The real reason Wall Street is downright giddy over the historic $18 billion Visa IPO this morning isn’t because the banks that own it are in for a big payday or that it represents a safe haven in a time of market turmoil. Instead, investors want to profit from the slow death of physical money. Cash is no longer king; Long live the charge card!
Already, a majority of retail transactions are done with a card instead of cash. This is up from less than 30% a decade ago. People love the convenience: Visa estimates that contactless card transactions are twice as fast as cash. For all their complaining about interchange fees, retailers love the fact people tend to spend 20% more when using plastic. Americans alone now possess some 1.5 billion credit cards.
The demise of paper notes and coins will only continue. The last refuge of cash has been small transactions like paying a bus fare. Now, even this is threatened. Interchange rates continue to fall. Card terminals are becoming less expensive and more ubiquitous. It’s only a matter of time before just about any purchase can be settled electronically.
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