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Debate at the intersection of business, technology and culture in the world of digital money, both commercial and government, a blog born from the Digital Money Forum in London and sponsored by Consult Hyperion

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« Enough with the NFC already! | Main | Contactless UK is on the way »

Snap!

By davebirch posted Nov 23 2006 at 6:50 AM

[Dave Birch] When the Snap Cafe in Georgetown, Washington D.C., decided to stop accepting cash they did so for many reasons. The owner says that it has saved her time and money, means she doesn't have to go to the bank any more and doesn't have to trust staff she doesn't know. She got a lower MSC from her card acquirer as well. Note the point about trust. This is a recurrent theme in surveys of retailers and cashlessness: even if they perceive cash to be cheaper than electronic payments, cash has a tendency to evaporate. It's also downright dangerous: attacks on security vans carrying cash are up 20% in the UK this year.

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One issue that arises in the discussion of cashlessness is whether merchants have to accept legal tender or not. In the U.S. there is no Federal statute mandating that a private business, a person or an organization must accept currency or coins as for payment for goods and/or services. Similarly, in the U.K. where only coins valued 1 pound Sterling and 2 pounds Sterling are legal tender in unlimited amounts you cannot force a shop to accept them. Legal tender is only legal tender for debts incurred: you cannot force someone to incur a debt (so you cannot force a shop to sell you something for cash). A shop is free to enforce any conditions it likes (within the boundaries of the law) with customers since when you buy a coffee from the coffee shop, you are entering in to a private contract. Our good friend Leo van Hove made a very good presentation about this, called When Will Electronic Money Be Legal Tender? at the 7th annual Digital Money Forum and you can download it here. It's well worth a look if you're new to the topic.

Meanwhile, Microsoft has abandoned fiat currency altogether for its marketplace. You can only buy songs for their new Zune music player using Microsoft points. I remember giving a presentation many years ago in which I said that the transition to digital money would lead not to the one world currency beloved of science fiction writers, but to many currencies because the cost of issuing a new currency in the digital world is essentially zero.

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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