Tuesday, 16 September 2008

Tyrannosaurus Cash

I feel something should be done with the monetary system, and not just in the UK, but everywhere in the world where paying by card and doing Internet transactions is common place. Retailers and other commercial businesses should allow more freedom of use of bank cards and online payments. Fees for spending amounts smaller than £5 in shops and £10 in bars should be eliminated - this would allow more spending freedom for the consumers and eventually more profits for businesses. All this would increase the velocity of the circulation of money and who knows, maybe eventually even bring down the shopping prices.

The history of people fiddling with the idea of having cards as media of payment goes back to the early 1900s. The first credit cards as we know them were introduced in 1966 and since then they've become a favored form of payment for much of the population. The digital age is here in so many ways, so what's keeping a wide-spread standardization of payments from happening? Does it really cost so much to the retailers to carry out the card transactions? I paid a 50 pence extra charge on a £3 purchase for using my card yesterday, which makes the fee over 15% of the entire purchase. As far as the pure transaction costs for banks, they are supposed to be a relatively small fixed percentage of the purchase, so to me it seems like the fixed fees applied in bars and shops are there not just to cover the transaction costs, but also to discourage the use of cards. Why does this take place? The bank charges, exactly as they are, should be transferred to the consumers instead of influencing the policies of retailers. By the way, Sweden supposedly found a way to make this all work.

If one was to push this issue further, why not think of abolishing cash and introducing a strictly card-only system? This would allow more transparency of transactions and eliminate a lot of ways in which cash is misused, but now this is probably a too-extreme measure. What can I say, I can't wait for tomorrow.

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