By Karen Weise
Coins may have been around since before the Caesars, but Canada is trying to make them extinct. The Royal Canadian Mint wants to create the “MintChip,” a digital way to replace coins for small transactions like buying a cup of coffee. Canada has already planned to phase out the penny and just launched a competition to attract developers to build technologies for the system. It wantsa complete overhaul of how people make payments.
MintChip may be technologically savvy, but it’s no easy task to replace coinage. “MintChip is supposed to replace coins, and it’s worth remembering that the coin is one of the oldest pieces of technology that you have in your pocket,” says Bill Maurer, the director of the University of California Irvine’s Institute for Money, Technology & Financial Inclusion. “The coin is super-duper old and we still have them.” Historically, new payment technologies just augment existing methods and don’t supplant them altogether, Maurer says. “Plastic was going to get rid of cash and coins, and it hasn’t yet.”
As an anthropologist, Maurer points out that the rituals and behaviors behind paying have helped coinage survive for millennia. It took years for people to get used to swiping a card to make routine purchases, but digital products such as Google Wallet haven’t yet codified a behavior. With some technologies, you tap a card to make a payment; with others you wave a phone over a sensor. In the developing world, digital payment products like mPesa, which is hugely popular in Kenya, latched onto a popular behavior—sending text messages—to facilitate payments. “Instead of telling people to wave things or access a web browser, you just text money to mom,” Maurer says. “Easy-peasey.”
Historically there have been other periods when what Maurer calls “the arbitrary nature of money” bubbles up and the public actively debates the physical form of currencies. For example, when the United States created a standard federal currency after the Civil War, the public questioned how money could have value just because Congress said so. The satirist Thomas Nast made afamous cartoon called Milk Tickets for Babies, in Place of Milk, in which an omniscient hand feeds a child with a piece of paper that says: “This is milk by Act of Congress.”
Maurer says we’re again in a period of debating physical currency because of a confluence of events that include vast amounts of government borrowing during the financial crisis, the digital revolution, and calls for a return to the gold standard. Indeed, Bloomberg Businessweek‘s short post about Canada’s efforts to kill the penny was one of the site’s most-read stories for two weeks in a row. The winners of the MintChip’s developer competition will be announced in September. Their prize? A physical piece of gold.
Bloomberg Business Week