On Cash
tbray.org
tbray.org
How could you run a gay bar, in a place where gay bars are illegal, and the government could just block your payments? How could you sell marijuana and build the legalize movement, if government could just block those payments? How could you run a whistleblower leak site on the internet through donations, if the government can just block all payments to you?
Deciding what people can buy and cannot buy sounds great if you're the one in power. But if you're not, it will pretty quickly turn into another form of tyranny.
It is even worse than that. In Canada, cannabis is going to become legal this week. Government stores will sell it in some provinces, regulated private stores in others. Despite this, experts are warning people to buy it with cash, and never ever with a credit card. You see, Visa, MasterCard, and Amex are American companies subject to American data protection law. Because cannabis is illegal in the US, buying it with a credit card means the US government can learn about the transaction and ban you for life from the US.
Credit card is only an option for the intersection of international laws. As soon as you want to do something that is not legal in some countries, you better switch to cash.
* You purchase some goods.
* Store triggers an 'ATM' withdrawal of a multiple of $20 that is greater than the cost of your purchase.
* You actually buy your goods with cash behind the scenes.
* The teller hands you your change from the cash transaction.
Same as having an ATM next to the checkout counter but the customer doesn't have to do the awkward step.
Canadian media thinks it is not worth the risk [0], especially in the light of the statements made by US officials [1].
[0] https://globalnews.ca/news/4140898/legal-pot-data-banned-us-...
[1] https://www.politico.com/story/2018/09/13/canada-weed-pot-bo...
The privatization of the payment system (which is basically complete in my country) means that my ability to participate in the economy is dependent on the whims of my bank, credit card issuer, and their (automated) blacklists.
Think of all the stories of Paypal accounts being frozen for no reason, or bad reasons, or even good reasons. Remember that at least once, for Wikileaks in 2010, Paypal unilaterally decided that what an account holder was doing was illegal and shut them down - and of course, legally, that's their right. Private companies get to choose who they do business with.
Personally, I think that's a rather worrying prospect: A private entity can now 401 my request for groceries. The payment system is critical infrastructure and should be treated as such.
He said they had to have armored guards at the store, because the thieves knew there was a good chance the customers were paying cash so the store carried a lot of cash and the customers did also.
I personally like cash, but there are some risks. Especially if you're in somewhat marginalized portions of society, cash is replete so robbers are attracted.
(I'm not based in the US.) I don't get it — aren't the point-of-sales system and card processing machine separate? How does cash back make a difference when all the card company knows is how much you're spending at a particular store?
Or even perfectly legal, not-unethical things which are not liked by your payment processor. Many will not process payments for firearms or firearm parts, and a whole host of other things which are perfectly legal; MasterCard (whatever your opinion on the validity of their choice) has coerced Patreon into shutting down the accounts of people whose speech they don't like.
A "cashless" system is one which requires a hell of a lot more regulation on payment processors, or a true virtual equivalent of fiat cash which doesn't involve the policy or whims of processors (or maybe a considerable deregulation, which allows individuals and upstarts to afford to process payments).
I think you'll find that plenty of people disagree with you on both of those points, so it's clearly subjective.
I don't want Chase knowing I shop at Goodwill, if they choose to pass that along to one of the credit agencies (there are hundreds of small ones in the USA FYI), it would nreflect poorly. Same for using anything bbesides cash when buying liquor, cigarettes or other low class/socially questionable items.
Edit: Using credit cards at thrift stores may affect your credit report: http://www.wistv.com/story/10670982/warning-shopping-at-thri...
No one can share individual purchase data with other lenders, that sort of data sharing is prohibited.
It's simply not a thing. It would violate PCI-DSS.
You should never believe that for two reasons:
1. Companies often get away with lying about that.
2. De-anonymization techniques, esp if having multiple sources of data to cross-compare, are improving every year thanks to an active, research community.
Most incentives work against your privacy. Most companies act on incentives. Best to just not share your data if you're concerned about where it might end up.
Nevermind that Google has location data for Android users (and Google Maps data on Android), and better profiles of people than the voter database has. Their attempts at user de-anonymization will likely be even more accurate.
