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In Canada, a Government-Backed Electronic Currency
An anonymous reader writes "Secure chips have already made it into our credit and debit cards. Next up, they could replace pocket change.The Royal Canadian Mint has been pushing forward with its "MintChip" prototype, a digital cash replacement aimed at transactions under $10, since it surfaced a year ago. The Crown corporation is factoring in developer feedback, hiring a product manager and consulting with the financial sector."
My credit card works fine on transactions below $10.
Where exactly is the need for this?
Credit cards companies take a cut out of what merchants later get, and it's normally a percentage, but it is not unusual for there to also be a minimum transaction fee. So, small credit card transactions aren't good for retailers, since the lose an unusually high amount of money to the credit card company. ... in fact, in the states, July 2010's Dodd-Frank Wall Street Reform and Consumer Protection Act recently legalized businesses setting a "minimum purchase with credit card" of up to $10.
Sounds a lot like the now pretty much dead "ChipKnip" scheme we had in the Netherlands. It wasn't practical; it died.
the end game will be cashless society so banks and the government in their pockets get a piece of any action. If government labels you a "terrorist", your ability to buy, hold money and sell gets instantly revoked. convenient way to make everyone in an area come in for "questioning" just to get their "privileges" back
Their contracts probably forbid it. Credit card transaction fees are a race to the bottom (a sort of prisoner's dilemma). Because the cost of the fees are passed on to all the consumers (regardless of whether you pay cash or not), the only winning move as a consumer is to use your credit card (and get the "rewards"). The rewards, of course, are less than the fees, and the credit card companies bank the rest while you pay a hidden tax.
Because the market cannot correct this itself, this is exactly the thing that requires government intervention.
A 3% charge is likely less than the cost of dealing with cash. It must be counted, moved to the bank, change must be brought back to the store and so on. It is also easy lost or stolen.
Lets not pretend CCs offer no value to the store.
All true. I think the benefit of cash for the merchant is that it's easier to under report.
One of the reasons I like using my CC (in addition to making it easier for me to track my spending) is that it makes it more difficult for the vendor to avoid reporting. I want my vendor to pay all those taxes and I want my wait-staff to report their tip earnings, and pay the taxes due thereby. Gotta keep that national deficit under control, eh?
One thing I find slightly funny is when someone says to me - "Hey - do you want to commit a crime with me? If you can pay me in cash, I won't charge you the sales tax. That way I can not report it as income, and thus avoid paying at least 30% while still being able to deduct all of my business expenses from the income that I do report. Oh yeah, and that will remove your ability to sue me for bad service or not actually doing the work, or any complaint really."
Actually they usually just say: "No tax if you pay in cash" and leave the rest "understood".
I usually respond with "How often do you think the average person informs on tax cheats via http://www.cra-arc.gc.ca/gncy/nvstgtns/lds/menu-eng.html ? I have used it a few times, it is oddly satisfying."
Actually I usually just say "No, I don't think so." and leave the rest "understood".