The Dichotomy of Currency

How much cash and/or coins do you have in your pocket/purse/wallet right now?  My answer to that question, almost 100% of the time, is $0.00.

I seem to find myself living in two completely separate worlds most of the time.  In the first world, every store, website, and vendor I patronize accepts my credit or debit cards.  (Don’t get me started on the reason some places don’t take American Express.)  Despite the fact that the credit card companies have made transactions impossibly expensive (especially for small businesses), these stores still accept them because otherwise I might not shop at their store.

The second world is a seedy underworld where chaos reigns.  It’s the world of cash-only purchases.  In 2012, it’s my experience that if a business only accepts cash, they should be audited every year for potential tax evasion.  Why, in this technological age, don’t you accept electronic payment?

  • I can tip the pizza delivery guy on my credit card receipt.
  • I can tip my waiter at the restaurant on my credit card receipt.
  • I can tip my barber on my credit card receipt.
  • I can tip the barista at the coffee shop on my credit card receipt.

In some cases, when tipping someone that I didn’t have another transaction with, I don’t currently have a better option.  This is an EXTREMELY limited list of people.

  • The luggage guy at the airport when I’m in a hurry.
  • The hotel bellman that helped me take my luggage to my room.
  • The homeless man that convinced me to help him.
  • The kid that cleans my clubs up after a round of golf.

For every other cash-based situation, why aren’t we moving these transactions to the credit card I already used?  For example:  Why can’t I tip the hotel maid ON MY BILL when I check out of my hotel room?  I’ve flatly been told that it’s not possible.

I don’t want to carry cash.  Ever.

It’s dirty.  It’s messy.  It makes my wallet gigantic.  I don’t even have a place to keep coins.  It is easily stolen or misplaced.  It requires change.  Have you ever tried to buy a bottle of Pepsi from a vending machine, only to discover you only have a $5 bill?  It’s maddening.  Credit cards, or the real point of this article, electronic payments, seem like a bright future to me.  Sure, there’s the possibility someone is going to be shaving fractions of cents from my transactions, and there’s always the possibility that the bank will have a software error that “erases” my bank balance.

Except that we already live in that world, whether you realize it or not.  The entire financial industry is not moving piles of cash or gold around to each other when money changes hands…only a series of bits are moved electronically.  So, for those of you that are leery of doing your banking electronically…you already are.

But in order for our civilization to be able to move to an entirely electronic system, we need to be able to accommodate every possible transaction, especially the ones I’ve listed below.  This is where Near Field Communication (NFC) could be the solution to all of our problems. 

Imagine a world where every single person has the ability to receive information, music, messages, and payments from any other person in the world.  You’re probably thinking that we already live in that world, but it’s clunky.  Services like PayPal and Square are working very hard to make this idea possible.  But their current solutions still require you to have someone swipe a card, or give you their email address.

NFC + one of the many wallet solutions that are coming from the likes of Google, Apple, or Microsoft might just be enough to bridge this gap to becoming seamless.  You’ll be able to store all of your payment methods inside your smartphone, and when you want to give someone money, be that a person or a vendor, it’s as simple as a wave of your device to do so.  You enter a PIN, type in the amount you want to pay, and you’re done.  No receipts, no fumbling with your wallet, and NO CHANGE to load into your pocket.

Maybe we’ll start seeing bellmen wearing devices like these:

spider-phone-4

Wave your phone near their hand, and the payment is made.  I think I’m going to love NFC.

P.S. Here’s an entertaining little video on why we should stop making money, as well.  (Well, OK, at least stop making pennies and nickels.)

7 thoughts on “The Dichotomy of Currency

  1. Regarding cash, I like it. There are times it get things done easier than credit cards, not often but really helpful when you need it. At the same time I hate coins. I wish the treasury would get rid of pennies, I give them back to the clerk when I get them.

    Australia got it half right and got rid of their 1c and 2c coins, rounding to a 5c but then added heavy $1 and $2 coins. Go figure!

  2. NFC scares me. see this clip from Adam Savage on why Mythbusters can not (not will not) ever show how hackable RFID is.

    • As I said in the article, I know this scares many people. There’s an underlying message in my text, though, that says “if NFC is done correctly.” Without the ability to secure my payments, I’m not interested. RFID scares me too, but I have an expectation that NFC, at least in smartphones, will have a layer of overkill when it comes to security.

  3. I have been debt free for a year and have been using mostly cash for 3 years. A big reason not to use a “Card” is people spend more if they do. It has been proven that when paying with a card over cash transactions are 20% higher. This is a study done by McDonald’s. This is when they started taking debt card and then credit cards.

    When you with pay with cash it sets off pain centers of the brain, so you think more about using it. Because it hurts to turn over the cash money.

    To remember “Cash is King, and Debt is dumb.”

  4. What you wrote is probably true for US, but in other countries there are many other reasons for not accepting credit/debit cards: in Germany a lot of stores don’t accept many debit and credit cards because the shop has to pay a tax for each transaction to the bank and the money is received only later – probably there are other reasons as well why they accept only some local prepaid debit cards, not Visa or Mastercard.

  5. While I agree with you generally that a cashless society has benefits, there are legitimate reasons for concern. Cash makes transactions anonymous, and that can be a good thing. Cash transactions are totally free- AMEX/Visa/Discover are not lurking behind you waiting for their cut. Governments can’t track cash transactions. There are situations where that is a good thing. The overhead of electronic transactions, both financial and technical, make moving money expensive and complex. The Cashless Society is coming whether we like it or not, and that has the potential to be a good thing. However, I think we’ll see some growing pains (especially in the US, where it’s not as well organized as in Europe.)

  6. I’m actually going in the reverse direction. There is too much technology today and the more I see the less I like it. Right now I’m getting ready to ditch the “smart phone” and go back to a phone that just, wait for it, makes phone calls. I have no need for NFC on my phone and really don’t think anyone else “needs” it either, they just want it.

    Now with current legislation in front of congress, the credit card companies are lobbying to allow stores to charge a transaction fee for using their credit cards (something we’re already paying in higher prices). This will make cash look like a much better option. Several gas stations here in Vegas already have been charging for the privilege of not using cash and I don’t buy gas there.

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