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The E-Sylum: Volume 12, Number 27, July 5, 2009, Article 25

DICK JOHNSON ON LOW-VALUE DEBIT CARDS

Dick Johnson submitted these thoughts on how low-value debit cards could encroach on coinage. -Editor
There is a movement afoot to replace the use of coins in American commerce. We have learned of a firm that is promoting this -- Card Concepts Incorporated of Bensenville, Illinois. They are the enemy of every American coin collector who wants to continue the issuing of American coins in the future.

They want to replace using coins with a card system and are inching their way into the vending machine industry. Where they have been most successful is in the self-service Laundromat industry. By retrofitting coin-operated Laundromat machines, the machines accept payment by a card (in effect a debit card). At the same location they supply a kiosk (they call an X-Changer) where you obtain or apply money to a debit card by increments of $5 (lowest amount acceptable) with $5 bills. Thus the use of coins in all denominations are entirely eliminated. We object to this.

We have no criticism of credit cards. These are generally used for high-value transactions, these are often in odd-cent amounts, accumulated during the month and billed in odd-cent amounts. No problem. Low-value debit cards, on the other hand, are specifically intended to replace the use of coins - a bad precedent for coin collectors.

The movement using low-value debit cards is insidious, a parasite eating away at the proper use of coins. Laundromats and public use photocopy machines are where these operators have made the greatest inroads. Their use is growing, a little at a time.

The greatest ill of debit cards is the unused portion. There is always a positive balance, no product delivered or service rendered to a zero balance -- causing, in effect, dead money! It cannot be used until the next transaction in that location. Never dead money with coins, they are universally accepted by every vendor, by every person in America.

What can coin collectors do? Do not patronize stores that use debit cards exclusively. Let the management know why. Write letters to the editor. A time honored way is to express your opinion in newspapers. And the most modern way is to hit the blogs. The influence of the internet is increasing.

Remember, as coin collectors, we have 2,000 years of coin-use heritage on our side. We also have the U.S. Constitution which granted the power of Congress to create coins. They were intended for just such use as at the local Laundromat.

To see the "face" of the enemy click on: www.laundrycard.com

Low-value debit cards are only one of many competing micropayment systems. Most have a niche, such as the laundry machine market - few are as ubiquitous as coins. They've worked for 2,000 years and won't disappear overnight. But inch by inch, competition is taking hold. My bet is on the mobile phone becoming a wallet equipped to exchange micropayments with vending machines and other devices.

Dick is curious to learn of other uses of debit cards replacing coins. I learned of an example of the unused portion problem this evening. My father in law discovered a Visa card he'd been given for his 80th birthday - two years ago.

It had an original $25 value, but now is worthless. After a year, the company starts deducting $3 a month whether the card is used or not. Real cash isn't printed with disappearing ink, and would still be just as good as it was on his birthday. But all he could do was give the card to my daughter Hannah to play with. Let's go shopping (her favorite game with Daddy lately)! -Editor




Wayne Homren, Editor

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The Numismatic Bibliomania Society is a non-profit organization promoting numismatic literature. See our web site at coinbooks.org.

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