Google is using this data to link online ads they display with in store purchases, thus Mastercard is giving them enough data that they can correlate who views an ad from Google's ad network with their in store purchase. Partial names would suffice for this purchase, combined with store location for the transaction, one could de-anonymize most customers in a given dataset by correlating using freely available datasets like the state voter registry (which often provides full names, addresses, elections voted in & more).
Nevermind that Google has location data for Android users (and Google Maps data on Android), and better profiles of people than the voter database has. Their attempts at user de-anonymization will likely be even more accurate.
Some of the data will also work for a cash system. And it's not just Google or other apps on their phones that people have to worry about now. (Not a popular opinion, but Google is generally a lot better than others at data protection because it doesn't often sell the data on; it works as an interface to the data and if it sold the data outright their other services would be less useful. So it has incentive to protect a lot of what it collects that other companies do not.)
Some surveillance systems recoup costs by selling off data about license plate and other sightings to companies like TransUnion who will aggregate the results and sell them on.[1].
The ability to narrow the focus is a bit lower, as it can't tie you to a specific store unless it has a dedicated parking lot (which is fairly rare and not easily predictable).
But if you look at what else is possible when all surveillance is up for sale, it's a bit scary how easy de-anonymization can potentially be.
Take the same sources of data to what's already actively sold and resold to/by TransUnion, and add Facebook/Google tech for identifying people instead of numbers seen on vehicle plates. Anyone who walks by a camera, which are ubiquitous in any marketplace, and who has photographs of themselves and whose identity has been tied to that image by one system, could have their location detected and further sold on to whoever wants it.
This doesn't even need to be a voluntary release of the data like tagging photos on Facebook, or actively collected by other people volunteering it by tagging you.
As an example, take something innocent like a trip to the grocery store. Even if they are not selling their parking lot surveillance to TransUnion for license plate tracking, they could potentially be selling or aggregating other data for the same purpose. The self-checkout line camera which they might show you very pointedly to discourage dishonesty isn't limited to their self-checkouts. But the footage of you in that location is a great training source for a recognition algorithm.
And right beside it is a register machine to tell the company your name, either from the credit card transaction or some other way. They might have your name on a reward/discount card that they insist you use to get discounts (or to put it another way, to avoid paying extra to opt-out, since these items are hard to identify as a promotion -- they are promoted the same as regular price, often have no competitor, and non-promotional pricing is obscured). Either of these can correlate the video/imagery to the transaction and a person's identity.
It wouldn't take a lot to build an image recognition profile.. just repeat the process a few times and it will probably be good for years even if it isn't reinforced with new data. Collecting information used for stuff like this becomes dead simple without significant data protection laws.
The recent Forbes article is a great example of how current systems like TransUnion's TLO unfortunately have seriously low barriers to use that have enabled things like identity theft [2]. More sophisticated uses are equally possible, highly probable, and likely much less detectable, such as politicians tracking behavior of political rivals and their operatives, or actors working on behalf of foreign governments to track politicians and military figures.
[1] https://www.tlo.com/vehicle-sightings
[2] https://www.forbes.com/sites/thomasbrewster/2018/10/12/how-a...
- Google buys transactions data, only timestamps when payment was made
- ???
- Profit
2. The idea of what you can or can not do varies quite a bit based on jurisdiction. For example, just searching for things related to democracy can lower your credit score in China.
Edit: BTW, I'm not saying one needs to be 100% cash. I use credit cards too. The important thing is that I have a choice.
Cash is instant, does not require power, does not require connectivity, and no one takes of cut of the transaction.
Cash also leaves a trail so faint that it requires a substantial investment in resources to trace it.
I think those hurdles will be difficult to overcome in order to match the benefits of cash in an electronic currency.
Generally speaking, the likelihood of these things happening is pretty small, and unless you carry a huge amount of cash, the cost if they do happen is not very significant.
If you are being negligent with your credit card you loose everything. If you are being negligent with cash you only loose what you have on you.
