One of the institutions of upstate New York is Wegman’s, here in Ithaca the Wegman’s is a vast box store; i.e. the size of a Walmart or a Target. It makes you wish you had a bicycle. Like other modern grocery retailing machines they try to lock you in with a loyality card. I have a small collection of these for the stores around Boston, all in Mr. Gate’s name, so you can imagine my disappointment that Wegman’s actually requires you to show your driver’s license before they issue one.
Reading as I am regional histories has brought to my attention that the US suffered a major economic Panic in 1837. One event in that unfolding mess was the point when banks, which at the time issued most of the folding money, all stopped exchanging it for hard currency. “Out of 850 banks in the United States, 343 closed entirely, sixty-two failed partially, and the system of State banks received a shock from which it never fully recovered.” The customers of those banks and the holders of their currency lost everything. They were locked-in, what a marketing person would call loyal. How money should work became a key issue in the national debate for a long period following. Over time the US moved from a highly distributed currency system to a centralized one. I believe we are moving back to something more privately run. The loyalty cards only a small part of that.
Once in possession of your Wegman’s loyalty card the check out transaction process has three steps. First you prove you are a loyal members of the Wegman’s club by swiping your card. At that point you are presented with a screen with, and this is the amazing part, 8 choices on it! These distinguish which currency system you want to use. Having selected, for example credit, you then swipe a second card to reveal what credit card network your allied with. There is a fourth step where you sign the receipt; but this is optional based on rules I haven’t investigated.
The reason for all these currency systems is to allow thier operators to take slice of every transaction. The slices are huge, many percent. A huge operator like Wegman’s probably has the slice negotated down; but a small retailer, like the coop in Ithaca (who also has a loyality program), is probably paying 5-7% across all his transactions. Meanwhile I got a 2$ off the price of a pie.
Of course the faux reason for these systems is efficiency. Here’s a lovely blog posting about that!, where in the writer attempts to fight back because he’s so peeved by the Visa Ad campaign intended to shame people who aren’t getting with the program.
As an interesting complement to all this the Ithaca community has a long running experiment in trying to run it’s own currency system. I presume they are called Ithaca Hours to link them to work rather than gold. In the period following the Panic of 1837 many companies started paying their workers in scrip. I love the idea of local currencies, but I must admit I can’t quite puzzle out if they are a good or a bad witch. I am confident that the entire credit card/debit-card system ought to be run by the US treasury; the cost of running these alternate currency systems is outrageous.