Cards on a plane

[Dave Birch] When I was last on a domestic US flight, I very much enjoyed hearing the announcement that beer and wine were available for $4 and $5 respectively but that “Continental Airlines is no longer accepting cash so please have your debit, credit or charge card ready”. Ah, music to my ears. When the stewardess came along with the drinks trolley, none of the passengers that I could see appeared to mind in the least. Perhaps they had given up complaining, but it’s more likely that there was no-one over 21 on the flight without a debit card and probably none of them without a credit card either.

In the closed ecosystem of the airplane, everyone can see that cash isn’t efficient. It has to be collected, transported, protected, managed and counted. A waste of everyone’s time. Electronic payments save money throughout the ecosystem. This is true for society as a whole, but in an excellent paper on “The Single European Cash Area” in the current issue of the Journal of Payment Systems and Strategy, Carlo de Meijer of RBS asks why we still use cash so much when it imposes such high costs on us all. He says that

…most citizens still believe cash is free of charge. That, however, is a misconception… Cash is expensive because it has higher production costs, costs of storage, distribution and security measures. And there are other costs for society, such a fraud and tax evasion.

He’s absolutely correct, of course. It’s reasonable to observe though, that not everyone has a card to pay with, and even I wouldn’t go so far as saying that anyone who doesn’t have a card is a drug dealer, corrupt politician or perhaps even a terrorist — unlike the British government, apparently.

A recent British radio advertisement for the anti- terrorist hotline urged listeners to call if they spotted a neighbour behaving unusually. Such odd behaviour included, “He pays with cash, because he doesn’t have a bank card”.

The advertisement has now been banned by the Advertising Standards Authority, because it encouraged listeners to report people for doing something which is perfectly legal

[From When cash is king | Stuff.co.nz]

But the day will certainly come when paying with cash is regarded as odd. Perhaps in my local Waitrose you will have to go to the special checkout to pay with cash, the plumber will refuse to accept cash because he think it may be part of an HMRC sting operation and the kids won’t want cash pocket money but it’s just plain uncool. We’re not there yet, but we should be.

Basic cash registers — and really, cash itself — are analog dinosaurs in the digital jungle of financial transactions. It’s time for them to check out.

[From Ten technologies that should be extinct (but aren’t) – Technology & science – Tech and gadgets – PC World – msnbc.com]

How true.

As an aside, Carlo mentions that one of the characteristics of cash that is valued is anonymity. I’ve written before why I think this isn’t true, and that we should be designing retail e-payment system with privacy, rather than anonymity, as a fundamental characteristic.

The dangers of a cashless society are huge and cannot be ignored: Everything would be tracked and controlled; privacy would be non-existent; the government would be close to omniscient; people could be literally shut off; electrical problems, electronic warfare, and hackers could bring trade and civilization to a standstill; and much more. Therefore, such a regime must be prevented.

[From Sweden Considers Cashless Society]

All of these things depend on the implementation: they are not inherent characteristics of electronic cash. The implementation may vary from culture to culture (there’s no reason to think the inhabitants of World of Warcraft want money to work the same way as the inhabitants of China, for example) and the technology provides for a spectrum. We can make cash anonymous, or enonymous, or pseudonymous or absonymous. It’s up to the designer. I should note that, as input to the discussion, the general public seem to think that cash is on the way, irrespective of what we may think about the implementations. A survey of nearly 2,000 people in the UK in June 2010 found that

• Around 52% of people said they did not think notes and coins would still be in use in 20 years.
• 11% of those questioned thought iris recognition technology would be used to make payments, alongside more conventional methods such as credit and debit cards.
• Nearly three-quarters said they preferred to use a card to pay for items rather than having to carry cash, with only 14% favouring notes and coins.
• A third claimed that they rarely had cash on them, 82% of whom said it was easier to use a card, while 47% thought it was safer.
• 83% of those questioned saying they had not used a cheque for the past five years (and I should imagine that many of them had to have cheques explained to them before they could answer the question).

[From 52% ‘think cash obsolete by 2030’ – News – MSN Money UK]

That’s an interesting benchmark figure, don’t you agree? Half of people think that notes and coins will vanish inside two decades. Now, this may seem an aggressive timetable, but perhaps there will be pressures for change from new directions (eg, the government) that will accelerate the process either. Who knows, but it’s an interesting question to ask, which is why I’m so pleased that Karen Pine, the author of “Sheconomics”“, will be chairing an expert panel discussing the pros and cons of cash replacement at the 14th annual Digital Money Forum in London on 2nd and 3rd March 2011. Block out your calendar now.

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