I know it might seem odd, especially in the case of panhandlers, who may have difficulty persuading people that the transaction is secure in addition to the fact that some people will be judgmental and assume that if they can afford a smartphone, a card reader, and a bank account, they must not need the money.
But what's the real alternative? It sure isn't trying to persuade people to carry cash because of "The Man" or so that they can keep buskers and panhandlers in business. If people who earn money on the street can't accept card payments, they're screwed, plain and simple.
There might even be a non-profit startup idea here: something like Square, but optimized for panhandlers and buskers. Something that people get used to, that clearly communicates that the transaction will be secure and small (e.g. $1 or $2 every time), that charges absolutely minimal fees (or none if possible), and perhaps that works without a real bank account - e.g. money goes onto the device, and then the device itself can also be used to pay for things, like Apple Pay.
That sounds to me kind of like this (only available in Seattle currently, iirc):
I was homeless for nearly six years. Instead of panhandling, I worked at developing an online income. I'm trying to support and promote that approach for others. Some of my work:
https://sandiegohomelesssurvivalguide.blogspot.com
The website talks a good game, right up until the point that you look at the claimed partner list. I tried to find a couple of the supposed partners linking themselves with Samaritan City in any way, but AFAIK there is no public announcement I can find from King County Metro and other partners mentioning this outfit.
To add to that, it appears money donated is easily locked away from those you supposedly donated to (with mandatory 30 day check-ins), and it can only be spent at select partners. The straightjacket on permitted places to spend donations is similar to EBT, but even more restrictive as you seemingly can't use this anywhere besides at mega-chain markets and restaurants.
I don't give Mutual Aid to exclusively support chains & mega-corps, this business practice of only allowing purchases at select partners is very scummy, and hurts the value of the supposed support donors are attempting to provide via Samaritan City.
https://www.seattletimes.com/seattle-news/homeless/homeless-...
Here, the buskers have a QR code where you can use to donate to them. You scan the code, and then you can select the amount to donate.
No external devices needed where you aren't sure about the safety of it and no need to be plugged in. Just a simple QR code.
https://www.theguardian.com/technology/2013/oct/18/izettle-m...
HN may not like this, but most people don't like pan handlers.
It's funny that the electronic payment industry is a direct result of innovation, but because of the stranglehold it now has on society, it's begun to limit the potential for new innovation.
If they released iMessage and ApplePay on Android, added a Wechat style P2P payment system, and started cannibalizing the AppStore/Playstore through a WeChat style API I think they could pull it off.
I had to resort to giving my Chinese friends cash, and then they can send me "red envelopes" to use.
Ideally, I would like to be able to buy top-up cards at convenient stores or even use my credit card to add money to my WeChat account.
How do they do this exactly?
It is almost impossible in many countries to use cash for large purchases, but many routine purchases that people do can easily be done through cash (this may vary by country, as there are some countries that have adapted to being hostile to using cash).
Within the constraints of a government issued and recognized fiat value exchange system, cash is freedom. Period. Everything else is a bunch of people sitting between you and the seller, taking a cut on every transaction and imposing more restrictions on what you can do with your knowledge or labor.
[1]: https://aeon.co/essays/if-plastic-replaces-cash-much-that-is...
And there's the rub: most payment networks charge the merchant, and through the elaborate tendrils of corporate ownership kick a proportionally smaller amount back to the customer. Still, it's a reward that's nice to have, and coupled with fraud protection, three weeks of delay in due dates, single-item usability, and a built-in credit line, credit cards are winning out among those who can obtain them.
Card surcharges are one way a merchant can pass on the cost of credit card acceptance to the customer, and are currently a state-by-state issue, but big retailers don't want to surcharge lest they create friction and lose shoppers to a competitor. This furthers the price pressure on small merchants or moves them further upmarket where price is less of a factor. Companies like Square (physical) and Stripe (online) able to make headway by simpler fee structures, ease of use, and a welcoming attitude towards small businesses.
