from Hacker News

Why Killing Cash is Key to MasterCard’s Competitive Strategy

by bavcyc on 7/27/14, 2:14 PM with 76 comments

• by milesf on 7/27/14, 5:15 PM

  One word: Wikileaks.

  MasterCard refused to process donations: http://observer.com/2010/12/card-declined-visa-mastercard-re...

  Whether you agree with Julian Assange or not, the fact that democratically elected leaders in a democratic country tried to force a democratic society to _NOT_ support a cause by telling MasterCard "don't process these donations" was an incredibly chilling event.

• by kimdouglasmason on 7/27/14, 6:28 PM

  I wish they would just be more honest and state that killing cash would give them: 1. A payment processing oligoply that would persist forever because of regulatory capture and regulatory barriers to entry. 2. A privileged insider position when dealing with government, as all government control of payments would be implemented by them. Imagine the current revolving door between the fed, sec, treasury, and banks, but much worse. Think of all the political enemies that could be rendered financially dead. 3. The power to implement negative nominal interest rates in deflationary scenarios, which is the dream scenario of large banks and central banks everywhere, allowing them to steal from savers in ALL economic circumstances.

  It's a fascist (I.e. corporate state) control freak's dream.

  The Japanese have been smart enough to stick with cash in their decades of deflation. As it looks increasingly like a number of Western economies may 'turn Japanese', I hope those nations will follow Japan and stick with cash.

  ... and 1.5% of GDP (almost certainly overstated by an order of magnitude) is a low price to pay to prevent a demonstrably criminal and corrupt banking cartel from controlling all transactions.

• by ethor on 7/27/14, 4:42 PM

  Purely noble motives regarding removing cash from society, right? It essentially gives international financial corporations oligopoly over commercial transactions.

  And for those of you that cherish privacy, imagine the tracking possibilities in a society where commercial transactions no longer can be pursued anonymously.

• by exo762 on 7/27/14, 3:49 PM

  I pray for a day when this guys' power is torn away from their hands by Bitcoin. World with Mastercard instead of cash is a distopian nightmare. Ask Wikileaks.

• by debrice on 7/27/14, 4:18 PM

  So his argument is that it cost 0.5% to 1.5% of the GDP to have cash money... I believe the current visa processing fee is 1.51% plus $0.10

• by tormeh on 7/27/14, 4:33 PM

  We actually had a debate about this in Norway; removing cash completely. Only 2.7% of all Norwegian transactions are in cash, anyway. In Norway I can go for months without having any cash with me. Germany, where I live now, lives and breathes cash, which was very shocking when I came here.

• by DCKing on 7/27/14, 6:40 PM

  MasterCard's duopoly (with Visa) of all electronic payment systems in the world is so well-known it is often used as the first example of such a market in economics courses. "Legacy" payment systems such as cheques and cash are being slowly replaced by systems very much controlled by MasterCard or Visa.

  This is troublesome for two reasons.

  The first is political; both companies are American. This gives the American government way too much control over such critical infrastructure. Even if they do not overtly mess with the system, they most certainly are passing all this information on to their intelligence agencies. Even a single worthy competitor from somewhere else would be a huge improvement.

  The second is that it stifles innovation. Because of the lack of a well-established competition, the only innovation these companies are interested in is new products that make use of their existing infrastructure. Contactless payments on mobile phones could have been reality five years ago, but MC and Visa have to jump through several hoops and require special SIMs to have it all run over the infrastructure they sell instead of the internet. And the banks are happy to wait instead of innovating themselves.

  I'm all for killing cash by digital means. But not if these two companies are doing it.

• by RichardFord on 7/27/14, 5:25 PM

  According to Banga, in addition to being bad for MasterCard, cash is bad for countries and governments.

  Yeah, if you're of the mindset that everything that anybody purchases should be tracked and scrutinized.

• by clord on 7/27/14, 5:08 PM

  This puts incredible power in the hands of the financial industry. It is the most clear evidence I've ever seen for the shape of the coming (already here?) plutocratic era.

• by cowbell on 7/27/14, 4:36 PM

  The problem with "Yes, if.." is that the person asking only hears "Yes..." You better make sure the "if.." is in writing, with extra bold font. That, or you're stuck supporting IE6 with no budget or time to do so.

• by refurb on 7/27/14, 5:51 PM

  One great reason why you wouldn't want to get rid of cash is anonymity. There is no better way to give companies and gov'ts the middle finger when it comes to tracking purchases than to use cash.

• by mfringel on 7/27/14, 6:42 PM

  The MC CEO wants to instruct his people to never turn down a deal, because he wants to expand into the 85% of the market MC et al. do not have.

  He's making the bet that as he grows the market, MC will be able to make the new parts profitable somehow, and that the thing holding him back is his dealmakers being too conservative.

  Put another way, he's hit top safe speed, and he's just flipped up the molly-guard on the "untested go-faster button."

• by jacob115 on 7/27/14, 9:13 PM

  "I don’t mean this in any bad way, considering I’m a man [myself] — but if you give the man money, he uses it for … drinking, some [form] of hedonism," he said. But, if you give the money to a woman, "the first thing it goes into is the kids: their education, hygiene in the house, clean drinking water and better food"

  I thought this was meant to be about 'killing money', not Bangladesh's apparent lack of gender equality or the MasterCard boss's rather blunt views on the subject.

  The article is all over the place. And -

  "What really helps them realize they can make a difference is [the ability to make] a decision — and that not making a decision is a criminal offense."

  If I were an employee of MasterCard, I would feel very patronized and angry in the face of a policy that disregards our opinions - even if it's obviously just a marketing farce for the stockholders.

  For once, I'm glad I use Visa.

• by tim333 on 7/27/14, 10:41 PM

  >“Cash is the dirtiest secret of the modern economy. It belongs to a 200-year-old economy. It’s being allowed to play a role because it suits vested interests.”

  is an odd statement. Cash goes back to at least the 30 pieces of silver in the Bible, it's not much of a secret and I wonder who the "vested interests" are. Perhaps the several billion people who use it daily? And "allowed to play a role" is odd as it's the standard system everywhere. Maybe Banga dreams of a world where Visa and Mastercard have the power to ban cash but perhaps still graciously allow it to play a role. I hope that does not happen.

• by tomphoolery on 7/27/14, 8:13 PM

  Cash isn't going anywhere. There is WAY too much money that's "off the books" floating around, and MasterCard is completely foolish if they think that's just going to disappear because some idiot banker tells them that cash is history.

• by acd on 7/27/14, 6:51 PM

  Credit card companies charges fees to the merchants selling items, in principle its a 0-2% on all purchases made with cards in the world.

  s/credit card/crypto currency/g

• by aquadrop on 7/27/14, 7:22 PM

  This may be a stupid question, but are Visa/MasterCard/etc essential? Can't banks work things out among each other?

• by doctorKrieger on 7/27/14, 4:07 PM

  it's not like when the government removes cash people will turn to trading in gold or any other portable thing.

• by zo1 on 7/27/14, 4:35 PM

  Mods, please change the name of this submission. It is completely misleading. The linked article is titled: "Why Killing Cash is Key to Mastercard's Competitive Strategy".

  On the other hand, if this was meant as click-bait, then go right ahead and not change the name. I'll just regret my click, and hopefully this comment will serve as a warning to other unsuspecting, curious individuals.

  Edit: I see that the title has been changed. Thank you very much, mods!