If major Industrialized countries switched from Physical money to Electronic Money

[Gamefreak89]

What would the outcome be of switching around from Hard money and checks to electronic money such as cards and computerized cash? I know that would save a lot of resources such as metal and that would eliminate currency problems too. Such as the face value, production, etc. Not only that companies and Countries won't have to keep switching to new currency values all the time and keep scrapping metal made currencies as well. Plus we won't be chopping down as much trees to keep producing paper money thus helping out the environment.

What are your thoughts on this?

[swampyankee]

Probably tend to make a lot of illegal traffic a bit tougher. Somehow, I can't see the corner drug dealer accepting Visa, unless, of course, he's got a deal with the neighborhood liquor store.

[Gamefreak89]

Yep that is the same thing I was thinking of if major countries switch to electronic money then it would be easier to handle and easier to deal with out the hassle of juggling around in your pocket book or wallet for spare cash/change. Plus there is an increase of computers that will be on the rise in the coming years.

[jokergirl]

You can pay for almost anything with card in Sweden - even the falafel from the kebab-place on the corner.
It always throws me for a bit when I go visit other European countries and sometimes even places like museums don't take card.

,)

[Gillianren]

It's also a lot easier to steal electronic money.

[Gamefreak89]

That maybe true but there are ways of countering that too.

[NEOWatcher]

That maybe true but there are ways of countering that too.

Like what?

I never get asked to see my credit card, and rarely do I have someone ask for my ID since I don't have the card signed. It's just swipe, sign and done. And the signature means nothing unless there's a dispute. In fact, many times there's no signature.
Too much out of my control.

And; if your card gets stolen? Who's responsible for wiping out your account? This is why I have no debit card.

Now; maybe they can combine credit card protections with some kind of debit where you can place a balance limit that you can update with an ATM transaction. But; in the back of my mind, I think this will come with even more "protection" fees that place the responsibility back on the card owner.

Personally; I find it handy to see how much I'm spending by seeing what's left in my wallet. With a card, you're going to do a bit more research. Not a problem at point of purchase, but a problem when heading out, or deciding if I should stop to buy whatever.

Until then, I think I'll stick with cash.

... the hassle of juggling around in your pocket book or wallet for spare cash/change.

I have no hassle or juggle. Either you just reach in and pull out some bills and slam the change back in your wallet the same as a credit card, or you have a bit extra time getting the exact change, and eliminate shoving the card back into the wallet.

[Fazor]

What I'd be most interested about is what was hinted on with the "drug dealer" thing, except not just illegal businesses. What about person-to-person transactions? Like, if I want to give my friend $10 for my half of the pizza ordered at the party? Do I have to write him a check? That's inconvenient. How are small personal transactions handled?

[swampyankee]

What I'd be most interested about is what was hinted on with the "drug dealer" thing, except not just illegal businesses. What about person-to-person transactions? Like, if I want to give my friend $10 for my half of the pizza ordered at the party? Do I have to write him a check? That's inconvenient. How are small personal transactions handled?

Well, everybody could get a card reader...

For illegal transactions? Organized crime is very experienced in various ways of laundering money. I suspect that they'd take very little time to convert to cashless operation. Various types of low-level independent thieves may be more inconvenienced.

I suspect that, in the US at least, "underground" income, such as unreported tips, would be hardest hit, in that a major chunk of their income would now be traceable, which would mean these low-wage workers would see about a 20% pay cut.

[Strange]

People would invent a subsitute for cash. This is effectively what happens in many money laundering operations; goods such as cars are used as currency. Or people will just use bits of paper and write a value on it; like an IOU. Then someone will step in to formalise and guarantee these and set up a ... well, lets call it a "bank".

I never get asked to see my credit card, and rarely do I have someone ask for my ID since I don't have the card signed. It's just swipe, sign and done. And the signature means nothing unless there's a dispute. In fact, many times there's no signature.

Some places (maybe everywhere outside the US for all I know!) have introduced PINs for credit cards. Not foolproof but better.

[swampyankee]

I do know -- from my brief, but too long, stint in retail, that the expense in processing a transaction is something like check > cash > credit or debit > store credit card, which is why large retailers' cashiers are always asking you to apply for the chain credit card: not only do they make money (lots of money!) on the interest they'll charge you, but it costs less to process the transaction.

[Gamefreak89]

Well there are tracking systems in GPS, cell phones, Smart phones, etc. the list goes on what I'm saying is that they could use some called "Smart Cards" and keep track of everyone's spending in hopes of balancing out things. Like if someone tries to still my money from my smart card via computerized hacking then say a company could email me or alert me right away to what happened. I know that this has already been done in the past but with better technology comes better tracking and finding the culprit and getting your money back. Thus if a company is legit and honest at keeping everyone's bank account, spendings, transactions, and deposits they would keep everything organized and hopefully a lot faster at dealing with people's bank accounts.

