Dedicated to Deposits: Deals, Data, and Discussion
Featured Savings Rates
Featured Accounts

How A Cashless Economy Would Benefit U.S. Security

Saturday, December 18, 2010 - 12:21 PM
This is an interesting proposal in this New York Times Op-Ed piece. The author proposes that the economy go cashless in which all transactions are done without physical cash. The main reason for doing away with cash is to make it harder on criminals and terrorists to operate. The article mentioned that this was the reason why the U.S. Treasury stopped issuing $500+ bills. There have recently been calls to do away with the $100 bill for this same reason. I doubt this has any potential, but it's interesting nonetheless.
Ken TuminKen Tumin5,472 posts since
Nov 29, 2009
Rep Points: 125,708
1. Saturday, December 18, 2010 - 2:25 PM
Ha! This is a very old idea that the federal government just seriously undermined. Moving away from cash was one of the reasons behind the old rules for credit cards.

Under the old rules, federal law barred charging of anything extra for use of a credit card, creating an incentive to move away from using cash. But under the new rules adopted this past year, murchants are now allowed to charge for use of a credit card, and even charge different fees depending on which credit card you use. (Yes, some years ago, gas stations started playing word games by not charging more for use of a credit card, but instead charging less for use of cash. The price had to be posted as the credit price, and the lower price was a cash "discount." I never heard of that being challenged in court.) Merchants had the option to not take credit cards, but they did not have the option to charge extra for them if they chose to take them. Clearly, they only take them if they think they will be making more money that way, so the complaints about "loses" due to fees on the merchant by the credit card company are just balderdash.

The original idea was to move away from use of cash, carrying around big wads of cash, merchants having too much cash on hand. But with these new fees that will be starting, the incentive now is to throw away your credit card and revert to using cash!

That is, we are moving backward. It seems many of the people involved in deciding the issue don't even understand, don't even know what they are dealing with, as I never even heard any mention of this incentive to leave cash behind as part of the discussion for these new fees. They just see "regulation" and want to get rid of it, no deeper thought to, or understanding of, it than that.

That will now have all kinds of consequences, from not having enough cash in your pocket at any particular time, to giving more incentive for street robberies since people will start carrying more cash in their pockets. And of course, wait until the merchants realize they don't make more this way, because many people who otherwise would have had a credit card and just used it will feel very differently about whether to buy when they are using actual cash in hand; the psychological difference results in fewer sales.
me1004me1004373 posts since
Jan 16, 2010
Rep Points: 2,600
2. Saturday, December 18, 2010 - 6:22 PM
That's a good point. I forgot about that new financial reform law that will encourage people to pay more with cash.
Ken TuminKen Tumin5,472 posts since
Nov 29, 2009
Rep Points: 125,708