Ricardo's comparative advantage
It’s entirely true that handling cash costs money. Banks charge a pretty penny for graciously accepting a river of coins and notes from a business account for example. But that’s not the same thing as saying that going digital payment only saves money. For there are benefits to handling cash as well as costs:
British retailers could save more than £7m a year each by ditching cash and accepting only card and digital payments, a study claims.
Large retailers such as Tesco could save as much as £48m annually by going cashless, according to the Global Payment Trends report.
Savings would come from costs associated with accepting cash at tills, and transporting it securely to and from banks by requiring customers to use card or mobile payments.
What’s being missed here is that basic point, that there are costs and benefits to absolutely everything.
The most obvious point about digital payments being that not all of us are up to speed with them as yet. Meaning that someone who simply does not accept cash will therefore lose the potential sales top those who only pay with cash. Or even, those who simply prefer top pay with cash at times and places.
Thus the “saving” of going digital is not the lower costs of not handling cash. It’s those lower costs minus the lost margin on those cash sales that didn’t happen.
Yes, of course, this is just a piece of PR from a firm that consults on how to go digital payment only. But then that’s the point of making this particular point. Who wants to take consultancy from someone who clearly doesn’t understand the first thing about the subject under discussion?
The language we use matters - it provides clarity to our own thoughts and enables…
It is now generally acknowledged that the structure of the NHS needs to be overhauled…
In the film Apollo 13, a loss of oxygen causes the crew to start inadvertently…
There's an idea out there which seems intuitive but then so many ideas do seem…
When we think about the darkly opaque goals of modern central bankers as they relate…
As the papers recently filled with the distressing images of desperate souls looking to escape…
View Comments
Not only are they flacks not scientists, but the readership of Global Payment Trends will be those selling the gadgets, not the shop owners using them.
The Chinese government likes digital payment systems. Even many of the delightful street-side food vendors in Chinese cities will not accept cash, only digital payment through the punter's smart phone to his bank account. It does save mucking around with coins and making change, and there are probably some side benefits for the Chinese government In this process. Just saying! But Alphabet Corp will be glad to bring the same benefits to their paying customers in the non-Communist West.
How on earth do you run a business without cash? You can't run a slush fund. You can't employ anyone who insists on being paid in cash that the Revenue will never know about. You can't have a side chick/side dick. All the fun will go out of it.
From a humanitarian point of view, the guy standing on the street corner with a sign doesn't have a card machine or even a bank account -- we hope.
You can find street beggars with QR codes or even contactless. Started in China, I believe.
I guess it's not very nice of me, but my fantasy would be to load up a shopping cart, pull out cash at the checkout station, and when told it is not accepted, leave the store and let them restock everything.
This works when what is being sold is a government monopoly. I note that I recently drove to the other side of Brissy to see a cousin of mine. The last time I did this was about 2 years ago.
So, since I've no idea how the road system has been altered these days, I went by the simplest route. Needless to say, instead of my simply going to the nearest garage and paying my toll, the damn government wanted me to pay over the internet.
After swearing, cursing, screaming etc, I finally managed to do this. Of course the damn machine then wouldn't accept my card. However, since the government really wanted my money, there was a way to work around this.
So, if you can bully your customers sufficiently, digital payment will work.