Which I said in my earlier statement that this has already been done but on an entire Nation wide scale several Major bank systems could be built around Large parts of the Country could keep track of everything via Smart Card Banking/Tracking system. Also if anyone asks me to explain this process well I couldn't because it would litteraly take pages to type and explain step by step . Of course there is always the risk of Cyber Counterfeiting/theft within and or around the Major bank systems, but hey risks are always taken everyday on smaller scales when dealing with large transactions.

[NEOWatcher]

Like if someone tries to still my money from my smart card via computerized hacking then say a company could email me or alert me right away to what happened.

If the system were any good, it would never get to the point where I would have to know.

I know that this has already been done in the past but with better technology comes better tracking and finding the culprit and getting your money back.

At the same time, the technology that the culprits can take advantage of increases too.

Thus if a company is legit and honest at...

Sorry, but for some odd reason this sentence somehow ended at this point for me.

... faster at dealing with people's bank accounts.

Is it not fast enough now?
Why would I want anyone other than my bank dealing with my bank account?

Of course there is always the risk of Cyber Counterfeiting/theft within and or around the Major bank systems, but hey risks are always taken everyday on smaller scales when dealing with large transactions.

Yes; and always has in the past. My issue is the volume that can be attained the easier it is to access.
Just like theft used to be limited to cash on hand. Then turned to credit card limits with some protection also built in, and now to debit cards with access to everything in your account.

I'm not saying that it wouldn't be an option for some time in the future, I'm just concerned that this is pushing the future ahead of its time.

[Fazor]

Well, everybody could get a card reader...

Sure, but how practical is that?

Another thing that would be impacted would be service industries that rely on tips. Tara has a part-time job as a waitress. Aside from providing a pretty crappy health care benefit, she keeps the job mostly because it's nice to pick up some extra cash a few nights a week. I'd imagine if the tips just had to be added on to the credit card charge for the meal, then she'd have to wait for transactions to process before actually getting any money. Which would take away from the appeal of the job. (I'm not saying this is a reason not to do away with "cash", just musing about ramifications.) Also, as an interesting note, personal experience suggests people tip less when including the tip on the charge, rather than leaving a separate cash ammount . . . though that certainly might not be true.

[Gillianren]

My landlord doesn't take credit cards, even though it would be easier for pretty much everyone, because it's more expensive for him. Card readers aren't free, and he'd either have to eat the cost or raise our rent. That's why a lot of people here do still actually write one check a month.

[swampyankee]

Considering that there is currently an active effort to permit cell phones to be used as a form of "credit card," in a few years there will probably be no cost in having a "card reader."

[Gillianren]

I don't have or want a cell phone.

[Ara Pacis]

There are cards that contain the cash value on it, so it's not linked to an individuals account. Kinda like an electronic cashier's check, except you can use it in smaller amounts than the total value at multiple locations. It would have to be made resistant to counterfeiting and hacking using smart-card tech and multiple layers of interactive encryption and PINs. It might be usable with an electronic checkbook that can talk to it electronically, but the transaction wouldn't go through until the checkbook was synced to the owner's account and verified with the other bank, using the electronic signature given to the reciptient of the electronic check at the point-of-transaction.

[Solfe]

It would increase the tax dole for the government because all transactions would be traceable. All of sudden people would find that subscriptions and such bought for friends and family would load the receiver with a tax liability.

On the other hand what would all the salvation army bell ringers do and would you swipe in before or after taking a seat in a pew at church? Lets say all of those transactions would become traceable. I would imagine that most people donate much more money than they claim.

When I tip I place a nominal amount on my card and leave a more realistic amount in cash. Instant gratification for the waiter or waitress (plus a possible bonus if you think about it).

[Elukka]

What I'd be most interested about is what was hinted on with the "drug dealer" thing, except not just illegal businesses. What about person-to-person transactions? Like, if I want to give my friend $10 for my half of the pizza ordered at the party? Do I have to write him a check? That's inconvenient. How are small personal transactions handled?

I have already done such transactions with friends in today's world. I'll say to them "Hey, you owe me 5 euros" and they'll throw 5 euros to my bank account from their computer.

[swampyankee]

It would increase the tax dole for the government because all transactions would be traceable. All of sudden people would find that subscriptions and such bought for friends and family would load the receiver with a tax liability.

On the other hand what would all the salvation army bell ringers do and would you swipe in before or after taking a seat in a pew at church? Lets say all of those transactions would become traceable. I would imagine that most people donate much more money than they claim.

When I tip I place a nominal amount on my card and leave a more realistic amount in cash. Instant gratification for the waiter or waitress (plus a possible bonus if you think about it).

