5 ms·

These days there isn't really need to keep using traditional currency anymore. Since I don't get charged for using them, I use cards even for <5€ payments now a

by fbnt 16y ago

These days there isn't really need to keep using traditional currency anymore. Since I don't get charged for using them, I use cards even for <5€ payments now and I hardly carry real money with me anymore. It's also much easier to monitor your expenses this way. There are still an enormous amount of shops/businesses that only accept physical money, but I think the world will be ready for electronic-only currency in 10-30 years time.

sgift 16y ago
I would love to agree with you, but using cards for every transaction makes it quite simple for the card companies / banks to monitor spending habits and selling them to interested parties (or the government). But still, not having to carry Euro coins would be great. They are awfully heavy.
silencio 16y ago
> Since I don't get charged for using them... That cost is factored into your purchase somehow, and if it isn't and it's a problem to the retailer paying the fees, it will be eventually. Transaction fees seem insignificantly small, but they'll easily chew into any profit margin and more for a payment as small as €5 (as small as, not less than). This is why at least in the US, lots of retailers try to enforce minimum purchases, tack on surcharges, and have differing prices for card and cash payments even if it's against the terms of their merchant agreement. There's also that whole aspect of dealing strictly in cash being convenient for tax fraud and purchases that can't easily be traced. Those two are possibly the biggest stumbling blocks for an all electronic currency. Case in point: I love the idea of going that way because it makes my finances easier to manage, but I hate that my CC company already tracks what I buy with my card to determine my credit-worthiness and more that has nothing to do with fraud monitoring, and it's frankly none of anyone's business what I buy with my own damn money if I have had no trouble paying my bills in full on time for years on end. There's so many pros and cons here, I really don't know which way to go.
- eru 16y ago
  Of course there's always some cost in handling payments. Cash also has costs for the merchant---somebody has to bring all that cash to the bank for example. Debit card payments (in Germany at least) are as free as it gets for the merchant, and they get their money immediately (not several days later like with credit cards). (I still prefer cash.)
  - silencio 16y ago
    There's ups and downs to all payment methods. Cash can be reused to provide change to other customers, and to make smaller payments. Just like credit card transactions can be used to pay for larger payments to providers. Just like CC processing fees can be a huge pain in the butt for microtransactions, but taking cash and lots of it to the bank is a mindfuck and you decide to call one of those armored courier services instead. That being said, speaking from personal experience owning and running retail stores, credit cards are a pain to accept because of the transaction fee vs. microtransaction issue when people decide to pull their credit cards out for all of a $2 purchase, but more customers spend more money usually because they didn't have any cash on them. What can you do....heh.
    - eru 16y ago
      Thanks for the update from the real world. Do you have any experience with debit cards vs credit cards?
      - silencio 16y ago
        Right now I'm using Costco's partnership with Elavon for credit card processing that also includes debit cards, and it's been a while so I don't think there's anything terribly different about accepting them. It's the same old industry that wants to charge you those transaction fees (that's at least kind of reasonable, you know?..) on top of $185972398742134 in monthly fees for everything from renting equipment to account fees and minimum charges and what have you. I think I went this way because it was cheaper than an Authorize.net+whatever mess (for brick and mortar, mind you) and better than the fees others wanted, on top of my spotting the brochure while shopping at Costco. > ...update from the real world. All things considered, I don't think there's anything fundamentally different about physical purchases vs. online purchases made with a credit card. The only big one is that micropayment systems and fees aren't really in place for brick and mortar retailers that might struggle just to accept cards in the first place, whereas it's becoming more and more common online because people are buying 99 cent songs and apps all over the place. It needs to happen for the former because people make 99 cent purchases everyday anyway (usually combined with something else, or else they're paying with cash...hopefully), but that's a problem that hasn't even been sufficiently solved in an all-digital world that loves the idea but can't easily do it because of all the damn fees.
- electromagnetic 16y ago
  Credit card is a percentage of the purchase price. Mastercard/Visa charge roughly 2%, and IIRC roughly 1.7% on their debit cards. I know here in Canada debit charges through the Interac system are a flat fee between $0.05 and $0.25 and can be charged as a surcharge by stores (however as far as I can tell they're charged full service fees if they surcharge it, like many convenience stores). However, because of the Interac system's flat fee some businesses will give you a 2% credit for using a debit card over a credit card. Here in Canada we have a $1 and $2 coin and I find it saves a lot of hassle, I can pay for a lot of things by just grabbing my change. I don't like taking my wallet out in a crowded area when I've got a couple 100 dollars in there.
  - deleted 16y ago
    [deleted]
  - silencio 16y ago
