Re: Idea to eliminate high denomination banknotes in Norway

Jim Seymour wrote:
>
> I see a real problem with your argument: It doesn't take into account
> the cost of processing cash.

Understood ... but the cost is already there and built into the system
and has been as long as people have been using cash. It's called "mark
up". If I have to pay someone $5 to deliver the goods then my price to
you just went up $5. The end-user always pays.

ATMs and credit cards are not scattered everywhere because citizens
demanded it be so. They are there because the banks and merchants want
it to be so. If you went to the mall with $200 in your pocket and saw
something for $300 you went home without it. But not if you bring along
your Uncle Visa -- he'll gladly lend you the rest so that you can spend
money you don't have (for a modest percentage and interest charge).

Once upon a time banks paid people interest in exchange for carrying a
balance in your account. The interest was a reward for maintaining a
balance that the banks could then lend to others, earn a few points, and
everyone was happy.

Now, you have to pay to have an account (fair enough in these low
interest rate times). But that's not all, you also get to pay a monthly
fee to have an account ($15.95 is what I pay) and they would prefer
(insist) I use web banking and ATMs so I don't waste the time of tellers
(I am now paying the costs and doing the work, not the bank, but this
doesn't lower my fees or grant me a free account), and there is a $1 fee
every time I use my debit card (beyond the first 3 times per month), and
any time I have the nerve and audacity to take up two minutes of a
teller's time there is another modest service fee.

Likewise (and I'm talking before the massive computerization), when I
was twelve years old I could deposit a cheque and cash it immediately --
be it a personal cheque from Grandma or a paycheque for delivering
newspapers. Now, in order to better serve their customers, the banks all
contract out the clearance aspect so money that is transferred
electronically in 0.4 seconds somehow requires three to five days to
clear through the Patagonia transaction station.

Why is that? Who is using my money and earning from it during those
three to five days when I can't have my money? The company I work for
can wire $20,000 to the other side of the planet instantly. Why does a
local business cheque require 3 to five days to clear?

Don't like it? Just don't use banks. Ah ... but there's the problem. If
you don't use banks and prefer cash you must be a criminal.


> I don't have direct experience - nor do I have any data to do
> comparisons, but claiming that credit card transactions have a hidden
> cost that does not exist for cash transactions just seems wrong.

It gets better. Stores that expect customers to buy with plastic almost
always build in a buffer price to their goods to cover their merchant
fee. So even if you pay with cash you get to pay the extra 2-3% 'digital
transaction' costs. Pretty sweet if you are a financial institution.
It's like a license to ...


> Merchants pay per transaction no matter what the source of funds. And
> while little guys like you and me are forced to pay ~3% or more for
> credit card transactions through PayPal, I understand the big boys get
> significantly lower percentages.
>
> On the average, I'd be surprised if electronic transactions are more
> expensive to the merchant than cash.

A cash register opens when you push a button. Add a pencil and a piece
of paper for accounting. Digicash requires computer terminals, merchant
account fees, operational costs, and training, electricity, hardware and
software upgrades, etc.


> The only argument I see to oppose the switch to electronic commerce is
> the loss of anonymity. It is mildly troubling to know that at some
> point in the future, all my financial transactions could be scrutinized
> by the powers-that-be.

This actually bothers me less than the "you have no choice but to give
me a percentage that I haven't earned because that's just the way it is"
philosophy. I will pay those who earn it, I dislike having those who
don't earn it just take it because they can.

I also don't like how quickly and easily an account can be hacked and
drained.


> Well, that, and the loss of our beloved hobby - but that's a selfish
> argument...

And one of the best! 200 years from now kids will be looking at illegal
currency in a museum -- regular $20s and $50s circulating banknotes
right beside Walking Liberties and Morgans and wheat cents -- all items
that have been banned by the World Monetary Fund as "the form of
exchange used exclusively between criminals for use in illegal
activities."

I'm sure I'm oversimplifying in many cases and am the master of
hyperbole. But some people prefer using cash and do not use it for the
cliche drugs, floozies, or gambling.

This is all IMO.


- Sheldon
.

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