Visa Goes Down in the UK, Chaos Ensues, Cash is Suddenly King

War on Cash Suffers Setback.

By Don Quijones, Spain, UK, & Mexico, editor at WOLF STREET.

For over 12 hours on Friday, shopping centers in the UK and other parts of Europe were plunged into chaos as millions of consumers were unable to use their Visa debit or credit cards at points of sale. The credit card company, which was finally able to restore normal service early Saturday morning, said it had no reason to believe the hardware failure was due to “any unauthorized access or malicious event”.

While the mayhem caused by the outage may have been short lived, it served as a stark reminder of the risks, both for consumers and retailers, of depending purely on cashless payments. In the UK, the chaos unleashed was particularly acute since it is one of the world’s most cashless economies, pipped to the post only by Canada and Sweden, as a recent study by industry analysts reported.

In 2017, cards overtook cash for retail payments in UK for the first time ever, according to figures from the British Retail Consortium. According to Visa, payment processing through its systems accounts for a staggering £1 in every £3 of all retail spending in the UK. Which is why, when those systems stopped working yesterday, the chaos was greater in the UK than almost anywhere else as cashless customers missed trains, were unable to fill up their cars, pay for their groceries, or even clear their bar tab — this was Friday, after all!

“There is never a good time for the payments system to go down but a Friday afternoon, when there is a flood of people leaving work, must be among the worst,” one banking industry source said. The only way for people to pay for stuff was with co-branded Mastercard cards, or hard cold cash. Luckily, Visa cards were still working at ATMs, although the queues were considerably longer than normal.

In a beautiful irony, Visa, a company whose stated mission is to “put cash out of business” as quickly as possible, had little choice but to urge its customers to withdraw and use physical bank notes for transactions until the technical issue was resolved. Without access to cash, the chaos caused by yesterday’s outage would have been immeasurably worse.

While the UK has happily embraced cashless living, with a resultant explosion in personal debt levels, in many other countries Visa has been dogged by the stubborn survival of cash and checks, despite widespread government and corporate efforts to kill them off. Globally, check and cash transactions totaled $17 trillion in 2016 — up 2% from a year earlier. To try to counter that trend, Visa rolled out a new US initiative in the summer of 2017 that offered to award 50 eligible retail businesses (online businesses are excluded) up to $10,000 each if they committed to refusing cash payments.

Visa is thinking of extending the initiative to its UK market, although it is roundly criticized by consumer groups, who say cash is still vital for many people. Serious questions have also been raised about the oft-touted financial benefits of going 100% cashless. According to a “study” that Visa recently “conducted,” if businesses in 100 U.S. cities “transitioned from cash to digital, those cities would stand to experience net benefits of $312 billion per year.”

It’s not hard to guess who would be the biggest beneficiary. Card fees, which are paid by merchants and usually passed on to customers via higher prices, normally range between 1% and 3%. Among the entities that get to divvy this moolah up are the bank that issued the visa card and the credit card network – such as Visa, MasterCard, Amex and the like. Visa gets just a small piece of the action, but if it is on every transaction, it adds up. In 2016 Visa extracted $15 billion from processing transactions globally without even carrying any credit risk (the banks have to deal with that).

Going completely cashless with risks, as consumers in Europe were just reminded: system outage. If the payment system goes down and all you have to pay with are cards or your mobile phone, you could suddenly find yourself quite literally cashless, as happened to many Puerto Ricans after the power outages in 2017, caused by Hurricane Maria, knocked out electronic transactions and ATMs for days or weeks on end.

It was a stark reminder of just how fragile and vulnerable a 100% cashless society would be — at least until a cashless system can be created that is 100% safe from the threats posed by natural disasters, accidents, cybercriminals, and basic human incompetence. And it’s why cash retains its crucial role in the payment universe, whatever Visa, driven by its desire for more profits and a larger market share, might want people to believe. Even some of Europe’s senior central bankers are now willing to publicly concede, printed banknotes should retain their place and their role in society as legal tender for a long time to come. By Don Quijones.

