Should government enter the payment business?

John Battelle thinks real-world payment processing would be an ideal business for local governments to get into. He notes that it's already in this business in the form of automatic toll-payment technology; in the Bay Area, it's called FasTrack. And apparently, commuters will now be able to use their FasTrack devices to pay for parking at the San Francisco Airport without the hassle of pulling out a credit card.

So, why not let the government manage all your transactions as you move about your environment?

California is in the pole position here, and should leverage it. Miniaturize the FasTrak, add a modal button (ie, when I press on it, it activates) and some security software, and then roll it out at grocery stores, gas stations, shit, everywhere you can buy a lottery ticket for that matter. The brilliant angle is this: while tons of retailers have tried this, no one wants a walled garden approach (ie, I can use this key fob for gas, that key fob for Safeway, etc.). The government can set an open standard, create a development platform...you all know the rest.

Well, your knee-jerk reaction is to say, what? trust the government with secure transactions? Just look at all the VA scandal and plenty of other government security losses. Look at the many disastrous government IT projects. But on the other hand, California really has been making FasTrack work with no problems, and government can be a useful driver towards standards. But government-spawned standards without active participation from the private sector never works. Ultimately, standards take hold when it makes business sense for them to do so.