Shelby: This week, we are all about the Benjamins and the George Washingtons and all the rest of the dollar bills. And you may not know that, actually, manufacturing — making the dollar bills and coins we use in this country — is not cheap. So, here is a pop quiz for you:
How much does it cost the government to create a penny? Is it:
A. Three-quarters of a cent
B. One cent
C. 1.7 cents
D. 2.4 one cents
You have 10 seconds.
Time’s up! The correct answer is “D,” 2.4 one cents. A penny is made up mostly of zinc and copper, two metals whose prices have risen over the last few decades. So now, it costs more to manufacture a penny than what the penny is actually worth. And some countries have already decided that manufacturing money is just not worth the cost.
Canada has just announced it will stop producing its one cent coin this fall. And Sweden, the first European country to introduce bank notes back in 1661, is now phasing out cash and pushing for all financial transactions to be done electronically. Could the same soon be true in this country?
“There will be a time — I don’t know when, I can’t give you a date — when physical money is just going to cease to exist.”
Shelby: That time appears to be almost here as digital ones and zeroes replace coins and cash.
“Ninety-five percent of the transactions in America, or more, have nothing to do with physical pieces of paper or coins.”
Shelby: Think about all the places you use credit or debit cards and smartphones.
“Did you know we do debit card now?”
“Twenty-two, thirty-two years from now, will cash still be here? I think we can put it in the grave already.”
Shelby: The author of The End of Money says the main reason we are going to leave cash behind has its cost.
“It’s really expensive to move it, store it, secure it, inspect it, shred it, redesign it, re-supply it, and round and round we go!”
Shelby: It already costs the U.S. government almost twice as much to make a penny and a nickel than they are actually worth.
“That’ll be $8.”
Shelby: Portland, Oregon ice cream shop owner Kim Malek uses an iPad app called Card Case that lets her customers pay without pulling out a wallet or credit card or even the phone itself. Here is how it works: when the phone or iPad is in range of the cash register, a photo pops up. All the customer says is his name and the money is smoothly deducted from his bank account.
The company that invented Card Case — Square — also came up with this device which allows anyone to swipe a credit card into their smart phone or iPad. But is it safe?
“Every transaction has your photo right next to your name. So, if somebody else walks up you’re going to know instantly as a merchant that that’s not the person who owns that phone or who has that Card Case.
Shelby: Big companies, from Apple to Google to Visa and most major banks, are looking to change the way we pay. And the number of mobile money transactions is on the rise.
What about young people like you? The money you earn is probably paid in cash. Or how about the poor who might not own smartphones or tablets? Experts point to Africa, where those without access to banks still have access to cell phones and the internet. So, a cashless society there might not be too far away.
- Do you think a cashless society is in the future for the U.S.? If so, how long do you think it will take for us to get there?