    That ultimately depends on the merchant agreement. Regardless, it's a percentage and/or a flat fee (and usually the flat fee that makes no sense for micropayments), and varies depending on other factors (which creditor, what kind of card, etc). But that's not what I'm talking about. Typically in the US the merchant is responsible for paying all fees and is not allowed to explicitly charge the customer for it in any extra way except through methods like "cash discounts". So the customer will pay for this some other way (like raising the price of the product). I guess that's the difference I'm nitpicking about here...just as ridiculous as it is ok to provide cash discounts but not credit card surcharges, it's ridiculous to claim you're not paying anything for those additional fees, because retailers that have to deal with the possibility of micropayments aren't exactly oblivious to the fact that a percentage+flat fee just killed their profit on a $2 purchase. There is a lot more to the cost of accepting credit cards than just the transaction fee, just as there are costs of accepting cash. It's just that the benefits of accepting cash (i.e. tax fraud as I mentioned above) is a lot more appealing than accepting card payments to many businesses. But I digress...
- barrkel 16y ago
  They are factored in, alright: cash users subsidize credit card users. And because of the income profile of cash vs credit card users, it amounts to a subsidy of the wealthy by the poor. EDIT: There's more details here: http://www.cutimes.com/Issues/2010/August-11-2010/Pages/New-Research-Suggests-Poor-Consumers-Subsidize-the-Wealthier-Ones.aspx http://www.cutimes.com/Issues/2010/August-11-2010/Pages/New-...
  - Yaggo 16y ago
    I think the opposite: credit card users subsidize the use of cash. I hardly believe the former can be more expensive than the latter – if you take into account all the physical effort required to replace / collect / move around the pieces of paper / metal.
    - silencio 16y ago
      I addressed this in http://news.ycombinator.com/item?id=1591129 http://news.ycombinator.com/item?id=1591129. To continue addressing it, credit card processing does not end at a card swipe. Unlike for internet retailers, brick and mortar can have more steps to take to complete a transaction, and routine things like tip adjustments takes just as much time as collecting and moving pieces of paper and metal. Other fees collected in the process of accepting credit cards can be just as ridiculous as the fees for hiring an armored service to take care of the cash, or the time/effort required to go to the bank. Or employees stealing cash. It's ultimately difficult to determine if credit cards are in fact cheaper than cash in a broad sense, although that's something you usually can figure out on a per-business basis.
    - barrkel 16y ago
      You're probably overlooking the portion of fees that credit card using customers can reclaim via cashbacks and rewards.
      - Yaggo 16y ago
        Well, I was talking more from a theoretical point of view (plastic/virtual money vs. cash). The current credit card model surely has its issues.
lkozma 16y ago
It's also much easier FOR OTHERS to monitor your expenses this way.
- fbnt 16y ago
  Seems to me that joe the plumber dosen't really care that much about privacy nowadays. I don't really see how it could be that harmful, if not for a bit of more targeted advertising. I have the feeling that people would give up a bit of their privacy in exchange of a more comfortable shopping experience, or maybe I'm completely wrong, only time will tell.
  - lkozma 16y ago
    Maybe the government will go crazy and you will start plotting a revolution, so you want to purchase stuff without being traced. Checks and balances and all that. You are just using the "I have nothing to hide" fallacy. see this, for example: http://www.schneier.com/essay-114.html http://www.schneier.com/essay-114.html
  - barrkel 16y ago
    How about your health insurance company charging you more because of your purchase profile? Or your credit score being affected by which brand of alcohol you prefer? Or one of the latest bits of news from here in the UK - credit ratings firms checking benefit claimant spending looking for fraud: http://www.bbc.co.uk/news/uk-10922261 http://www.bbc.co.uk/news/uk-10922261 You almost certainly don't need to be committing fraud to attract an investigation and all its hassle.
  - silencio 16y ago
    It's already been used to decline credit to people based on the likes of their shopping preferences. Not necessarily how much they spent and how much they paid off of that, but where they shopped. Whether or not it was justified, I can't tell you. And I am fully aware that tracking history is a vital part of fraud monitoring and determining creditworthiness. But the possibility of abuse beyond the horror of targeted ads is still there, and people can imagine them and they don't like it. I don't like it. I have nothing to hide, but that doesn't mean I should condone the excessive information collecting and profiling either. See http://www.govtrack.us/congress/billtext.xpd?bill=h111-627&version=enr&nid=t0%3Aenr%3A431 http://www.govtrack.us/congress/billtext.xpd?bill=h111-627&#... and http://www.federalreserve.gov/BoardDocs/RptCongress/creditcard/2009/consumercreditreductions.pdf http://www.federalreserve.gov/BoardDocs/RptCongress/creditca... tl;dr off the top of my head: Congress/POTUS passed a law last year that included commissioning a report on whether or not creditors were actively profiling, and how far it went. The FRB eventually found that most of the creditors in the US applied this kind of profiling to the majority of CC holders, but only a tiny fraction of a percentage were directly affected by it. It was also pointed out that the use of this information to track things like fraudulent transactions probably outweighed many negatives of tracking this information for other uses as well, so limiting the profiling would probably be a Bad Thing. But they didn't have enough information to determine if this was overall a negative enough to justify restricting it. And that's kinda...scary. They may not do it now, but what's to stop them from doing it in the future without you fully aware of what's going on?
barrkel 16y ago
One convenience is being able to pay the bill in a restaurant faster without having to do the credit card dance.
chopsueyar 16y ago
I'm glad all your transactions require electricity to be present to take place. Why should I have a physical store of value, when I can trust Bank X's database? Also, now all transactions can involve at least three parties, instead of two.

