Warning: this entry gets a little technical. But you'll want to follow this one through because YEG Live could change how you pay for things... forever.
YEG Live recently submitted an application to the MintChip Challenge; a competition organized by the Royal Canadian Mint to encourage the development of "digital payment technology." The Mint describes it as the "evolution of currency" and it could mean not only paying for things using your smart phone, but also cutting intermediaries like Visa, MasterCard and INTERAC out of the everyday exchange of currency.
So instead of me telling my bank to pay a business with my money so I can purchase a new widget, I can pay for it directly using MintChip. Consider it a form of digital cash.
I'm sure you're thinking, 'my credit and debit cards work just fine. Why is the Mint pushing for this technology!?' As Cameron explains it, there are two major reasons:
For one, when we use our debit and credit cards, those intermediaries (basically, the big banks) take a cut. Subsequently, over the years our increased reliance on plastic has caused prices to inflate so retailers can recover the service fees placed on all debit and credit purchases.
"Prices have to go up," says Cameron, "because when, say 30 years ago, only 20 per cent of transactions were through cards, many retailers thought 'as a business owner I can capture that 20 per cent of the market that isn't carrying cash.' Now the situation has flipped - it's more like 80 percent of people pay using various cards all the time and, generally, if the purchase is over 20 dollars that proportion is even higher. The net result is price inflation on all goods because merchants assume a card will be used by the customer, so they add a few percent to the price."
The second reason has to do with how the Mint determines the overall health of the economy. Studying the velocity of the turnover of money, economists determine the strength of our economy based on how quickly money exchanges hands.
"If more money is transacted more quickly from one person to another to another, the faster the economy will grow," explains Cameron. "If you take three percent - in many cases it's more - out of the equation to pay Visa and MasterCard, the velocity of the turnover of money slows down. If I spend a dollar in a retail shop, the retailer only receives 97 cents - or less - to spend somewhere else."
"There's still a role for the banks, and it's a huge one, when it comes to the business of supplying credit, but it's the every day transactions that people already have the money for that the Mint wants to get back on track."
Enter the MintChip. The Mint has asked software developers to show us what a world without credit or debit cards might look like. YEG Live has one of about 40 accepted submissions out of 500 applications and you can see their vision for the MintChip here:
If you like what you see, you can vote everyday for YEG Live's MoneyBelt app. They sure would appreciate it.
Now aren't you glad you read all the way through? The world is changing. YEG Live is here to help you keep up.