There is a surprising degree of competition for who’s going to run the currency system. There are at least four major currency systems in the US: cash, checks, visa, mastercard, and amex. Running a currency system can be quite profitable, and not just because you can tax people to particpate in your network. Once you start looking for them these private currency systems are extremely common. For example loyality award point programs and phone cards.
Gift cards are an interesing example. Look around in grocery, drug, stationary stores – there are hundreds of these cards! Today I was looking at the ones at CVS and Wallgreens, two drug store chain.
Gift cards let you convert highly fungible money into money with only some limited range of uses. You can spend $25 any where, but a $25 burger king gift card is more limited. But yeah – there are lots of Burger Kings. Some cards are more fungible that others, for example one of the cards I saw on recent visit can be used at any of six different resturants chains!
I find the gift cards that let you buy gift cards amusing. These let you move from highly fungible currency into semi-fungible; before you finally commit to marginally fungible. An online example of this are the gift cards from Great American Days. Those were on sale at the drug store today.
Of course if you have gift cards for one of those drug stores I was in today you can buy any of the gift cards they sell. Converting to another gift card is close to close to free. You will probably have to pay sales tax. I like to note at this point your taxes pay to keep the national currency system functioning.
And then there are the gift cards that can be used any place that those credit card networks reach. You can buy those at the drug store too; but your charged a fee of about 5% – think of it as the tax to regain some fungiblity. Though it looks like it might be possilbe to reduce that some using this vendor
Credit cards aren’t the same as currency though. Lots of authentic little vendors doen’t take them; and those that do pay a heavy lot of fees for access to those private currency networks. When you use them you loose your privacy. As they say in high school: it all goes on your permanent record.
So I was interested to see this gift card today Web Secrets Card. It’s really intended only for buying stuff online. Though it appears you can pay ten dollars and have then ship you a physical card which you could then use to buy offline goods. They charge five dollars a month until you drain the card.
So there you have it. The cost of fungible is around 5%, the cost of privacy is around $5 dollars a month.