by fbnt 16y ago

sgift 16y ago

I would love to agree with you, but using cards for every transaction makes it quite simple for the card companies / banks to monitor spending habits and selling them to interested parties (or the government). But still, not having to carry Euro coins would be great. They are awfully heavy.

silencio 16y ago

> Since I don't get charged for using them... That cost is factored into your purchase somehow, and if it isn't and it's a problem to the retailer paying the fees, it will be eventually. Transaction fees seem insignificantly small, but they'll easily chew into any profit margin and more for a payment as small as €5 (as small as, not less than). This is why at least in the US, lots of retailers try to enforce minimum purchases, tack on surcharges, and have differing prices for card and cash payments even if it's against the terms of their merchant agreement. There's also that whole aspect of dealing strictly in cash being convenient for tax fraud and purchases that can't easily be traced. Those two are possibly the biggest stumbling blocks for an all electronic currency. Case in point: I love the idea of going that way because it makes my finances easier to manage, but I hate that my CC company already tracks what I buy with my card to determine my credit-worthiness and more that has nothing to do with fraud monitoring, and it's frankly none of anyone's business what I buy with my own damn money if I have had no trouble paying my bills in full on time for years on end. There's so many pros and cons here, I really don't know which way to go.

eru 16y ago
Of course there's always some cost in handling payments. Cash also has costs for the merchant---somebody has to bring all that cash to the bank for example. Debit card payments (in Germany at least) are as free as it gets for the merchant, and they get their money immediately (not several days later like with credit cards). (I still prefer cash.)
- silencio 16y ago
  There's ups and downs to all payment methods. Cash can be reused to provide change to other customers, and to make smaller payments. Just like credit card transactions can be used to pay for larger payments to providers. Just like CC processing fees can be a huge pain in the butt for microtransactions, but taking cash and lots of it to the bank is a mindfuck and you decide to call one of those armored courier services instead. That being said, speaking from personal experience owning and running retail stores, credit cards are a pain to accept because of the transaction fee vs. microtransaction issue when people decide to pull their credit cards out for all of a $2 purchase, but more customers spend more money usually because they didn't have any cash on them. What can you do....heh.
  - eru 16y ago
    Thanks for the update from the real world. Do you have any experience with debit cards vs credit cards?
    - silencio 16y ago
      Right now I'm using Costco's partnership with Elavon for credit card processing that also includes debit cards, and it's been a while so I don't think there's anything terribly different about accepting them. It's the same old industry that wants to charge you those transaction fees (that's at least kind of reasonable, you know?..) on top of $185972398742134 in monthly fees for everything from renting equipment to account fees and minimum charges and what have you. I think I went this way because it was cheaper than an Authorize.net+whatever mess (for brick and mortar, mind you) and better than the fees others wanted, on top of my spotting the brochure while shopping at Costco. > ...update from the real world. All things considered, I don't think there's anything fundamentally different about physical purchases vs. online purchases made with a credit card. The only big one is that micropayment systems and fees aren't really in place for brick and mortar retailers that might struggle just to accept cards in the first place, whereas it's becoming more and more common online because people are buying 99 cent songs and apps all over the place. It needs to happen for the former because people make 99 cent purchases everyday anyway (usually combined with something else, or else they're paying with cash...hopefully), but that's a problem that hasn't even been sufficiently solved in an all-digital world that loves the idea but can't easily do it because of all the damn fees.
