Extending debit

[Dave Birch] Our good friends at Edgar Dunn have produced a study showing that more consumers prefer debit cards than any other type of payment for point of sale purchases for the first time.  So it looks as if the march of debit at POS continues.  It may well continue beyond POS as well now that the the Star EFT network plans to start testing PIN-less online debit payments. The test will run about four months and involves Solana Corp., which will act as an aggregator of $25-and-under transactions generated by the online merchants.  The idea is that customers can buy digital junk like ring tones or cartoon subscriptions from PCs.  Through Solana, participating merchants will be required to register and authenticate consumers for the payments and bear the risk in disputed transactions.  If they are happy to do this, then presumably the consumer preference for debit will begin to extend into cyberpsace. It looks as if debit cards are set to displace cash even further, with PINless transactions to eat into virtual cash transactions and contactless interfaces to eat into real world cash transactions.

Technorati Tags: cashless, debit cards, coins

On which topic, replacing cash is environmentally friendly, I’ve decided, after reading in the newspaper (The Daily Mail, 24th April 2007, p27) that the Royal Mint estimates that 6.5 BILLION one penny coins are missing presumed down the back of the sofa in the UK. The penny was introduced with decimalisation in 1971, as was the halfpenny that was scrapped in 1984.  Now, it transpires, 38% of the all the pennies ever issued are unaccounted for.  This is not too surprising, given another UK poll result: 60% of people wouldn’t bother to bend over and pick up a penny in the street.  What a waste.

Given that one penny coins actually use up 1.65 pence worth of metal, they are (as in America) not only pointless but value-destroying.  No-one is going to go to the trouble of melting them down (which is, of course, illegal as well as impractical) but its still time to either scrap the penny and stop wasting copper (well, copper-plated steel) or, as one of the most popular suggestions for a referendum put forward on the Prime Minister’s web site points out, introduce a more useful 99p coin.  (I’m not sure I would have voted for this, but I definitely would have voted make police car sirens play the Benny Hill music.)  Introducing a 99p coin used to be one of the Official Monster Raving Loony Party manifesto commitments, but I can’t find it on their web site at the moment.  I wouldn’t sneer.  When the Monster Raving Loony Party was first launched (as the National Teenage Party) in 1964, two of its policies were votes for 18 year-olds and all day opening for pubs (both of which are now law).  The other one was putting Parliament on wheels and taking it round the country.  Give them time.

On the other hand, it may be that I don’t understand economics.  If you don’t, but would like to, I have a spare copy of Forum friend Diane Coyle’s not only splendid but critically acclaimed new book "The Soulful Science: What Economists Really Do and Why It Matters".  Be the first person to reply on this thread and it’s yours.  (Excluding, as usual, employees of Consult Hyperion, blogmeister Jane and members of my immediate family).

These opinions are my own (I think) and presented solely in my capacity as an interested member of the general public [posted with ecto]