You know how, every time you need cash and you go to some ATM that's not your bank's, they charge you $1.50? And then your bank, to rub it in, charges an additional $1.50 as a processing fee (at least my bank does)!

The U.S. congress wants to cap ATM fees, interestingly, at 50 cents per transaction. The logic is populist; only really low-and-middle-income people use ATM's that much, so they end up with the shitty end of the stick once again.

But I thought about this for a minute, and came up with the following question: Why don't we just eliminate cash altogether? I'm trying to think of all the reasons we use cash these days, and there aren't that many. Petty purchases (snacks, bar drinks, etc) - and all other small purchases - could be done with a swipe debit card... the technology exists already and it would only require /everyone/ to have a bank account of some kind. The only other things people use or have cash for are things that are illegal, annd things that they don't want to pay taxes on. I"m talking about drugs, tips, under-the-table business fees, and all that sort of thing.

So let's replace our slow debits with fast swipe cards for small (i.e.under 50 dollar) purchases, and use our regular cards for everything else. It would only be a small leap in technology to create cards that could transfer money to each other, thus eliminating the problem of paying people back for things in person!

Forget the penny, folks. Let's get rid of all cash. In fact, I'd be willing to bet that before I'm dead - presuming I live up to average mortality rates - cash will be a thing of the past. And luckily, if you chart the trends, people in my sort of shoes (Canadian, healthy, non-smoker/drinker born in the mid-80's) should live well into their 90's, if not beyond.

Comments

notorious vjp said…
I personally am the complete opposite. I do not trust the "bank", which is not a governmental organization with people/consequences to adhere to, with the money of an entire population.

The bank's goal is to make profit-- not to sustain an economy of a country, or an individual.

I encourage people to never use their debit cards, or their credit cards. I understand we live in a world where people typically do get fiscal benefits from both these things (especially when banks offer promotions, free vacations and better savings rate if you do use your card), but for lower-income consumers, it's best to just withdraw your desired spending money (helps you save it better, having a physical representation of your earnings on hand) and use that instead of your card.

A lot of people don't know that banks charge businesses to have interact. Currently, my work loses 30 cents per transaction on debit, and 70 cents per transaction on credit card. So when guy A wants to pay for his 1.60 small coffee with his visa, we're not really even breaking even on the cost of that coffee, let alone making profit. Banks hurt small businesses with fees just as much as poor people.

Also, if and when a crash, or a computing error, or an electric blowout occurs, your money in the bank becomes void. Then where is everyone.
10:48 AM
Max said…
The one thing you write, that I really do agree with, is the idea that we're more careful with cash money than we are with card money. I find that the more 'physical' my money gets, the more neurotic I am about valuing and spending it. It's an intuitive trait, that leads to funny consequences such as people spending hours upon hours rolling up mountains of pennies just to deposit the 10 bucks, when they just as easily could throw their pennies out the window and spend their evenings with a book instead of in a movie theatre.

I think what I imagine isn't quite as revolutionary as you interpreted, though. I only imagine replacing cash with a swipe card the way that transit systems have them, or store gift cards. So it's not a debit or credit (both of which are expensive for small businesses to accept, you're right!) but a card that actually has X dollars loaded into it it, that you recharge at the bank machine as a cash withdrawal; this would merely replace the paper and coinage with a "cash card". It would work exactly as cash works, just minus the expensive-to-produce paper and metal.

So, I guess, the idea isn't so much to get rid of the /role/ of cash, just the paper and metal.

The one key difference, aside from the amount of money that would be saved by not having to mint any more paper and metal money, is that people wouldn't be able to spend or save without a financial institution. You're right about that. But cash is no more stable than electronic money anyway; it is equally stable at best, and less stable at worst. Cash is also /never/ a way to invest (except if you are a FOREX trader), because it doesn't gather instrest to at least match inflation as banked money does. Cash, as it sits under a one's matress, is losing value by the month, slowly and surely, wheras money in a simple savings account with basic interest, retains its real-world value.

And for your interest, the Bank of Canada, a crown corporation, decides how much cash to create every year, and therefore decides quite directly what its value will be. It's mission statement, as per the 1935 Bank of Canada Act which created it, is "...(its) responsibilities focus on the goals of low and stable inflation, a safe and secure currency, financial stability, and the efficient management of government funds and public debt." AKA they control inflation and interest rates, and print bills. (Thanks Wikipedia!)

The other banks are heavily regulated and legally bound to fulfill a long list of obligations, interest minimims and maximums, and so forth. They're not 'private' at all the way other sectors are.

And thanks to removable /and/ online storage, even in the elctronic age there is no risk of a fight club-esque information catastrophe. Even if Brad Pitt blew up our financial buildings one fine evening, nobody's credit history or savings would be erased.

God that was a long comment.
2:09 PM
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