electromagnetic 16y ago
Credit card is a percentage of the purchase price. Mastercard/Visa charge roughly 2%, and IIRC roughly 1.7% on their debit cards. I know here in Canada debit charges through the Interac system are a flat fee between $0.05 and $0.25 and can be charged as a surcharge by stores (however as far as I can tell they're charged full service fees if they surcharge it, like many convenience stores). However, because of the Interac system's flat fee some businesses will give you a 2% credit for using a debit card over a credit card. Here in Canada we have a $1 and $2 coin and I find it saves a lot of hassle, I can pay for a lot of things by just grabbing my change. I don't like taking my wallet out in a crowded area when I've got a couple 100 dollars in there.
- deleted 16y ago
  [deleted]
- silencio 16y ago
  That ultimately depends on the merchant agreement. Regardless, it's a percentage and/or a flat fee (and usually the flat fee that makes no sense for micropayments), and varies depending on other factors (which creditor, what kind of card, etc). But that's not what I'm talking about. Typically in the US the merchant is responsible for paying all fees and is not allowed to explicitly charge the customer for it in any extra way except through methods like "cash discounts". So the customer will pay for this some other way (like raising the price of the product). I guess that's the difference I'm nitpicking about here...just as ridiculous as it is ok to provide cash discounts but not credit card surcharges, it's ridiculous to claim you're not paying anything for those additional fees, because retailers that have to deal with the possibility of micropayments aren't exactly oblivious to the fact that a percentage+flat fee just killed their profit on a $2 purchase. There is a lot more to the cost of accepting credit cards than just the transaction fee, just as there are costs of accepting cash. It's just that the benefits of accepting cash (i.e. tax fraud as I mentioned above) is a lot more appealing than accepting card payments to many businesses. But I digress...
barrkel 16y ago
They are factored in, alright: cash users subsidize credit card users. And because of the income profile of cash vs credit card users, it amounts to a subsidy of the wealthy by the poor. EDIT: There's more details here: http://www.cutimes.com/Issues/2010/August-11-2010/Pages/New-Research-Suggests-Poor-Consumers-Subsidize-the-Wealthier-Ones.aspx http://www.cutimes.com/Issues/2010/August-11-2010/Pages/New-...
- Yaggo 16y ago
  I think the opposite: credit card users subsidize the use of cash. I hardly believe the former can be more expensive than the latter – if you take into account all the physical effort required to replace / collect / move around the pieces of paper / metal.
  - silencio 16y ago
    I addressed this in http://news.ycombinator.com/item?id=1591129 http://news.ycombinator.com/item?id=1591129. To continue addressing it, credit card processing does not end at a card swipe. Unlike for internet retailers, brick and mortar can have more steps to take to complete a transaction, and routine things like tip adjustments takes just as much time as collecting and moving pieces of paper and metal. Other fees collected in the process of accepting credit cards can be just as ridiculous as the fees for hiring an armored service to take care of the cash, or the time/effort required to go to the bank. Or employees stealing cash. It's ultimately difficult to determine if credit cards are in fact cheaper than cash in a broad sense, although that's something you usually can figure out on a per-business basis.
  - barrkel 16y ago
    You're probably overlooking the portion of fees that credit card using customers can reclaim via cashbacks and rewards.
    - Yaggo 16y ago
      Well, I was talking more from a theoretical point of view (plastic/virtual money vs. cash). The current credit card model surely has its issues.