Meanwhile, Google's much-rebranded payment network, Apple Pay, and Samsung's me-too Pay are an attempt to leverage the market penetration of cell phones to gradually ease people into different payment habits. It's not hard to envision a situation where in a few years, the cellphone-making companies of the world have cut out the likes of Visa and Mastercard from payments, giving them negotiating power with banks, merchants, and other payment networks. This is a particularly plausible outcome for Amazon, who is extremely intent on being a complete end-to-end solution for customers for anything that they'd want to buy.
In a world like that, cash becomes an instrument of those for whom lenders don't want to extend a line of credit, or those who can afford to use other payment instruments, but are paying extra for their privacy.
Fraud is a cost of credit cards, not a benefit. Even with "protection" it's an ordeal when it happens -- or when it doesn't but the credit card company wrongly suspects it has and abruptly disables your card.
And putting off the payment for three weeks can also be problematic. If you're just spending money which is already in your checking account it makes little difference which day the transfer posts, but if you're spending money you don't have, what happens when you still don't have it by the due date?
Or even if you do have the money, wait until first time you forget to make a payment and all the supposed financial benefits of credit cards instantly evaporate into a nasty late fee and 15+% APR.
> Card surcharges are one way a merchant can pass on the cost of credit card acceptance to the customer, and are currently a state-by-state issue, but big retailers don't want to surcharge lest they create friction and lose shoppers to a competitor.
The alternative is a cash discount. The advertised price would be no higher than it would be by charging the same price for cash and credit, you just give two thirds of the credit card fee to the customer (instead of the one third the credit card company does) and pocket the other third. And take more customers from the competition once they realize you're offering the discount.
wait what? making one phone call (5-10 min) is hardly an ordeal, and is better than the cash alternative - losing a couple hundred dollars
>Or even if you do have the money, wait until first time you forget to make a payment and all the supposed financial benefits of credit cards instantly evaporate into a late fee and 15+% APR.
this is a non-issue for me because I already have multiple bills I have to remember to pay, so adding a few credit cards to that routine is trivial
It's a pretty good sized ordeal when your card gets declined due to fraud and you look like a schmuck in front of your date/boss/client/etc.
> and is better than the cash alternative - losing a couple hundred dollars
There is no cash alternative to credit card fraud. You can't steal the cash in someone's pocket or make it unspendable by cracking a third party website or taking a customer service job and skimming cards.
The closest alternative is physical theft, but that's much less common in most areas, and credit cards can be stolen too as an independent threat. Even then it's easier to replace $100 in cash than spend time ordering and waiting for all new credit cards with different card numbers and then update that info in multiple places etc.
> this is a non-issue for me because I already have multiple bills I have to remember to pay, so adding a few credit cards to that routine is trivial
The problem is human fallibility. One month you're preoccupied with some family drama, or the bank's new website is hot garbage, or you just miss a typo, and you schedule a payment for November when it's due in October. That whole system is set up to stick it to you for minor honest mistakes.
Far more than 10 min.
I lived in part of a murder capital that gets 300+ cops per shift according to one guy keeping up. Basic precautions kept my family, friends, and I from losing cash on hand for the time I was there. I mean, you can take as little cash and ID as you need for one trip. A guy who claimed to sell drugs and be street smart taught me to keep about $200 on me since it covered about every situation. He kept the rest of the cash in hidden safe at the house. Even working-class people can usually take a $200 hit (i.e. utility bill) vs losing a whole bank account. Whereas, various banks have done security holds, surprise fees, and screwed with me on credit items many times. A few caused real damage in ways like AnthonyMouse describes.
The worst was Chase not letting me pay off a smaller, high-interest balance until I paid off a large, low-interest balance with the high-interest balance accumulating interest with every payment to other one. Before Obama Administration banned that, I told them I wasn't paying until they let me pay the higher-interest, accumulating account off first. I thought they'd, as rational actors, let me pay my debt and collect interest on other balance to avoid a major loss. They put me in collections, did a charge off, and (thanks to corrupt lawmakers) the full interest was counted by IRS as income as if the interest was loaned to me to use, too. As in, goodbye tax return.