For the last? Right now, I try to leave the entire tip in cash, partly because I've heard that the credit card processing companies take a very large chunk on tips, and partly because the restaurant -- which I'm already rewarding with my custom -- takes another chunk.

For the second? Or not.

For the first? That's going to depend on how the tax laws are written. Right now, I believe that small (under a few thousand dollars) gifts between friends are not taxable as income (at least in the US), nor are they deductible as expenses.

[NEOWatcher]

It would increase the tax dole for the government because all transactions would be traceable. All of sudden people would find that subscriptions and such bought for friends and family would load the receiver with a tax liability.

I don't see that scenario playing through. It's still a purchase made by the giver and traced to the giver's card. The only difference is the shipping address. And if the government would dig that far down, how do they pin the charge on a particular person in the household? (yeah, you can say by name, but you still have things like children named after other family members.)

[Solfe]

Actually US federal tax can work like that. Under certain circumstance the receiver pays the tax on some items.

I haven't exactly encountered a situation exactly like that, but once I won a gift card from a raffle run by my employer and I paid tax on it as if it was a prize AND it was considered taxable income. I do have to disclose that the way my employer set the raffle prizes up, I received exactly what was offered as if I didn't pay taxes on it; the company actually gave me much more than the stated value to exactly offset taxes. I suspect that might be one of many reasons why most give-a-ways by businesses restrict employees from entering.

I so dislike taxes. Needlessly confusing.

[Inclusa]

Than again, states will be dysfunctional without taxes. Have you considered education, medical, and welfare?
The problem is NOT with taxes; it's all about efficiency.

[Solfe]

Oh, I understand taxes are necessary; I just find them needlessly confusing. I get nervous when I have to agree with something that sounds more than a little crazy. My accountant friend can translate the tax law in ways that makes total sense to me, but the actual phrasing of those laws are as transparent as zinc oxide. Perhaps phrasing is better elsewhere.

I think that transparency causes a certain amount efficiency all by itself.

[NEOWatcher]

Actually US federal tax can work like that. Under certain circumstance the receiver pays the tax on some items.

But the examples you give are not gifts, they are prizes.
Give-aways by business are taxable. The distinction is that they will deduct this as a business expense.
In the private world, the difference is if it's a gift or a donation. A donation will most likely be deducted from the giver's taxes and the giver would need to issue a 1099 if it's not given to a non-profit.

I so dislike taxes. Needlessly confusing.

I agree, but in this case, I just don't claim things that I don't get a 1099 on.

[TrAI]

I expect I could go completely electronic if I wanted to, I can't think of any shops that does not have a card terminal(they all use PIN verification, I have only had to sign for a transaction when the network was down), my wages are payed to one of my bank accounts, I can pay bills, manage accounts, transfer money and handle other common bank services from my bank's web site. I could pay the pizza share by transferring money to the friends account with my nettbank, or by using the bank's phone service.

But I think it is practical to have a few coins and some slips of paper for small transactions. And I don't 100% trust that this piece of plastic with an embedded micro chip will always work when I need it, sometimes things happen, ATM's eat cards, card terminals crash, Internet servers or connections fail, etc... In a cash less society, any such inconvenience might become a serious problem, waiting some days for a new card may be a serious issue in such a situation.

[Gillianren]

Heck, I was at a grocery store once when the card system went down for the entire store. They could only accept cash and checks--and they had a small-ish stack of food stamp vouchers, where they copied down relevant information and sent it to the state. However, I got the last one, and until the system was back up (hours, I believe), people on food stamps couldn't buy food.

[Hlafordlaes]

I think the worst effect of all would be the complete individual profiling that could be then done. My taste in sci-fi novels is no one's business. Then again, it looks like most cultural goods are going digital and their purchase will then be traceable anyway. I can see a need for proxy purchasing agents emerging at some point.

[TrAI]

Heck, I was at a grocery store once when the card system went down for the entire store. They could only accept cash and checks--and they had a small-ish stack of food stamp vouchers, where they copied down relevant information and sent it to the state. However, I got the last one, and until the system was back up (hours, I believe), people on food stamps couldn't buy food.

Hmmm... Actually, here in Norway, if the terminals can not connect to the network, you would get a receipt that you would sign, and the transaction would be logged with the BBS(the organization that handles interbank transfers and card payments inside Norway) later.

Checks are not used much anymore, in fact, I don't recall having seen anyone use one, some banks still offer the service, if you are willing to pay, but they have little useful purpose anymore.

I am a bit uncertain how that food stamp stuff works though. Do you have cards issued to people on social or unemployment support, and that these cards contain food money, and with the card system down, these requests had to be handled manually by filling in the vouchers?