lkozma 16y ago

It's also much easier FOR OTHERS to monitor your expenses this way.

fbnt 16y ago
Seems to me that joe the plumber dosen't really care that much about privacy nowadays. I don't really see how it could be that harmful, if not for a bit of more targeted advertising. I have the feeling that people would give up a bit of their privacy in exchange of a more comfortable shopping experience, or maybe I'm completely wrong, only time will tell.
- lkozma 16y ago
  Maybe the government will go crazy and you will start plotting a revolution, so you want to purchase stuff without being traced. Checks and balances and all that. You are just using the "I have nothing to hide" fallacy. see this, for example: http://www.schneier.com/essay-114.html http://www.schneier.com/essay-114.html
- barrkel 16y ago
  How about your health insurance company charging you more because of your purchase profile? Or your credit score being affected by which brand of alcohol you prefer? Or one of the latest bits of news from here in the UK - credit ratings firms checking benefit claimant spending looking for fraud: http://www.bbc.co.uk/news/uk-10922261 http://www.bbc.co.uk/news/uk-10922261 You almost certainly don't need to be committing fraud to attract an investigation and all its hassle.
- silencio 16y ago
  It's already been used to decline credit to people based on the likes of their shopping preferences. Not necessarily how much they spent and how much they paid off of that, but where they shopped. Whether or not it was justified, I can't tell you. And I am fully aware that tracking history is a vital part of fraud monitoring and determining creditworthiness. But the possibility of abuse beyond the horror of targeted ads is still there, and people can imagine them and they don't like it. I don't like it. I have nothing to hide, but that doesn't mean I should condone the excessive information collecting and profiling either. See http://www.govtrack.us/congress/billtext.xpd?bill=h111-627&version=enr&nid=t0%3Aenr%3A431 http://www.govtrack.us/congress/billtext.xpd?bill=h111-627&#... and http://www.federalreserve.gov/BoardDocs/RptCongress/creditcard/2009/consumercreditreductions.pdf http://www.federalreserve.gov/BoardDocs/RptCongress/creditca... tl;dr off the top of my head: Congress/POTUS passed a law last year that included commissioning a report on whether or not creditors were actively profiling, and how far it went. The FRB eventually found that most of the creditors in the US applied this kind of profiling to the majority of CC holders, but only a tiny fraction of a percentage were directly affected by it. It was also pointed out that the use of this information to track things like fraudulent transactions probably outweighed many negatives of tracking this information for other uses as well, so limiting the profiling would probably be a Bad Thing. But they didn't have enough information to determine if this was overall a negative enough to justify restricting it. And that's kinda...scary. They may not do it now, but what's to stop them from doing it in the future without you fully aware of what's going on?

barrkel 16y ago

One convenience is being able to pay the bill in a restaurant faster without having to do the credit card dance.

chopsueyar 16y ago

I'm glad all your transactions require electricity to be present to take place. Why should I have a physical store of value, when I can trust Bank X's database? Also, now all transactions can involve at least three parties, instead of two.