Evan Schuman's StorefrontBacktalk

The data collected by these third parties—be it Apple, Google Wallet, PayPal or some other entity—can be mined, cross-referenced, utilized or sold. It also is subject to subpoena, discovery and attack.

Take a simple example of a mass transit system like New York City’s subways. For years, to ride the subways all you had to do was to buy tokens. You gave the Metropolitan Transit Authority cash, and it gave you a small round coin with a cut out “Y” in the middle that you could store and later use to ride the subway. It was, in essence, a stored value device. Later, the MTA moved to stored value cards, where you would purchase a card either with cash or by credit card, and use that card in the same way you would use a token.

As we move to a more universal and, therefore, a more attributable payment system—be it direct withdrawal from a credit card, withdrawal from an iTunes account, payment by text message or SMS, or any other form of payment—we are restoring a connection between the use of the service and the individual paying for the use of that service. As a result, the MTA would now have a record not only of the fact that you had purchased a token or a fare card but also a record of every time you got on the subway, where you got on the subway, with whom you got on the subway, when you got off the subway and, again, with whom you got off the subway. These records could be cross-referenced with surveillance videos both in the subway and on the streets to create a comprehensive database of ridership.

Because of this system, the MTA could be transformed from a subway system to a massive surveillance and data gathering system. If you want to know where John Smith was on the night of June 25, just log in to the MTA’s database. If John Smith wants to establish an alibi for some crime, or simply demonstrate to his divorce attorney that he was not in a particular place at a particular time, it is simply a matter of subpoenaing the MTA for that information.

Similar attacks on databases would occur for anyone who collects intimate personal information about consumers. Retailers would be consigned to being co-conspirators in creating, storing and even utilizing this massive database.

Internet service providers, search engines, online merchants and even providers of gaming systems have found that, while they are providing the services, they are daily receiving subpoenas, search warrants and other discovery demands from law enforcement, intelligence agencies and private litigants for information about users of their systems. The more data we have, the more people want the data we have.

For retailers who have privacy policies promising their consumers that the data collected will not be shared, this puts them in a quandary. Technically, the retailer is neither collecting nor disseminating this information. Rather, it is the consumer who decides to use the iWallet technology, who is making a conscious choice to give up that information to Apple. It’s much the same as consumers who use a credit card knowing that their information will be given not only to their bank but also to Visa, MasterCard, American Express and any third-party payment processor— such as First Data Corp.—who may collect that information.

On the other hand, information about the consumer’s purchases at a retailer ultimately may become public. And the consumer is not likely to be happy about that.

It remains to be seen which, if any, of these technologies will end up ruling the world. What is certain, however, is that the line between who is a retailer, who is a technology provider and who is a bank is getting blurrier all the time. And blurry lines promote litigation.

If you disagree with me, I’ll see you in court, buddy. If you agree with me, however, I would love to hear from you.