For a country to go cashless is too risky and systematically excludes the most vulnerable people. Read… Even the World’s Most Cashless Nation Doesn’t Want to Go Fully Cashless

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  81 comments for “Visa Goes Down in the UK, Chaos Ensues, Cash is Suddenly King

  1. gary says:

    100 percent of anything is bad. The saying goes “all things in moderation”.

    • robt says:

      But Socrates is moderate to excess – Aristotle

    • Freddyb says:

      Moderation is okay if you don’t take it to an extreme.

      Does anyone know if Visa’s outage was related to SAP?

    • Gershon says:

      I never heard a good story that started off with, “After a night of moderate drinking….”

    • Jon says:

      I moderately drink, smoke cigarettes, cocaine, heroin, and processed sugar. I’m moderately healthy right?

  2. Tom Stone says:

    I don’t understand why people lack trust in their Governments or big banks, they are, after all, doing God’s work.

  3. Rates says:

    10 days in Europe and the number of times I used credit card was exactly ZERO. Convenience is overrated.

    • Lee says:

      Last trip to Japan and I found that there are more places taking cards than the last time I was there – even in the country areas.

      I was surprised that when I bought a ticket from Narita to Tokyo the place (Keisei Line) wouldn’t take cards. Maybe that was just one place though.

      (FYI Australian credit cards rip you for 2.5% to 3% of the trasnaction if used overseas.)

      Here in Oz there is supposed to some new law/regulations that restrict cash transaction to A$10,000……….under the guise of getting those criminals, etc.

      Funny how countries are so different. When I left Japan the limit for ATM’s was 1 million yen. Here in Oz it was A$500.

      That Japanese figure converts to around US$9000 now, but back then it was well over US$10,000 which would have had banks in the USA filing one of those cash reports!

      • Quack says:

        CapOne do not have currency exchange fee. And they have exchange rate close to the best. Use it all over the world.

      • Javert Chip says:

        1,000,000 yen is only about USD$9,100+, or AD$12,000+

    • Kasadour says:

      Where do you purchase €s? I used to get mine at the airport (PDX), but now I get it at an ATM. It’s slightly better to get it at an ATM, but I’ll tell you what, they get their fees coming and going.

      • Frederick says:

        NEVER change your money at the airport They are by far the worst exchange rates you will find

        • Rates says:

          There’s an exception to every rule. I can assure you that changing your money for Taiwanese Dollar at the Taipei airport is the best thing you can do.

      • Javert Chip says:

        Best exchange rates are almost always with big bank ATMs. Your card’s issuing bank sets the conversion rate, and it’s generally VERY close to the WSJ rate.

        NEVER have a vendor convert your bill into your home currency, thinking this eliminates the 1-3% “foreign transaction” fee. The merchant use a crappy exchange rate and (if your card has a “foreign transaction” fee) you STILL pay the fee. NOTE: Visa does not charge this fee – your home bank does.

        You will pay ATM fees (generally $3-5). If you are not careful, you will also pay a 1-3% “foreign transaction” fee (definition: transaction initiated outside your home country, regardless of the actual currency). In the US, there are banks that issue debit cards without this fee (credit unions, etc).

  4. Bev kennedy says:

    Well the boy scouts collecting donations and local pan handlers now will have reason to give thanks as spare change suddenly returns to rattle in pockets and wallets not just the plastics visa card

  5. Paulo says:

    Cash believing Canadian, here. I understand that in Canada debit cards are used more than anything else. In my opinion a debit card is the same as cash. Having said that, and even though I used my debit card today for building materials and a few groceries, I always have a wallet full of cash and at least $1,000+ tucked away at the house, including a roll of twoonies and loonies. Last year the debit machines went down at the grocery store I like to use. No problem, out came the cash.

    Debit is convenient, and nothing more. Credit cards are used by us for gas, and online purchases, and never never for anything else. If we go out for supper or lunch I always have an assortment of cash to cover the bill and a decent tip. The merchent can do what they like regarding receipt or declaration.

    It has always been an unspoken rule in our home that liquor is only paid for by cash or debit. It is against our family rules to pay for booze with credit. I have seen too many people ruined by making foolish purchases while drinking.