I depend on and trust credit card companies as little as possible these days. I keep paper statements like I did before. I pre-pay and minimize my use of them to credit building like I did when I started. Difference is now I see them as a toxic asset in that they can turn on us at any point. Chase decided to take a loss of about $3,000 in bogus interest and fees when they could've made the $800-1000 I actually borrowed from them that year plus claimed interest. They thought being evil would pay off by the numbers. Instead, they lost $3,000, destroyed my credit that year, and kept doing the same shit. I read similar stories by people using all kinds of services since most for-profit banks pull the same shit in a cartel manner.
Use cash, credit unions with good reviews, and credit cards you don't really depend on for stuff you already have money for. Keeps the risk low. Don't assume anything will be easy even if it was in the past. My previous dealings with Chase, esp on fraud, were great. Later on, they destroyed my credit record to achieve a net loss. (shrugs) That's how such companies think. You might luck out being in an area, segment, or whatever to a company that doesn't try that stuff. Could also make it all look more easy and reliable than disputes really are for folks in another class, area, or company.
Edit: One sentence was incorrect given I changed that practice a bit. Fixed it.
You can get cards with 2% cash back, and a typical merchant fee is 2.35%. The fee can be 15% to the credit card company and 85% to you.
Here's what I was remembering when I said 2.35% (though it's really 2.25% in their table) fees: https://www.againstmalaria.com/TransactionFees.aspx
It's possible the fees vary by sector, though: https://www.mastercard.us/content/dam/mccom/en-us/documents/...
If I buy something for $100 cash it would have cost me $98 (after cash back) via credit card.
I say this as someone who lives in part of the US where shops and medical practices are starting to go card only. Having cash is still really handy, though many people here can get by without touching cash for months.
Anytime I've had a body shop repair dents or paint nicks it has cost so much more than $100 that I would literally laugh in the face of anyone that tried that with me.
Not long ago I walked in to a store with $150 of cash and asked for a thing I needed that would be within the amount I had with me and they gave me the $165 item for $150 because thats all I had with me.
No communication with a server, no approval (for either party), no contracts and agreements, no cut taken from the seller (and partly passed on to the buyer), no third party involved at all - just a direct transaction between buyer and seller, no chips, not even electricity is needed. Imagine just handing someone a piece of paper.
Nobody is excluded, no matter their income or background. It's frictionless, anonymous, and it's very simple (for the user); the complexity is all handled by the cash-issuing party. Of course some will complain about government intruding into the payment processing marketplace.
What's not to like?
I have to do math at every transaction? There's different denominations (which make no sense), and some are paper and some are metal? How do I authenticate that it's a real bill? What happens when it wears out? Are you really going to keep inventing new designs every couple years as criminals learn to make their own? What if I want to buy something and I have enough cash but the vendor can't "make change" (actually happened to me the other day)?
Cash is one of those great ideas, like bicycles and music, that I'm glad we invented long ago, because I doubt it'd ever get invented/discovered in today's ROI-above-all-else environment.
In practice, these won't be significant problems for the user. I haven't seen the focus group testing, but I'm comfortable predicting that. Some of those issues are problems for the cash-issuer, not the user.
I've carried thousands of dollars around and no one was none the wiser. So while the security argument is true. It's overblown. At most someone will probably steal $100 from me. And that's never happened, thankfully. (I live in a dodgy part of SF)
With reasonably good probability you are (or were) exhibiting outlier behaviour. I do not have much faith in humanity, so if a high proportion of people routinely carried that much cash with them, the incentives for random muggings would be also higher.
In essence, it's because people don't generally carry that much cash with them, that you could do it without having to consider your safety. Before anyone claims that carrying large amounts of cash around is not a problem, think about this: The people who fill ATMs go around armed[ß]. Either personally or they have a guard with them.
It isn't that different from herd immunity.
I like cash, but I make a point of carrying only small amounts with me. Moreover, I also make sure that the bank account linked to my card has only limited funds on it, and move the money around between accounts as needed.
ß: A good proportion do, at least.
The security argument is mostly orthogonal to the benefits of carrying cash. Obviously there is wisdom in having multiple options for moving money, which will inevitably have different strengths and weaknesses. Cash is important to have because the other methods occasionally fail in very problematic ways[1], while the security (and bookkeeping) advantages of electronic payments become more attractive when the transactions size is large.
