Cash is Dead

The error of choreographing a cashless society.

By now, you've probably seen the Visa commercial "Lunch," in which consumers move beautifully through a cafeteria as if lunch were Ziegfeld's Follies, filling their trays with high-speed, clock-like precision and grace and paying for lunch with debit cards, until one customer decides—GASP!—to pay with cash. The impossibly catchy tune (Raymond Scott's iconic "Powerhouse," of Looney Tunes fame) grinds to a halt, the choreography disassembles, food spills. Everyone stares at this man; one woman sneers viciously. The message is clear: Cash is not pretty. Cash impedes. It makes a mess of things. Using cash affronts your fellow citizens who have stuff to do! Cash, finally, is bad.

Even if the ad's Orwellian overtones—unthinking industrial conformity, anti-individualism—escaped the company, they haven't escaped those who've watched the spot on YouTube. Commenting on the dancing debit-card holders directing their disdain at Mr. Cash, one person cleverly writes: "They'll be late for today's Two Minute Hate! The horror!" Another YouTuber called the spot "sinister" and at least three of 30 posts told Visa to do something involving the F-word. The spot has been "favorited" (officially the worst verb ever) fewer than one in a thousand times.

Retailers, on the other hand, probably love the spot. In addition to Visa, whose interest in denigrating cash transactions is obvious, retailers will tell you that cash is bad for them, too. Cash requires handling, and insurance for cash handling. It requires expensive safes and armored car services and trustworthy employees. Cash fosters risks like fraud, skimming the till, armed robbery and ram raids, a destructive kind of theft involving heavy vehicles plowing through a building to get at a safe.

From a security perspective, retailers can argue that the less they deal with cash, the less overhead they'll incur on cash protection, fraud deterrence, employee safety and so forth. Less overhead means savings on operating expenses which, eventually, will trickle down to the consumer, right. Is the cafeteria going to reduce the price of a burger because everyone's using a debit card, or just pocket the savings? Maybe the customer is always right, but the shareholder is always more right.

Retailers and card issuers also prefer plastic over cash because of its marketing potential. A permanently stored debit transaction, or series of transactions, creates a valuable profile of consumer shopping habits. It's hard to use and/or sell that mined marketing data when you don't have it because your customer paid with sawbucks. (For these same reasons, the government believes cashs anonymity is an impediment to its war against various nouns like terror and drugs). From a marketer's perspective, cash makes it harder to make money. Behind all the musical pomp, what the ad really says is not that cash is bad, but rather that cash is bad for Visa, and by extension, the cafeteria.

But of course they can't come out and say that. So instead they position card transactions as an efficient alternative to cash that's beneficial to the consumer. Even to society; Debit will literally prevent a breakdown in lunch service!

Some consumers recognize this as the canard it is. An inconvenient truth for card issuers and merchants is that cash is a lot safer for consumers. It's anonymous and secure; it's impervious to power outages and network outages and clerical or computer errors which require hours on service calls to reconcile. Cash is also privacy-friendly, allowing the consumer to complete a transaction at its face value without paying the tax of ceding personal information and exposing oneself to the identity theft pandemic.

What's more, the clockwork efficiency Visa portrays in its commercial is unrealistic. After all, in the ad no one waits for card approval, no one punches in a PIN, or decides if they want cash back, or waits for a printed receipt to sign, or signs an electronic pad after approving the amount charged or gets on the telephone when the transaction is denied because some computer somewhere flagged it as potentially fraudulent.

Retailers try to minimize these delays to make debit transactions as quick as possible, but the benefit to consumers is marginal at best. Card transactions do create efficiencies for retailers. In their zeal to push consumers in that direction, though, they fail to recognize that cards create new inefficiencies too.

Sure, a retailer might save on cash management overhead, but suddenly IT needs money to secure the electronic transactions. Yes, marketing gains data mining and market research capabilities, but then what about the mushrooming costs of identity theft mitigation and response? Armored car service is Peter. Database security is Paul. The goodwill of (allegedly) more efficient transactions is erased by the bad will of consumers burdened with months of credit checks and unexplained charges. In one hand, out the other.

Is cash really all that bad? One would love to pose that question to the TJX Companies. The retail giant recently disclosed that non-cash transaction records from 2003 and from the last six months of 2006 with personally identifiable information in them, were compromised. Consumers who swiped cards at stores like Marshall's, TJ Maxx and HomeGoods are affected. The company would spend untold dollars recovering, even if not a single record were used fraudulently, but the Wall Street Journal reported this week that credit and debit card data stolen from TJX has turned up in fraudulent purchases in several states and other countries. Needless to say TJX's reputation is affected too. (The company's not talking.)

Overall, more than 100 million notifications of lost or stolen personal information have been delivered to U.S., according to the Privacy Rights Clearinghouse. (Thats a lot of stamps). Yet, consumers have remained maddeningly, absurdly apathetic, conforming to a system that puts them more at risk—like the cogs in that commercial—for no other reason than that a company is telling them its more convenient.

One wonders if the TJX breach, which could affect such a broad swath of retail consumers, might finally arouse the public to fight back in what privacy advocates call the "war on cash" by using a payment method that's not vulnerable to identity theft. Will bargain shoppers finally say, "Enough is enough," and force companies to realize that cash has its merits too?

Or will they keep dancing and swiping, like mindless puppets on Visa's string?

Copyright © 2007 IDG Communications, Inc.

The 10 most powerful cybersecurity companies