industry for a way to guarantee "reliable payments for sex workers," the book recommends only "cash and checks." One particularly bizarre passage predicts that corporate-issued points programs like the Starbucks Rewards card are more likely than cryptocurrency to become a top "new money." Yet people with limited financial freedom—sex workers, the unbanked, the underbanked, Venezuelans—don't turn to the Sephora Beauty Insider Points program to secure their transactional autonomy.

What does it say that a critical theorist's "reimagining" of money for the age of social media concludes that loyalty to corporations will be the winning coins of the land? Maybe it says that pessimism also pays. Or maybe it's that the value proposition of an escape hatch like bitcoin is harder to grok when you're the kind of person with the privilege to rack up social points for an Andean ski vacation. In the author's defense, the utopian anarchism endemic in cryptocurrency culture may strike the uninitiated as a mirror image of the same affliction. Many well-known bitcoin promoters live in wealthy and stable countries with finance options aplenty.

Though New Money is light on remedies, it's heavy with critique. It is at its best when drawing attention to the many ways that the financially powerless are too often kept that way. It will remind the reader of the core communicative functions of cash, if not digital cash. And it could shake the relatively comfortable to better understand how much they have to lose should they one day find themselves on the other side of the digital transaction divide.

But we aren't doomed to a future of ZuckBucks. Cryptocurrency may not get the academic appreciation it deserves, but no amount of elite negligence or agitation can stop you from sending bits on the blockchain. In these wild times, it's nice to at least have something that everyone can bank on.