    If a country makes a move to limit cash transactions, then citizens will have to make a concerted effort to undermine the initiative, imho. Vote them out!!! The article describes a very good wake up call.

    • Prairies says:

      I am also a Cash Advocate, I see too many people reliant on a plastic card. When the power goes out, all businesses are shut down. Unable to process simple transactions like buying a loaf of bread. When power goes down buying canned goods, and simple food items should have a back up option of no electric cash registers and cash.

      Also, I hate the “tap” feature. If you get robbed of cash, you just lose that cash. But with tap you lose $100 or less over and over until the card is noticed missing.

    • Rusty Brown in Canada says:

      For the record: the smallest bill in Canada is now the $5. We have one-dollar coins “loonies” and two-dollar coins “twoonies” and there is even talk of replacing the fiver with a coin.
      Our penny was eliminated years ago and the smallest coin we have now is the nickel.

    • Argus says:

      This Canadian uses cash for all purchases under about $60 (on principle). I keep a couple of thousand in cash at home, just in case of a sudden bank holiday or ‘technical glitch’. I also always carry cash on my person. While I am not unduly frugal, an unexpected advantage is that parting with cash reminds me of how hard I worked to accumulate it.

  6. peter says:

    Cash is king. When the power is out and we want stuff after a natural disaster, who the hell is going too want to accept a credit card? Nah, I’ll keep my cash thanks, if only to piss off the big banks and governments!

  7. Debt Free says:

    The top denomination of U.S. currency since 1969 has been the $100 note. Running some quick numbers on the CPI calculator shows $100 in 1969 is equivalent to $704 in 2018. It is long past time for the Bureau of Engraving and Printing to produce $500 and maybe even $1,000 notes again.

    • ewmayer says:

      We demand the return of our beloved Grover Clevelands!

      • Debt Free says:

        I helped a friend purchase a used car one time. It cost $6,800, so here we were meticulously counting out 68 $100 bills on the hood of a car in a parking lot at 9:00 p.m. on a Friday night. It would have been much easier for him to whip out 6 $1,000 notes and some small change in $100 bills instead.

        • Nicko2 says:

          EU got rid of the 500 euro note precisely because it made money laundering / drug smuggling so easy. Hence, if anything, we will have smaller bills.

          Besides, nothing better than a fat stack of $100’s in your hands. ;)

  8. NY Geezer says:

    Why do you accept as true Visa’s sly claim that “failure was (not) due to “any unauthorized access or malicious event”. The company does not straight out deny unauthorized access it just says it has no reason to believe an unauthorized access or malicious event occurred.

    The denial of “reason to believe ” is of dubious value when accounts have not yet been carefully audited.

    Until a careful audit is conducted that proves the contrary, we should all assume a large amount of debit and credit card information was stolen., and act to protect ourselves

    • sierra7 says:

      First thing that came to my mind at the begin of article. If we expect the CC companies (or banks) to tell us the “truth” we are truly “pimped”!!

  9. William Smith says:

    The big problem with “electronic” of any method is that someone knows exactly when, where (and maybe even why) you bought an item (insurance companies can spy on you etc). They can locate you exactly every time you pay. It is the same problem with the privacy invading so-called electricity “smart meters” (I call ’em dumbmeters ’cause they are dumb for consumers). Indian call center employees can then telegraph the realtime info to some nefarious accomplices for all sorts of mischief (they know you are out of the house). They have already been caught selling lists of credit card and personal details many times. The crapbook data egress issue of recent times shows that privacy is something that needs serious attention as all data will be exfiltrated eventually. We need to get back to the suspicious nature everyone had during WWII (reds under the bed and all that). Quite beside the fact that cash forces one to more prudential economic activity, it is the collateral effects of every “electronic” action that we take that we must be paranoid about. The “convenience” of paying cashless for a quick fast/crap food fix could be considered outweighed (pun intended) by the inconvenience of an emptied house.

    • Petunia says:

      You don’t need to use a card to have your purchases tagged at big retailers. I bought a $4 scraper at Loews yesterday for cash and got a text on my phone asking me to rate the shopping experience. They can track you on your phone the minute you enter the store with location tracking. I had the same experience at a major department store.

