Technorati Tags: costs, e-purse, payments
This is the kind of story I was thinking of planting in the national press…
Source close to the police (my mate Ken who lives next to Guildford nick) tell me that the overwhelming majority of drug deals are cash-enabled. And you know who supplies this cash, don’t you: unbelievably its the Government! You couldn’t make it up!
But the charge sheet doesn’t end with incitement to armed robbery and conspiracy to supply illegal drugs. A decade ago, James Gleick wrote in the New York Times Magazine that cash was on the way out. His main points (below) remain valid.
Cash is dirty: that The New Jersey Turnpike tried to punish toll collectors for wearing latex gloves (thus giving the driving clientele a “bad impression”), but who can blame them?Cash is contaminated with bugs (a 1998 UCSF study found that 18% of coins and 7% of notes in circulation in the US had “unfriendly” bacteria on them) and drugs (a 1994 US court case established that, since almost all US notes test positive for cocaine, a “sniffer” dog detecting cocaine in a hoard of notes was no longer probable cause to seize the money). In 1999, the Evening Standard found that 99% of the banknotes in circulation in London are contaminated with cocaine.
Cash is heavy: $1 million in $20 bills weighs more than you can lift, and drug dealers have been disconcerted to note that their powdered merchandise is handier for smuggling than the equivalent money. As has recently been discovered in Kent, a few million quid is a hassle to move around.
Cash is fundamentally inequitable. It means the poor pay the highest transaction costs, while the e-payment empowered rich steer clear of the stuff. The unbanked pay extortionate fees to cheque-cashing operations: even more extortionate than the fees charged for ATMs, which will total a quarter of a billion this year. I can’t say it’s transparently obvious to me why ATMs should be free, but the fact is that the charges fall disproportionately on those least able to afford them.
But the killer is the cost. Cash is expensive. From the perspective of retailers constantly counting, sorting, moving and monitoring cash eats up as much as 6% of its value, and cash has a way of constantly “shrinking” as a notes disappear from time to time. For the economy as a whole estimates very, but cash could waste anywhere from 0.5% to 1% of GDP. As our good friend Leo Van Hove puts it, the social cost of cash is very substantial.
With all of these terrible consequences, isn’t it socially irresponsible of the government to keep making and distributing notes and coins?
I was going to make a contrarian point about card and ATM fraud and how no-one has invented a jam jar skimmer but I got distracted by sniffing the contents of my purse (being London based).