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« First and last money | Main | Contactless in the marketplace »

More on Moore's Law

By davebirch posted Jun 1 2007 at 8:17 AM

[Dave Birch]  Money used to be stuff, now it's data.  Some people are sad about this, nostalgic for the good old days of the Gold Standard: As John Maynard Keynes once lamented, when "it appears that value is inherent in money as such", governments are able steal from the populace by inflation, which is sort of a bad thing.  On the other hand, when money is minted from silicon, the economics of handling cash (which today involves armoured vans and security guards) are driven by Moore’s law.  As that commentator notes, electronic information is instantaneous, weightless and exact. No longer the fumbling through coat pockets while a line of waiting customers quietly fumes.  He goes on to point out that retailers get rid of both cash floats and cash frauds such as charging $4.99 so that the $5 bill most people hand over has to pass through the till for one cent change rather than being trousered by a shop assistant (my italics).  I have to say, given the discussion about 99p coins, this had never occurred to me until I read it in this article, which I came across while searching for something else entirely.  Is it really true?  I had always thought that the origin of this irritating practice was to make goods appear cheaper, because 4.99 somehow sounds a lot less than 5.  But the anti-trousering theory sounds, frankly, more plausible.  Does anyone out there know?

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As was mentioned in a previous discussion about the cafe that won't take cash, cash fraud is an important driver for digital money and must be one of the reasons why retailers are probably on balance OK about it going away, despite its perceived low cost and the amount they have to pay in the merchant service charges (MSCs).  In the big picture, this is a trend already under way, and the introduction of contactless and mobile payments simply builds on the foundations made by debit.  Debit is growing very strongly.  The recent figures issued by Visa show that the total volume for Visa consumer debit and prepaid programs, including cash transactions, grew by 17% in 2006, reaching US$2.68 trillion up from US$2.29 trillion in 2005.  Debit and prepaid now account for 60 percent of Visa global total consumer volume and over 67 percent of the number of Visa transactions, based on total consumer volume of US$4.4 trillion and 59.9 billion total transactions.

My opinions are my own (I think) and are presented solely in my capacity as an interested member of the general public. [posted with ecto]

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Comments

"Modern (a.k.a. Internet) software based transaction systems lost any sense of Moore's law a decade ago"

Actually, I agree with this Ian, but my misplaced quote didn't make it clear. The Moore's Law bit was from the article I was referring to, not from me. I'm a Reed's Law man, myself :)

I always throw those pennies away or put them in the charity box. I hate pennies, they are irritating as heck.

I disagree that Moore's law has much to do with it. Hardware based systems may still have a vestige of Moores' law in them, in that smart cards are still a potential cost, and phones aren't free. But in practice this is dominated by distribution costs.

Modern (a.k.a. Internet) software based transaction systems lost any sense of Moore's law a decade ago. That's the backoffice side, the frontoffice side can still suck up the cycles that are presented to it, but that's abusing Moore's, not being limited by it.

As a sort of proof, look at the total and repetitive failure of micropayment systems. They could do the transactions, they just weren't viable businesses. IMHO!

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