Who or what can destroy the industry of payment systems?

There is an opinion that everybody will give an answer – hacking, phishing, ddos attacks, absence of population demand and etc. Yes, surely they are serious threats, but they’re just problems that can be avoided or effectively solved. However, there is one danger that can destroy the whole industry it’s Government.


As soon as any payment system appears it starts slowly entering the market. Further follows the growth of its turnovers but it acts as financial agent that lives owing to commission fees. 100% of all payment systems work on this basis. Of course, first they existed only for micropayments. If it were not one BUT… This BUT is a bad regulation of payment market in Internet at legislation level. And exactly this aspect resulted in appearance of people in Internet whose turnovers may exceed the profits of middle financial corporations. Today it’s enough to fund money into system and the problem with their control is solved immediately – now it is possible to transfer, convert, buy precious metals, pay for goods and services and all of this performs without any state control. As a result after the lapse of several years from the beginning of electronic money era (that is counted from 1996 – year of E-gold foundation) such order has puzzled conservative officials that wear out their seats in congress. And as usual the government asked itself a question “Why in real financial sector we earn a lot on the taxes and charges and in virtual section we have no share?”.

As usual it was too expensive to investigate this situation and the government has thought out a simple option – to accuse in tax evasion and in money laundering the law about which has bored to death. All these tools have supplemented PA USA which was followed by quickly written drafts in other countries and which began destroying of payment system industry by showing who will be a master on the market.

As we know Neteller, Fethard E-gold, and correspondingly 1MDC and other small payment systems had caught it.
It’s interesting whether nobody in congress has asked himself a question how can gambling business disturb the state? Why was it necessary to ban online casino? The answer is quite simple – the state failed to think out the way of Internet payment business regulating and decided to close it.

But it’s impossible to close all of them… Most of them are surviving yet. For example, Paypal bought by auction Ebay in 2002 now feels more than excellent… And it is reasonable as the government knows how to control this system. Ebay is a trade site and this means that all sales and taxes can be counted easily. But for some reason nobody thinks that PayPal can also be successfully used for money laundering. For instance, I’ve met once or twice some announcements in the following style:
Pencil sharpener is for sale - cost 11000$. Such announcement looks suspicious. In reality it’s just a method of sending money from one user to another. But government shuts its eyes to it as on paper everything is legal and tax from this transaction will be paid and this means that the main player of financial market – Government is satisfied.

And at the same time when somebody opens account in e-gold under the name of Mickey Mouse and sends its partner $11 it’s called money laundry.

The same thing is with gambling. Once in the beginning of past century USA had already moved the whole gambling industry to one city in the USA. And that are the results? Behind beautiful neon lights and sparkling buildings of Las-Vegas is hidden a foul place of North American continent where reigns the sale of drugs, arms and widely spread uncontrolled prostitution.
And what lesson did Government learn from this? None. More over it decided to ban the activity of Internet-casino in the USA. Why? Government has its own reasons. But it’s evident that this happened due to impossibility to control money flows and make a profit out of it under cover of taxes.

Today Government has turned from the structure controlling social and economic sphere into some person who like a puppeteer manipulates all companies acting in the state. And like a real puppeteer government has its curtain – it is a Patriotic Act and also some other laws to control financial operations. But again it’s not so. Indeed there is an opinion that covering under mythical terrorism protection the government purposes only controlling of the whole business in the country and earning on the taxes let alone the bribes.

So, for example, by covering under amendment “(a) to paragraph ‘‘§ 1960 of clause «?», article 373, Patriotic Act the government of the USA can visit any payment structure and demand reports and license. In other words government wants to control every dollar which may be transferred anywhere. And all of this is called anti-terrorist activity. The same effect has also sub-item 1 of item «?», paragraph 5332, article 371, in accordance with which any person who is carrying more than 10000$(average salary of American financier per month) and who has not told about this to US state services can be sentenced to 5 years of imprisonment. And according to the words of officials all of this was done only to counteract terrorism. But at the same time the emerged fact that USA had been financing Afghanistan militants that was recently confirmed by USA and that resulted in appearance of Osama Ben Laden is not considered as assistance for terrorism. Has any official regulating that program got imprisonment? No. It seems that in respect of state officials the law has no retroactive forces. That cannot be told about Stephen Eric Lawrence and John David Lefebvre, founders of Neteller, whose accounts were frozen on 17 January 2007, and Netller system has to refuse from two thirds of its assets due to suspicion in illegal transfer of money funds. And did government win the crime in online medium with this step? Of course not, it has signed once more that it wants to be an omnipotent player on the market of payment system in Internet.

Having thought about the future of payment systems one can unwittingly come to conclusion that government in USA will win. It will totally destroy the existing industry and will make the majority of payment system acting on American market to shiver with fear and after conquering will make them to share their revenues. May be it is not so bad you will say but these actions of government will strongly brake the development of virtual economy in Internet.