Money Mind Games
Digital currency reworks traditional notions of cash, plastic.
There was a time when businesses would frame the first dollar they made.
For a new business today, that first dollar would be a speck of data in a bank server somewhere in oblivion.
As the convenience channel moves toward accepting mobile payments, loyalty rewards and digital coupons, the idea of paper currency and the tactile nature of giving a bill or a coupon to a cashier to start the pump or get a discount on a pack of cigarettes may be fading, evolving into transactions that exist only in an ocean of unseen bits and bytes.
Concepts such as Bitcoin or truly digital currency have also entered the dialogue, forcing retailers to rethink payment beyond paper money or even using established credit- and debit-card systems.
C-store retailers are already moving slowly into this arena. The 244-store Maverik chain, based in North Salt Lake, Utah, is about to embark on its mobile-wallet trial with Isis, the New York-based electronic-payment platform created by three major phone carriers.
“Everything mobile is the current trend, and that includes mobile wallets,” says Shon Call, executive director of store technology for Maverik. “Customers love the convenience of it and really are driving the demand for all their services to be available on their mobile device. That includes payments.”
But prior to the effort, Maverik had already launched a two-tiered loyalty program through which customers earned points that could be exchanged for fuel discounts, merchandise or even donations to their favorite charities.
The company’s Adventure Club Rewards Black Debit Card loyalty program asks customers to tie their bank accounts to the card, thereby using the less expensive automated clearinghouse (ACH) payment process vs. higher credit-card interchange rates. The program turns the savings into 6 cents off every gallon every day, plus points for purchases.
In essence, retailers are rewarding customers with digital currency to encourage them to buy more frequently or purchase higher-margin goods.
The disconnect in thinking that retailers aren’t outright giving pennies or dollars to every customer using a loyalty card—and legally they aren’t—stems from the tactile nature of cash. David Wolman, an author on the topic who spoke earlier this year at The Tech Event in Dallas, said most people have already resigned much of their financial lives to digital currency such as online banking, direct deposit or even using their credit or debit cards.
“So by and large, we’ve said yes to electronic money. However, we think the money is … in gold or [physically] sitting somewhere,” he says. “I’m sorry. It’s not. Most money is already zeroes and ones in distant servers.”
A Server Far, Far Away
The concept of digital currency can be mind-blowing. Bitcoin, for instance, is at its essence electronic money not tied to any bank or institution, but still traded via online exchanges as global currency and is as valid for goods and services as a dollar bill.