      • Wolf Richter says:

        Turn your WiFi off before you go shopping. It gives away your MAC address. That’s the biggie. They read that in the store. That’s how they recognize you. Your Wifi should only be on at home when you’re on your WiFi system or when you’re trying to log into a Wifi system (at a cafe, etc.)

        Always turn your Bluetooth off.

        If you’re really nervousness, shop in Airplane Mode (but you won’t be able to receive/make calls, etc.)

        • Mark Harris says:

          I’m not sure about iPhones, but I’ve shut off the Location feature on my Android phone after discovering a location history of every place I’ve been during the last five years. It’s right there in my Google account.

          Since I’ve shut Location off, I’ve since seen no record of where I’ve traveled since.

        • Wolf Richter says:

          Thanks. I forgot to mention that. This is less of a problem with stores, but as you pointed out, an overall problem in that all your movements are being tracked. This is permanently shut off on my phone (however, if you use Uber and some other apps, you might have to switch it back on before using the app).

        • William Smith says:

          My Android tablet changes its MAC address (from a fixed range) every time it is woken up. This is VERY annoying as I use a MAC filter on the home WiFi for added security and I thus can’t use the tablet with WiFi (I won’t downgrade security). My older Android phone does not do this so WiFi is _always_ off. Perhaps some makes of phones now do MAC address cycling to address just such security concerns? At home, I still use wired LAN connections and only turn the WiFi on briefly when needed. We seem to be seeing new WiFi and bluetooth exploits every few weeks (see for latest tech info) and thus _any_ tech that uses a radio needs to be seen as far less secure.

        • Mark Harris says:

          I also had the deal that Petunia saw, in so much as visiting a store and getting a text message telling me about another sale, or like her, asking me to comment on my shopping experience.

          After turning off Location, I no longer get any advertising texts. Talk about another invasion of privacy. Sheesh.

    • Robert says:

      ” The “convenience” of paying cashless for a quick fast/crap food fix could be considered outweighed (pun intended) by the inconvenience of an emptied house.”
      Ditto for facial recognition software.

  10. Wolf Richter says:

    “Illegal aliens, whose numbers fluctuate between 20 million and 40 million”

    It’s always fun just to make up nonsense and post it, hoping someone is going to believe it or get upset about it.

    • Gian says:

      Who’s upset? Regardless of their numbers, they are inextricably married to cash and since I am a proponent of cash, they are my allies. Skewing their numbers is the equivalent of a Democrat poll.

    • bandini70 says:

      I don’t think he’s trying to be deceiving, but instead the statistics says 11.1 million, but if you see the % of immigrates, its the highest ever. . With 13.5% of the population or 44 million in 2016, it sure does seem like there are a lot more illegals. I am also surprised that its only 11.1 million, I would have also guessed the range he gave.
      Also, usually immigrants are going to send money home because they are supporting parents or extended family. Why is it hard to accept that cash would be king for them and many illegals use EBT? Which is probably why Western Union was fined for allowing so much money (fraud) to move overseas. .

    • bandini70 says:

      Only you said that, I did not! However, I do know of a few illegals and they don’t speak any English, so even if i did suggest accents, you’re not necessarily correct. Back to the statistics, it show an ever increasing amount of foreigners, more than ever before and surprised me since I had always thought it was constant. If you hadn’t seen the statistics and thought the same, it would give the impression there are ‘probably’ more illegals. You took statistics based comment as xenophobic, very ANTIFA like response.

  11. Debt Free says:

    The U.S. Treasury has the right to issue United States Notes, aka “Greenbacks” that were first issued by Lincoln during the War of Northern Aggression to finance the war. Imagine if they had used this authority during the last recession to reduce the private debt burden and get the economy moving again, rather than relying on gimmicks like QE and all of their other measures, which all worked basically by encouraging people to get further into debt to stimulate the economy.

    We would be on much firmer footing with less debt and at the same time avoiding a deflationary depression.

