That will do nicely sir: paying for stuff in 2017
There’s a famous passage in The Hitchhiker’s Guide to the Galaxy when Guide writer Ford Prefect tries to pay for a drink with American Express. The alien bartender is unimpressed with that suggestion, and after threatening to kill him on the spot, points out that his establishment doesn’t accept that particular credit card. Luckily, Ford has an ace up his sleeve, and offers the bar a favourable writeup in the Guide in exchange for free booze. “That,” rumbles the bar-creature, “will do nicely, sir.”
While abandoning journalistic ethics in exchange for alcohol worked for Ford Prefect, not all of us have that opportunity (well I do, but you’re not me). So what exactly are our payment options in 2017?
If cash is King, he’s an old one who can’t quite remember where he left his crown. As we celebrate the 50th anniversary of going decimal, we’re also leading the world in abandoning cash for plastic. While that’s good news for whoever used to have to clean the coins out of fountains, it might not be so good for our kids’ financial literacy. ASB’s response to this in 2016 was to launch an electronic piggy bank that turns virtual money back into simulated cash. (Insiders tell us that the next version will come with Pokémon-style virtual coins users can find down the back of the couch.)
Fun fact: New Zealand’s $1 and $2 coins are made in the UK; the rest come from Canada.
Yes, they still exist – just. Cheque use in New Zealand is plummeting even more quickly than cash, and in 2015 we wrote eight each on average (down from 130 in 1993). Most of us still have a chequebook gathering dust in a drawer somewhere though – so you might want to feed yours to the work shredder before someone unsavoury gets their hands on it.
Fun fact: cheques have been in use in some form since Roman times, however the first oversized novelty one didn’t appear until the 1970s. (Oversized novelty electronic transactions never really took off though.)
Electronic Funds Transfer at Point of Sale piloted in New Zealand back in 1985, took off like a possum up a punga and today accounts for more than 60 per cent of all retail transactions. Transaction fees can be a pain though – so if you’re a heavy EFTPOS user check with your bank that you’re on a low- or no-fee plan.
Fun fact: it’s EFTPOS, not EFTPOST.
The credit card is the double-edged sword of personal financial management. Sing it with me: pay your balance off in full, every month. Do that, grasshopper, and there’s no cheaper way to buy stuff (and often collect reward points along the way). Miss that payment, though, and a gold-plated bell rings in your bank’s boardroom and they break out the champagne. Last year (Canstar reports) we put $36 billion on the plastic … and ended up paying interest on 63 per cent of that.
Fun fact: market leader Visa didn’t arrive in New Zealand until the 1970s and was originally a debit card – it didn’t become an interest-charging credit card until 1980. Champagne sales to banks have never looked back.
Blockchain-based currencies use cryptography and something called a distributed ledger to create (“mine”) money and keep track of who owns it. (If that sounds hard to understand, ask someone to explain exactly how the standard banking system works.) There’s a bunch of blockchain currencies, but the most widely used ones are Bitcoin and Ethereum. Upsides of blockchain currencies include anonymity and (currently) no way for the government to track or tax transactions. Downsides include a limited number of ways to spend your money, and the risk the whole thing will come tumbling down (which, again, you could say of the standard banking system).
Fun fact: one Bitcoin equals $6,072 New Zealand dollars – up from $625 in 2015.
Look out for this one – or a Facebook-based equivalent – at a noodle bar near you. WeChat is the leading social media platform in China, and if you think Facebook is trying to take over your digital life, WeChat is takes it to the next level. One of its most popular features is its payment platform. WeChat uses QR codes – those black and white patterns that look like hobbit-sized crossword puzzles – to display prices on items in shops or vending machines. Scan the item’s code with your phone and bam! – you’ve bought it.
Fun fact: This Chinese New Year, users used WeChat to send more than 8 billion traditional “red envelope” cash gifts via the platform.
Vaughn Davis is a smart cookie who lives in Auckland and has a goat farm. An actual goat farm. He also has The Goat Farm, which is an ad agency and doesn't involve any actual goats. He writes monthly for Credit Simple and you can find him @vaughndavis.All stories by: Vaughn Davis