Have you ever purchased a newspaper with a credit card? How about doing away with all sorts of pockets and cash tills and carrying just the plastic cards carrying the names of the likes of Visa, MasterCard and American Express? Well, this is soon going to happen looking at the rate at which the usage of plastic money has risen over last 10 years. This is reflected from the fact that 10 years ago, American consumers paid in cash or though cheques for around 70% of all their purchases. According to Nilson report, today, more than 50% of all their transactions are paid for through cards. So, the day is not far when people would pay for a hamburger or a bus ticket through these plastic cards. But credit card companies have realized that the use of the age old swiping cards would not work for such small purchases. So, they have introduced a concept named “contactless cards” for purchases under $25. These cards are used by transferring data wirelessly through a tap or a wave to a receiving device with the shopkeeper. The whole process takes less than 2 seconds and retailers feel that such a concept is likely to reduce risks of thefts and also people spend more when they use plastic money. They also feel that this would reduce the effort of counting coins and smaller currency everyday and getting it exchanged from banks. In fact, many fast food giants, cinemas and sports venues have already started accepting such cards in America. The next step is the idea of embedding a credit chip in the mobile device and using it as a credit card itself.
The whole concept is not limited to just small transactions but to ones involving huge amounts of money as well. Card companies have started approaching property management companies and thus we can even hope to pay our monthly installments, rent and even down-payments through credit cards in future.
The question that might come to mind now is, “What if one does not have a bank account?” Well, these biggies have already cashed upon that idea by coming with another concept called pre-paid cards just like the debit cards loaded with money. These cards would help customers without a bank account to pay with plastic money by depositing a certain amount with the card company before making a transaction. In fact, many state governments in the US have even started paying employment benefits by depositing money in the pre-paid card accounts of the concerned persons. This makes the whole system effective and less costly. In fact, Ohio government claims to have saved more than $2 million after switching to plastic money for giving out benefits and subsidies. Some companies have even started giving out salaries by depositing money in accounts of the employees’ pre-paid card accounts. The time is near when cash would lose its charm and plastic money would be the king!
The whole concept is not limited to just small transactions but to ones involving huge amounts of money as well. Card companies have started approaching property management companies and thus we can even hope to pay our monthly installments, rent and even down-payments through credit cards in future.
The question that might come to mind now is, “What if one does not have a bank account?” Well, these biggies have already cashed upon that idea by coming with another concept called pre-paid cards just like the debit cards loaded with money. These cards would help customers without a bank account to pay with plastic money by depositing a certain amount with the card company before making a transaction. In fact, many state governments in the US have even started paying employment benefits by depositing money in the pre-paid card accounts of the concerned persons. This makes the whole system effective and less costly. In fact, Ohio government claims to have saved more than $2 million after switching to plastic money for giving out benefits and subsidies. Some companies have even started giving out salaries by depositing money in accounts of the employees’ pre-paid card accounts. The time is near when cash would lose its charm and plastic money would be the king!
Written By: Anubhav Jain, IIM Indore
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