There has been a lot of excitement recently about the proliferation of electronic currencies and payment tools.
There’s Square, a tool that allows just about anyone to accept credit card payments.
There’s PayPal, a way to transfer funds between parties and pay for things.
And there are all the old electronic payment tools, too–namely credit and debit cards.
And thank goodness for that.
Because the other technology we use to pay for things–cash–is just plain awful.
I made the mistake of using cash to pay for my lunch yesterday, and I immediately regretted it.
Because after taking one dirty piece of green paper out of my wallet and handing it to the cashier, I got several dirty pieces of green paper back–along with a fistful of heavy metal disks:
I had to stuff the many pieces of dirty green paper into my wallet, which made it even fatter, and and I had to dump the heavy metal disks in my shoulder bag, which made it even heavier.
And that exchange reminded me why cash is a horrible payment mechanism and why the complete transition to digital payments just can’t come soon enough.
How is cash lousy? Let us count the ways…
* It’s dirty. Except for the crisp new bills that you occasionally get from cash machines, most cash is grimy and limp. It’s also probably disease and bacteria ridden. Given the stuff they find on cell phones, I don’t even want to know what’s on cash.
* It smells. Old cash also has a distinct odor. You definitely don’t want to know where it comes from (At least I don’t).
* It can be lost, destroyed, or stolen. The other day, someone stuck his (?) hand into my wallet and walked off with at least $200. (Yes, silly me for leaving my wallet in a place where someone could stick their hand into it, but once the cash was gone, it was gone. There was no credit-card company or bank to call to stop payment.) I’ve destroyed the value of countless bills over the years by ripping them in half or running through the washing machine. And I’ve probably dropped a fortune on to the street.
* It’s heavy. Small numbers of bills are easy to transport, but try carrying enough around to pay for a car or a family vacation. And you had better lug your excess coins back to the bank regularly, or they’ll get so heavy that you’ll break your back trying to exchange them for usable currency.
* It can’t be used to pay for big-ticket items. Ever paid for a car in cash? A house? A big family vacation? Of course not. Even if you were lucky enough to make it to the point of sale without getting mugged, it would be highly impractical and weird to do this. And the vendor probably wouldn’t accept the cash if you did. They’d figure you stole it.
* It’s clumsy, slow, and imprecise. Before you can pay for something in cash, you have to count the cash. Then, when you hand the cash to the cashier, the cashier has to count it. Then the cashier has to count out the amount of “change” you get. Then you have to count that. Think of all that wasted time. Think of the errors. Think of the lost productivity!
* It leaves you with no record of your purchase. Yes, fine, anonymity in payments occasionally has its virtues. But unless you’re buying drugs or sex, or trying to conceal some other inconvenient purchasing habit, it’s generally helpful to have a record of your spending. There’s no record with cash, though. It just goes “poof.”
* It’s only good in your country. Any time you leave the country, you have to use your cash to buy some other kind of cash. That transaction costs money. It’s also a pain in the neck. And when you get back from your trip, you’ll inevitably have some now worthless cash left over. It will weigh down your wallet or bag until you finally store it some place and forget about it.
* It’s expensive. Cash machines now regularly charge $2-$3 to sell you some cash. Unless you buy vast sums of cash, which increases the risk of loss, destruction, or theft, this is a high fee on a percentage basis. Also, it costs the U.S. taxpayer $800 million to print cash every year. And it costs companies hundreds of millions of dollars more to truck it around.
Compare these problems to the promise of digital payment tools:
- Acceptable anywhere in the world (No physical currency exchange!)
- Accurate to the penny (No counting!)
- Clean (No dirty paper)
- Light (No heavy coins)
- Simple record of all spending (No more wondering where it all went)
- Unlimited denominations (Buy a Frappuccino a TV or a massive family vacation–all with the same simple swipe)
- Relatively cheap for you (It’s the merchant who gets hosed by credit card fees)
- Much less risk of theft, loss, or destruction. Yes, credit cards can get stolen. Yes, bank accounts can get raided. Yes, someday, someone will like “steal” a boatload of Bitcoins. But overall, your money is safer in digital form than paper form.
Bring on the digital payment revolution!
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