    • Johnny Reb says:

      Good post Debt Free.
      Just musing it might be time for the South to secede from the Union?
      Who needs MC, VC and Amex when you can use Gold, Silver and trade Moonshine and Grass for goods and services. Alas I belong to a bygone age. No Debt, No Taxes and no damn IRS!

      • Debt Free says:

        Well, I am related to Stonewall Jackson on my mom’s side of the family, so maybe that was my Southern roots showing. :-)

        Maybe this time we could put United States Notes to a more constructive purpose.

        • Frederick says:

          NO it’s your pragmatism and intelligence showing Maybe alittle of your roots as well lol

    • Dan Romig says:

      In 1861 President Lincoln went to the banks in New York in order to obtain loans to support the ongoing civil war. The banks did not want to lend money out for this at ‘reasonable’ rates and asked for over 20% interest. Lincoln then issues ‘debt free’ money and informs the public that this is now legal tender for both public and private debts.

      So, by April of 1862, nearly $450 million worth of debt free money had been printed and distributed. Lincoln: “We gave the people of this republic the greatest blessing they ever had, their own paper money to pay their own debts.”

      In 1865, before Lincoln was killed on the 14th of April, he made a statement to Congress, “I have two great enemies, the Southern Army in front of me, and the financial institutions in the rear. Of the two, the one in the rear is the greatest foe.”

      • Gershon says:

        Abe Lincoln is also reputed to have said, “Just because there’s a quote next to a picture on the Internet doesn’t make it true.” Google it.

        • sierra7 says:

          I did. There are multiple “source” references to the statement. Google the whole para quoted in this post.

    • alex in san jose AKA digital Detroit says:

      Now that I’ve done some research (this should have been taught in high school) I now know that anyone who uses the term “war of northern aggression” is someone who is a liar (the South started the war) and who wants slavery back (the cornerstone speech, where the cornerstone of the Southern constitution is that nonwhites are inferior and their natural place is slavery). Interesting reading here:

  12. andy says:

    Well, cash pays you 2% interest (in some online banks in US), but mostly nothing. Credit card gives you 2-3% cashback on groceries (including liquor), 6% on American Express Cash Prefered card with $95 annual fee.

    • MC01 says:

      A while back I asked the (European) banks I work with about credit cards with a cashback program, since I grew to know and like it while living in the US.
      I got stares like I were an alien from Zeta Reticuli speaking an unintelligible language through his nostrils.
      But I was offered several “exclusive cards” with hefty commissions to the tune of €10/month or €120/year and cash withdrawal/currency exchange fees as high as a monstrous 4% for no real benefits whatsoever.

      If you want to know why the war on cash is running out of steam in many countries, look no further.

  13. Kasadour says:

    I read, too, that residents couldn’t get across Severn Bridge to/from Wales! How awful that must have been.

    Other problems that occurred were folks that tried multiple times to pay with their debit cards, not knowing the system was down, were charged for each attempt when the system came back online, and it’s not clear when these folks are going to get refunds.

    As far as holding cash, that can be a hassle if you’re found with more than $10K. Police can confiscate it under mere suspicion. Bank employees by law must have you fill out a large currency transaction report for transactions over $10K, but there is a form he or she can fill out for any amount under mere suspicion. And don’t even try to cash a large check. I tried to cash a large check two weeks ago and got turned away by all the banks I went to. I ended up depositing it with a 10-day bank hold even with available balance to cover it.

  14. tech12 says:

    In addition to a wildly exaggerated number of illegal immigrants, you don’t seem to have any idea what a sanctuary city actually is. Try watching something other than Fox News.

    • Lee says:

      Tell us, what is a sanctuary city?

      Other than a place that ignores the rule of law and aides and abets people who are breaking Federal laws in regards to immigration?

      You can keep your sanctuary cities and all those illegal or non-documented aliens or whatever you want to call them in whatever number there are. (The fact that there millions shows that laws have been broken for too many years.)

      We don’t have very many here in Australia and when I lived in Japan there were few there too.

      Funny how crime has risen in Australia and in Melbourne especially home invasions, car jackings, smash and grabs as the number of immigrants from certain areas/countries increased.

      When I moved to Australia 22 years ago, we rarely had that kind of thing happen.

