Earlier this month, Visa announced a new initiative aiming to increase the number of card transactions to cash’s detriment. Indeed, the credit card provider will offer a $10,000 reward to a selection of 50 restaurants that agreed to refuse cashMoney in physical form such as banknotes and coins. More transactions in the future. The objective is to encourage consumers using their credit card rather than paperSee Banknote paper. More moneyFrom the Latin word moneta, nickname that was given by Romans to the goddess Juno because there was a minting workshop next to her temple. Money is any item that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular region, country or socio-economic context. Its onset dates back to the origins of humanity and its physical representation has taken on very varied forms until the appearance of metal coins. The banknote, a typical representati... More for more purchases in order to accelerate the move to a cashless society – a dream for card providers. Recently, MasterCard also decided to attack cash’s market to push card payments by signing agreements with third-party paymentA transfer of funds which discharges an obligation on the part of a payer vis-à-vis a payee. More providers in several sectors including rent and education.
Visa and MasterCard’s share of the payment industry has expanded significantly over the past years. In 2016, the two companies handled about $4.3 trillion in payments only in the US, figures that practically doubled over the past decade. Nevertheless, the amount of cash in circulationThe value (or number of units) of the banknotes and coins in circulation within an economy. Cash in circulation is included in the M1 monetary aggregate and comprises only the banknotes and coins in circulation outside the Monetary Financial Institutions (MFI), as stated in the consolidated balance sheet of the MFIs, which means that the cash issued and held by the MFIs has been subtracted (“cash reserves”). Cash in circulation does not include the balance of the central bank’s own banknot... More has risen at the same pace, and studies demonstrate that cash remains the most used payment instrumentDevice, tool, procedure or system used to make a transaction or settle a debt. More in the US, especially for small-value transactions. To tackle the problem, credit card providers have thus decided to promote card payments more aggressively, encouraging retailers to refuse cash. Ajay Banga – CEO at MasterCard – is known to support the demise of cash actively.
Nevertheless, various retailers are not willing to deprive consumers of a payment methodSee Payment instrument. More that they might prefer and chose to safeguard their freedom of choice. In addition, merchants usually try to avoid fees inherent to card payments, which range from 22 cents for debit cards to 2% of the transaction for credit card purchases. Finally, the lobbying activities performed by Visa and MasterCard have extremely prejudicial consequences for the unbanked people, who would thus not be able to visit certain restaurants and retailers. As a reminder, there are about 10 million unbanked households in the US.
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