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The Future of Money
Snuggums writes "Apparently some major forces at play in the tech money world. People like Vint Cerf, Tim O'Reilly, Andre Durand, and Cory Doctorow are teaming up with Tom Frey and the futurist think tank, DaVinci Institute, to dive into the forces at play with a Future of Money Summit later this year. They've even tapped a Nobel Prize winner and Visa founder, Dee Hock. They're hoping to answer questions like; what kind of money you'll be putting into vending machines 25 years from now; when will cash disappear; when will our current banking system become obsolete; and who gets to own money in the future?"
Credit cards cost even more than debits - you just pay a different way. The fee for using a credit card is 3% MINIMUM, and only a large retailer can get that rate. For small businesses it's more like 10%! That goes directly into the prices you pay.
The only reason more people aren't aware of this is that government has been in the pocket of the credit card companies for a long time - that's why it's illegal for the retailer to actually put the amount you're paying to Visa or Mastercard on the bill, where it belongs. Some have gotten around that by offering a "cash discount", but it's a legal grey area.
Credit card companies are the worst of finance industry, and that's really saying something.
There's overhead to maintaining a cash system too, of course, borne by the government that prints the cash (and polices counterfeiting, etc). But I really wonder how much extra we'll be paying in assorted "service charges" with every new electronic-cash scheme that comes along. If it's coming from banks and other financial empires, you can assume you're being bilked, because the only reason they ever have to offer a new service is to find a new way to skim your money.
People complain about paying taxes all the time; what I object to is bank charges. And the "take your business elsewhere" is ridiculous - they're all the same (even credit unions are only marginally better these days).
It's worth reading Dee Hock's writings. He sounds like a collectivist nutcase at first. But this is the guy who designed how Visa, the organization, works. He got all the big banks to sign on. And he was a mid-level guy at a small bank when he did it.
Few people outside the banking industry understand what Visa really is, let alone how it's organized and governed. Internet people should. It's a good model for shared infrastructure, like Internet backbones.
Visa is a major corporation organized as a cooperative. Its members, and owners, are banks. Visa sets standards and runs the backbone network that transfers credit card transactions between banks. Visa doesn't issue credit cards or do financial transactions itself.
The details of how that works politically are complex. Yet it does work, and a lot better than, say, ICANN. I'm not going into how it's done; read Dee Hock's book.
You are incorrect in associating paper with wealth. There is no connection. That dollar bill in your wallet is no more or less money than a digit in a Wells Fargo computer. Both represent a unit of confidence in the issuing body - the US government. That is all they represent. You cannot redeem that dollar bill for a fraction of preciou metal. You cannot redeem the bill for a piece of a brick of a government building. You are not assured of receiving a set unit of a foreign currency for it either. It is a fiat currency. It has no inherent value. The paper bill is simply a physical container for a fractional unit of confidence in the US government, nothing more or less.
I'm not sure what the banking requirements for e-money schemes would be like, but banks are only required to keep a small fraction of deposits in reserve. If that applied to e-money as well it would expand the investment options for the money collected by e-money firms.
Of course, consumers understand this logic perfectly well --- why should I pay for the privilege of spending my own money? why not just use a debit card and cut out the intermediate steps? That's one reason why these ideas have been floating around since the 1980's without really catching on.
My point: a lot of hype about a "cashless society" is coming from firms with an interest in replacing the current system with one in which they effectively "issue currency" and make money off of the float, as well as from percentage based and flat fees. They don't mean "cashless"--they mean "use our cash instead of theirs."
arrrggh, I never thought it would come to this, but...
1) issue alternative currency
2) ????
3) Profit!
except that in this case ????? = collect interest.
blog-O-rama
foldplay your photos won't know what hit them.
I agree with the ideas espoused above, but wanted to correct some factual errors.
The fee for using a credit card is 3% MINIMUM, and only a large retailer can get that rate. For small businesses it's more like 10%!
Running a small business in Central California, I had an account with Cardservice Intl and paid 1.59%, with an annual volume somewhere around $80,000-100,000. 10% is simply rediculous, and it's a good idea a credit card merchant account isn't that expensive!
that's why it's illegal for the retailer to actually put the amount you're paying to Visa or Mastercard on the bill.
It's not illegal - it's just against the contract that you sign to get your merchant account. The contract actually says that you won't charge extra for credit card transactions.
You won't go to jail, but you might lose your merchant account!
I have no problem with your religion until you decide it's reason to deprive others of the truth.
Most technical conferences give out lots and lots of free complimentary tickets to their events. That's partly why the remaining tickets get to be so expensive. If you don't receive any free complimentary tickets yourself, then it could possibly mean you're not really part of the social fabric of those communities.
I am not making an assertion, so please don't get upset, I am just making a guess based on my personal experience.