A World Without Cash: Marvelous, or Terrifying?
Remember the Visa Check Card commercial where hundreds of consumers were quickly and efficiently buying everything in sight, using their Visa Check Cards? Life was grand. Everything was running like a well-oiled machine. Purchases were being made, money was being spent and transactions were happening at breakneck speeds. Life was perfect. Perfect until, that is, a man decided to pull out his wallet and pay with… gulp… cash.
Mayhem ensued immediately, and everything came to a screeching halt. It was like a train derailing, causing customers to bump into each other and spill things on each other. The once smooth-flowing process was interrupted by this ignorant jerk who had no courtesy for his fellow consumers. Not only did this show a lack of planning, care or tact on his part, but it also showed that he was the type of person who can’t ‘get with the times’.
Seriously. Who does he think he is? Because of people like him, customers have to be — dare I say it — patient! How dare he interrupt the perfection that is the customer checkout process with that antiquated form of payment?
In case you haven’t seen the commercial, check it out here:
I spent 7 years of my professional career working for a major Credit Card company, and in that time, I received an expert education on the past, present, and intended future of the ‘payments’ industry. I didn’t need any of that to figure out what most conspiracy theorists will tell you: The ultimate goal of any credit card company is a cashless society.
There is a lot of money to be made on the elimination of cash. Heck, there’s already billions of dollars being made. Issuing Banks take on the risk of managing users’ credit card accounts, and for that, they receive the largest portion of the interchange fees associated with each transaction. Other revenues they can receive include late fees and credit limit overage charges.
Credit Card companies (like Visa and MasterCard) make a large chunk of change on branding and licensing fees. There is also a big revenue business surrounding the analysis of the billions of transactions that take place. For example, spending habits, such as how frequently cards are used, which merchants they are used at, and the average spend per transaction, can be valuable information when used to create targeted marketing campaigns that appeal to consumers.
Consulting services offered by Credit Card companies can also bring in revenue by providing the Banks with reporting and analytics from the transactional data. I am not giving away any trade secrets here; just a general overview of how some of the revenue pie is split. These are some of the ways money is made, and I could probably go on and on about the myriad of other ways money is being made, but the basic point I am trying to make is, money IS being made. A lot of it.
The more you swipe, insert and spend, the better for all companies involved, and that is not necessarily a bad thing.
These companies are providing a service to us that allows for greater speed, flexibility, and security within our personal payment lives. Who can argue with that? And now that Chip payments have been adopted in the US (they existed in Europe for years prior), there is an even greater level of security and peace of mind, with respect to our ability to make purchases.
Paying online, and accepting payments online, has never been easier. The auto-payment subscription processing, which allows companies like Netflix, Sirius XM, Hulu, and YouTube (Google) to auto-charge you for a monthly fee for a service, would be much more difficult without cashless payment methods. From a business standpoint, there has never been a better time to have an online presence.
But what about the in-store, “Brick and Mortar” experience? Have cashless forms of payment really benefitted the consumers as much as the commercial above suggests?
I am going to use my wife and one of her recent trips to Target as an example. Understand that I recognize this only to be an example, and not indicative of everyone else’s experience. I did not conduct a scientific experiment or study about the experiences of the masses. I say this because there will inevitably be someone who says “that’s not true!!!” Well, yes, it is true. It really happened. Here goes…
My wife found herself at the register, armed with her Target Debit Card with a chip in it, and her and personal debit card, also containing a chip. Both forms of payment were rejected at the payment terminal. To the best of her knowledge, her PIN numbers were entered properly on attempts for both cards.
Each time, the message displayed on the terminal stated to call the card’s issuer. My wife was ultimately told by the cashier to call the banks to see if there were any problems, since it was out of her control.
In the world of credit payments, there are different ‘reason’ categories that are associated with every transaction. The ones I remember are as follows:
‘Approve’ — Transaction gets approved with no problems
‘Decline’ — Transaction gets declined
‘Capture’ — Card is suspected to be fraudulent or stolen, and should be confiscated by merchant.
‘Call Issuer’ — Customer is instructed to call the issuer (Bank) in order to resolve the issue.
Each of these categories has several different specific ‘reason codes’ that roll up to them, and there could be tens of different reasons that may be triggered, each with its own description.
Something was fishy. It would make sense if ONLY one of my wife’s forms of payment failed, but both? And this all happened after she used her debit card earlier in the day at the car dealership.
My wife wanted to do a little investigation, prior to calling the banks. First, she checked her accounts and everything was fine. So why were the transactions rejected? Before calling the issuers, she took a trip to another merchant, Stop & Shop, to attempt a transaction. Viola! She had no problem making the purchase. So why in the world did Target reject her transactions?
In my estimation, the problem was with Target, and not her cards. In any case, the experience of having her cards declined was mildly embarrassing. For a brief moment, she became (not literally) the man in the commercial, and caused the customers behind her the same inconveniences as those theoretically caused by ‘cash-payers’. Oh, the irony.
I am going to briefly delve into a couple of aspects of this topic that are mildly disturbing.
To preface, I would first like to point out that I do feel strongly that credit card transactions are incredibly safe and secure. I have seen, first-hand, the technology behind the anatomy of a transaction, and I would vehemently defend the safety of a credit card transaction any day of the week. When cards get stolen and numbers get skimmed (a chip card solves the skimming problem, by the way), that can be an unfortunate cost of existing in this world of efficient payments, but it does not detract from the overall safety in making electronic payments.
Mildly disturbing aspect #1: I recently attempted to make a purchase for $2.50 at a merchant, only to find that they had a $5 minimum. I wondered, if we were in a cashless society, would there still be a $5 minimum? Would the merchant simply price their cheapest items over the $5 threshold?
We also know that, given the illegal underground economy, cash isn’t going anywhere, anytime soon, however we are rapidly (and surely) approaching the day when cash becomes a distant memory. This leads me to…
Mildly disturbing aspect #2: When that day arrives, I wonder what would happen if I go to Target and my cards get declined? What if technology gets interrupted? What if there is a freaking EMP (or thunderstorm) and the power goes out? What if I can’t buy a thing?!? Ok, maybe that’s not so mild.
What do you think? Let me know your thoughts in the comments section, below.