I've been thinking about money lately. Not just the considerations one would expect from the unemployed, but at a larger economic perspective. A couple of things brought this about. One, our school district added a charge for electronic additions to school lunch accounts. That prompted me to research the costs of electronic payments. This was expanded upon by chatting with the folks at Fabric of Life, a local store focusing on Fair Trade products.
As they encouraged me to pay with cash or check (sadly, neither of which I had), we got into a discussion of the effects of these myriad charges on small businesses. First, there's a payment they make simply to be part of the network, providing access to the payment system. On top of that, we have a per transaction charge. Then there's a percentage charge of the transaction. I'm left wondering what value these systems add. Well, besides convenience.
For me, convenience is the main benefit. I don't need to go to an ATM, or wait in a bank line to make transactions. Nor do I need to hold up a line with check writing. Just whip out the debit card and go. I guess this is an element of our impatient society. Well, another piece is not having cash to lose or have stolen. I lose my debit card, I make a few phone calls and I have my cash restored. It may take a few days to process, but it's better than losing cash, which will never be refunded by the bank.
However, are the costs worth the convenience? What's the "value add"? It's easy to lose sight of this as a consumer since we don't see the costs up front. However, small businesses, operating under tighter margins, and unable to leverage large scale transactions, are the ones saddled with the costs. It's hard from them to pass those along to the consumer; well, to do so and compete. These eat into their profitability and, thus, the sustainability of these businesses. As I have a fondness for them, I see that my continued electronic payments are damaging their ability to sustain. Gives me pause.
Added to this, one must consider all the activities of the banking sector the past few years. All the destructive practices of these lending institutions, which not only have gone unpunished, the main perpetuators have become well rewarded. It's very frustrating to watch these people richly rewarded for acting in direct opposition to their customer's interests. Then there are the continued addition of myriad fees, nickel-and-diming us to penury. With that, we, as thoughtful consumers, need to consider why we continue to engage with institutions that do not, by their very design, have our interests in mind.
So, I'm considering shifting my economic payment medium to cash. And my banking to a credit union. What's more progressive than a co-op? Those institutions born out of last century's progressive movement. Not perfect, perhaps, but more aligned with my values. My personal challenge in this is inertia. Shifting direct deposits, recurring payments, and all that sort of thing is a bit daunting to consider. And I've habituated to debit payments. That'll be tough to change, too.
Into all this comes this piece, The Future of Money in Wired (it's also a book). Will PayPal, and it's related technologies, open this up and make these transactions sustainable? (It's a meaty article...I highly recommend it) I think there's great potential here. But it's not quite here yet. However, I think it bears greater exploration for what's out there already. Thus, more to come...