      When we moved to Melbourne I worked for the Victoria Police. The stats didn’t show much of that going on back then either.

      How times have changed – along with the makeup of the population.

  15. Debt Free says:

    Legal, illegal, whatever. We have enough people here and aren’t in a position to bring any more in.

    Crowded countries are generally not very pleasant places.

    • Lee says:

      Funny, but Australia is big, but the place is crowded in the sense that most people live in a few big cities.

      It also feels and is more crowded here in the city than other big cities I’ve been in because the infrastructure stinks. Roads and trains are pathetic.

      Try driving around the suburb where I live when school lets out in the afternoon – it is faster to walk!!

      Contrast that with Japan, big cities, crowded, but generally very convenient, safe, pretty clean (at least compared to Melbourne – you should see the graffiti here and it gets worse the closer you get to the CBD.)

      Get out of the big cities in Japan and you wouldn’t know that you were in one of the most crowded countries in the world.

  16. J.M.Keynes says:

    – Just imagine what would happen when there’s no longer electricity available.
    – And how old are all the electricity systems in the UK, US, and other countries ? With an ageing electricity grid/suplly system the chances of a break down of the electrical grid go higher and higher.
    – I still remember the power outage in 2003 here in New York.

    • L Lavery says:

      That’d be a problem at present but long term I don’t think it will as, in my opinion, we are headed for a more decentralised future (think local solar/wind, 3D printers and such). Centralised systems are exposing their greatest weaknesses, when they fail the whole lot goes down. The grid, governments, banking system etc. Plus the fact those at the center, those who have control, tend to favour their own ideology, their own kind, their own version of democracy. There is impetus to move away from the current centralised systems and also the means (internet and phone networks, both of which are becoming one newtwork). That’s all that’s needed.

    • Gershon says:

      – Just imagine what would happen when there’s no longer electricity available.

      No need to imagine. There are a ton of news stories about how Puerto Ricans were unable to use credit or bank cards after the Island got inundated by hurricane damage and flooding. It wasn’t pretty.

      • Javert Chip says:

        Merchants, if they so chose, have the option to fall back to the old carbon-copy paper set that was universally used up until sometime in the 1990’s (yes, this presents a problem with validating the transaction amount, as it always did until everything was on-line).

        • 91B20 1stCav (AUS) says:

          Very true, JC, but note that most of todays cards are no longer embossed and do not allow printing a cc# from a manual-slide ‘copier’. If you can find a merchant with the foresight to still keep a stack of carbons for a ‘copier’, make sure their machine has the embossing plate containing their merchant info/account#, otherwise, if completely handwritten you risk skullduggery in spite of your carbon receipt. A better day to us all.

  17. L Lavery says:

    Why was there no backup? Will there be in future?

    Perhaps a decentralised system would be more reliable than something conceived of in the 1950s? I know of one that’s been up and running since Jan 2009. It’s been slow and expensive at times but still kept going. Today it’s solved those problems and is lightning fast.

    • MC01 says:

      VISA Inc spun off VISA Europe as a wholly independent entity in 2007 before becoming a public company and bought it back in June 2016 after getting the green light from the EU Antitrust Commission, admittedly not a daunting task.

      Before this VISA Inc was running every single transaction request worldwide from two large data processing centers, both located in the US. VISA Europe ran their own data processing center/s, but data are hard to come by, especially on how the formerly independent European payment processing system was integrated into VISA Inc’s.

      I suspect the Friday “hardware malfunction” is somehow linked to this integration and probably we’ll hear about it again soon: as said VISA Inc is a public company and I am sure several large shareholders will want to know if similar episodes can happen again in the future, thus driving customers into using Mastercard or Amex instead.

      Speaking of which… VISA shares (NYSE: V) behaved in very peculiar fashion on Friday, shooting into the stratosphere in the morning and sliding in the afternoon until dip buyers stepped in at the close.
      I am just saying this, but it looks like somebody may have sold V in the morning for a pretty profit and bought it back at a discount in the afternoon after news about the “hardware malfunction” were confirmed.
      Let’s see how V will behave tomorrow.