[1] Cash works when the power/internet/banking-infrastructure isn't available. Cash also has inherently limited risk: you can only lose what you are carrying. Credit cards, debit, and any other method where someone else controls your access to the money carry a risk of losing access to the entire account if the controlling bank decides (possibly in error) to freeze your account.
Maybe, maybe not.
I've been asked to pay by card by a street food vendor in Copenhagen, after I offered cash.
I don't think he wanted the increased expense of going to a bank to deposit the money, getting change, or having the (small in Denmark) risk of theft.
For a larger business, there is also the risk of theft by employees.
There's a small business (owner and 1-2 employees) here in Seattle that regularly gives me a huge cash discount. He'll print an exact price on the bill, to the penny, and when I pull out cash, he'll notice and just make up a much smaller number, rounded to the $10. On a $50-$150 purchase, it's usually a 30-50% discount. They've been in business for many years so I assume he knows what he's doing.
(I wonder if this comment will get people to start offering cash at Seattle area small businesses, in the hopes of getting a discount!)
I really hope WeChat does better on this. Either letting us use our foreign cards or have some type of top off card where you can buy at convenience stores or the airport and load that into WeChat account.
I know there are some services that can do this, but I'm not sure how reliable they are.
More transactions are good for the economy but not necessarily for the individual. I use cash because it's easier to not spend it.
https://www.bbc.co.uk/news/av/stories-45102437/would-you-sca...
I didn't spend as much. I felt insanely rich. And I had bucks for the buskers and homeless.
Digital money isn't money. It's just Numbers with no relationship to reality to me (and many others).
Admittedly these aren't anonymous as the recipient will get your name and phone number, but the convenience is arguably even greater than what's possible with cash.
Also credit cards offer rewards program, so in effect, most purchases are tiny bit cheaper with a credit card than cash, and over a long term these tiny savings can add up.
I thought it was a bad and inconvenient idea at the beginning, maybe I should rethink.
Coinstar has a deal where you can exchange your coins for an Amazon gift code with no fee. So just dump them in a bucket and go exchange them once a year, then use the gift code for whatever you would have bought on Amazon regardless -- and use your credit card even less.
> Also, what do you do for big purchases? Most ATMs have a $200 limit.
Most ATMs have a $500 limit. For some banks it's $1500 or more. And you can get more by going inside the bank.
How often do you make such a large in-person purchase anyway?
ATMs allow $1000AUD per card in Australia, so with multiple cards you are sweet. Anything more than a couple of 1000 I'd prefer to use bank transfers anyway.
That said, cash will always have the advantage of relative easy and effective anonymity. I find it troubling that people are so eager to give up on such an essential feature of their money.
This would seemingly be a feasible sell to many governments with the right spin (reduction in processing costs for their own payments, fraud control, data gathering, reducing reliance on foreign-controlled payment services, adding another means of capital control) It also seems reasonable within the same sort of "government needs to provide the basic infrastructure for a modern financial system" scope that allows for government "lenders of last resort", bank insurance, and clearing houses for cheques.
Then the question for Visa/MC/etc becomes "what can you offer these consumers and retailers that the local service doesn't except higher fees?" aside from the corner case of "you can use it abroad more easily".
On the other hand, I've had some interesting meals with people because i couldn't give them cash so I picked up the tab instead.
You have no idea what you're talking about. Cash enables big corruption, too.
A store owner, market stall holder, hawker, beggar - anyone can accept cash, trivially. You hold out your hand, someone gives you some coins, done.
None of the other payment mechanisms are that simple. Generally at a minimum a lengthy sign up procedure would be required involving identification; accepting credit card payments is going to further require purchasing or owning physical hardware.
Cryptocurrencies come close (no registration, authentication, etc and so on required), but they don't (yet?) have the market penetration required to function as cash does.
I'd say this is reflected in the cost of cash-only establishments vs. non-cash-only. All of the cheap takeaway-style establishments are cash only for good reason - it's the only way to just transfer funds without associated baggage.