Of Plastic Money: a Snippet

Question:

What about plastic money. You can bring a single piece and can reach almost everywhere in the world!


Answer:

Yes, that is an argument for plastic money. In terms of demographic access, plastic money can be used in all major cities around the world plus many other areas, especially in the “First World” countries. It is also a major “currency” for internet transactions. But on the same account, plastic money does not represent many retail transactions done in the Third World or even in the Developing World.

Also, in terms of access of usage, one needs to be in certain “credit standing” (i.e. “good standing”) to be able to use it. And guess who are able to use this “feature”? Yes, only from those with “good credit standing” of the middle and upper class. Those of the lower class would most probably shy away from using the “service” or are weeded out through some kind of filtering mechanism by credit rating bureaus.

Furthermore, the buyer and/or seller must PAY for plastic money by servicing the debt (from interest rate or all other kinds of “financial fees”) and membership fee. Despite many kinds of perks and benefits the owners of plastic money may lure people about, many have fallen into endless debt cycles in their lives.

Why must we, buyers and sellers, pay extra for private transactions every time? Yes, these kinds of “taxed” transactions do distort price equilibrium in the market. Most often, the buyers who are left to pay all the extraneous transaction cost – when the sellers decide to factor in the transaction cost into goods they sell. Does this do justice to those who don’t use plastic money?