Living with Digital Currency

Living with Digital Currency

October 12

Doubtlessly, many of us have thought of how great it would be to dive naked onto a pile of money, giggling like school girls as we frolic in the crisp currency like it was a meadow in a Disney film. Or is that just me?

Money is important. You can’t buy food without money, your business can’t function without revenue, and even the city sends a monthly bill for water, our most basic need.

Although the US mint produces 38 million new notes a day, the idea of rubbing crisp bills across our bodies might be dying as we frolic into digital meadows.

We all likely use our plastic money cards often, (I rarely carry cash—there are only two dollars in my wallet), but a recent Wired.com experiment caught my eye. A member of their staff attempted to use only her phone and digital payments to survive, no credit/debit cards, or cash.

The author explains that she was surprised that there were so many apps that made it fairly easy to function without a wallet and that the biggest challenge was finding places that accept digital payments—even with apps to find them. The trouble is that certain payment apps like Google Wallet don’t work consistently, and it’s not easy to track down places that allow you to pay with a phone.

Although it was an interesting experiment, using a phone for payments seemed to highlight the fact that there are many ways to pay and that different places utilize different methods, so the process is a lot more complicated than swiping a card. Another Wired article suggests that we are at least a decade away from leaving our wallets at home completely, since there are so many options and no standard payment methods.

Large companies, however, like Starbucks are working to make digital payments a viable option. Starbucks recently announced that in early November, customers will be able to buy coffee using Square Wallet, an app which allows users to scan a barcode from their phone at checkout to pay for their triple double grande vanilla frappa-whatever. It may make it easier for Starbucks customers, but with so many types of digital payment, and few early adopters, it’s not likely to pick up much steam in the near future.

On the other hand, there are iPhone cases that have a compartment for your ID, credit cards and other things, so would it really save that much trouble getting rid of them?

My concern is that when I pay for things online, or with my debit card, I never handle the crisp bills I love so much. My hours of work translate directly into an abstraction of wealth that I can trade for whatever useless stuff I thought I needed from thinkgeek.com (though brain candles and saw-blade throwing disks are cool).

The more digitized currency becomes, the less it impacts someone spending it. An article on investopedia.com explains that it’s much easier to spend when you have immediate access to more capital, but with cash you have a limit and would be required to visit a bank or ATM should your wallet run dry. It’s also a lot less painful to sign your name to a hundred dollar tab at the bar than it is to painstakingly scrape your last green bills from your now grim-looking wallet. Digital currency makes buying things or paying for monthly subscription services very easy. You’ll need to think about what that means, especially when you’re looking at expanding your use of cloud services (many of which are offered as either pay-as-you-go or on a subscription base).

For example, I currently subscribe to Netflix, Zune Pass, Xbox live, and probably something I’m forgetting. I get so accustomed to having these services and using them regularly that I forget that the payments are automated. Though I use the services, I forget to include them as monthly expenses and the more services I add, the more difficult it is to keep track of my spending—which is especially true if I use multiple credit or debit cards.

Often with digital problems, there are digital solutions. Websites like Mint.com allow you to track your spending across multiple accounts. It can even categorize your spending so you know which things you spend the most money on, and even lets you make your own financial goals and track the progress.

Because it is so easy to click-purchase, digital payments can be tough to keep track of. Subscriptions are easy to sign up for, and you might be charged monthly without physically seeing a bill, and without cash changing hands. Payments start to happen under your radar, and you might find you’ve subscribed to things you no longer use. According to an article on CIO.com, AOL receives 80 percent of its profits from subscribers, and 75 percent of those don’t realize that they don’t even need the service.  It’s important to monitor which subscriptions you are using and which you aren’t so that they can eliminate all but necessary ones, and use the savings elsewhere.