Thursday, June 30, 2005

National Change Card

Here's an idea that I've thought about on and off. Figure I'd throw it out here and get some opinions and feedback. We all know how much of a pain it is to keep coins around. They are dirty, heavy, and cumbersome to use. We also know that there are quite a few people out there who are opposed to a completely electronic currency system. So here's a compromise.

Let me introduce the National Change Card (NCC). This card would be a government-issued card that would keep track of your change up to $0.99. Because the NCC can hold only a small amount of money, there is very little risk of fraud and also there are virtually no big brother issues. Basically, whenever you purchase something using cash, you'd hand them cash plus the NCC. Any amount that would typically have been returned as coinage would not be deposited onto your NCC. Say you purchased a $1.90 item. Now, you'd have $0.10 on your NCC. Now, say you were to purchase a $24.08 item and you handed the cashier $25, you would receive a $1 bill and your NCC balance would now be $0.02. If you forget to bring your NCC, you could simply type in the official NCC number along with a pin code. If an NCC was ever lost or stolen, you are out at most $0.99, plus any fees you'd pay to get a new one. The various state DMV offices could take care of these issues.

Implementing the NCC would remove the need for the government to mint coins. And, there would simply be more efficient use of money, which would be seen as an uptick in consumer spending. These two points alone should be enough to offset any costs associated with issuing and maintaining an NCC for everyone. Visitors to our country could be issued temporary cards or a system could be set up to allow use of passports from different countries in lieu of the Change Card.

The government could certainly push the cost savings towards bettering education or any number of worthwhile projects. What do you think of the NCC? What are potential problems and pitfalls? Could they be resolved?


Anonymous said...

Hey man, I just feel that we need to do something about coins. I mean I have a few yogurt containers of the stuff. Why use CSTR machine that rake a %? I heard about some bank in TX that offers CSTR like machines without the rake. NCC'll work for me.

Anonymous said...

The cost of implementing something like this would be enormous, in terms of the card readers businesses would have to invest in. And of course, consumers would still have to carry coins around, to use at the overwhelming majority of businesses who don't have the card readers. All in all, I'm not a big fan of this idea.

Brute Force said...

Great point about the many places that don't have card readers. Amazing how such an obvious hole was overlooked. I agree with what you're saying... the cost of installing a card reader at all points of sale would be enormous. But, boy would it rock never to have to deal with coins again. Do you see any way to reduce the cost of a similar system?

Anonymous said...

Merchants get $1 from the NCC, and then issue the consumer a $1 bill. This would imply that there's a merchant account system (dealing with issuing checks, transfering money to their bank accounts, detecting/resolving issues of merchant fraud). In addition, consumers would probably need a system to check their account balance, request new cards, etc. This all adds to the implementation costs.

Anonymous said...

JT makes your NCC idea not look so good man. Coins still suck though.

Anonymous said...

Well the benefits of the idea make sense, especially if you hate coins. I'm just bringing up the other side of the feasibility equation, which are the implementation costs.

Brute Force said...

Been thinking more about this.

Need to know how much the government spends on minting coins. Those costs must be pretty large. Of course, they'd need to offset the decrease in money supply by printing an equivalent worth in paper money. I think new business owners could be forced to purchase a relatively cheap card reader. Or, they will not be allowed to charge amounts that would lead to change.

Some stores today don't accept credit cards or ATMs. What usually happens? Some 3rd party installs an ATM machine there to allow customers to get cash, for a nominal fee. Similar developments would likely occur if the government were to move towards an NCC and discontinue all coinage. The implementation costs while large would not be shouldered by the government (and thus, taxpayers) alone.