      • Javert Chip says:


        Visa Europe was not “spun out”; pre-IPO, Visa had 7-8 Visa-branded “sister companies” (Visa USA, Visa Europe, etc), all of which EXCEPT Visa Europe, agreed to consolidate into a post-IPO Visa Inc (this is very different than the MasterCard IPO). Visa Europe always had an option to sell to post-IPO Visa Inc at a favorable price (referred to as the Visa-put), to protect European banks against a severe down-turn in Visa Inc brand value.

        Ten years ago, Europeans wanted their own clearing network (they are VERY profitable). However, running a clearing network is extremely complex and capital-intense, which European banks couldn’t afford. Exercising the “Visa put” gave European banks about $24B, money they desperately needed to shore up capital ratios (which most of they just pissed away on further loan losses).

        Interestingly, most AMEX and MasterCard transaction volume rides Visa’s physical network, and, like Visa debit, appears to have been be unaffected.

        • MC01 says:

          Thanks for the details. It was more complicated than I remembered, and it makes a whole lot of sense as our banks here are still up to their pre-2008 antics so they did need the money, even in 2016.

          Intriguingly enough I did make a credit card (Mastercard) payment in France on Friday afternoon and it took a while but it did clear.

  18. Gershon says:

    Giving banks, or any corporate entity, full visibility into every transaction you make in your life seems a bit creepy and Orwellian to me. What are they doing with that data and information? I use cash on general principle most of the time.

  19. Chris Wagner says:

    Well, I got paid $ 600 cash and then had a big issue with the forex. I checked half a dozen banks in a small city named ULM. No one would do it for less than about 10% vs the mid spread. => Never again, my friends. And I’m a credit card addict, but hate a cashless society and fear Big Brother or “no more bank runs”.

  20. Lee says:

    Two last comments on ‘cash is king’.

    Japan and Australia:

    During the occupation of Japan by the Allies after WWII, the British had a contingent there made up of a bunch of different countries.

    One of the largest was the Australian military and they handled the mail for what was termed the British Commonwealth Occupation Forces or BCOF.

    One of the “problems” for troops in Japan was that there was strict control of movement of money from Japan to Australia. Or in other words how could they move profits from rackets and other black market activities back to Australia.

    A solution was quickly found:

    Buy Australian postage stamps from the military post offices and then send the stamps back to Australia. Once in Australia the stamps could be converted back to cash for a 5% fee.

    So to ‘stamp out’ this practice, Australian stamps issued/used in Japan from 1946 were overprinted with the initials B.C.O.F. and could no longer be sent to Australia and converted back to cash.

    The set of stamps can be found as M1 – 7 in the Scott Catalogue and have a value of around $US150 -200 or so.

    On cover (on an envelope) they are more valuable.

    Of course there are many fakes and forgeries too.


    When I was stationed in Korea there was still a black market for many goods and some of the people in the military made good money from buying stuff from the Commissary/PX and then selling the goods.

    With regards to cash, it was prohibited for US military personnel from having US$100 bills.


    Because at that time there were currency controls for Koreans when they left the country and you could get about 10% more won for a US$100 bill. Much easier to hide them than a large roll of US$20 bills.

    I remember one time when I was at Kimpo, a Korean man was caught trying to smuggle a bunch of cash out of the country that was sewn into his trousers. He was standing in his underwear with a bunch of police around him!

  21. Ambrose Bierce says:

    So were merchants giving discounts on perishable goods to cash customers? I was buying a used product at a local merchant, and was going to use my CC, but he offered to drop the sales tax if I paid cash, I went back the next day and saved almost $20. I suppose people are card happy in the big urban centers (where muggings occur) but around here cash is at least the prince of money transactions if not king.

    • Javert Chip says:

      I believe in the USA it is illegal (if not illegal, it’s certainly in breech of the contract the merchant signed for accepting credit cards) for a merchant to charge extra to use a credit card (exceptions: state & federal governmental agencies, and perhaps some tiny transactions, like <$5). Obviously, a small number of merchants ignore this. However, USA merchants may give a discount for paying cash.

      It is not unusual in Europe to be charged a (legal in Europe) credit card "convenience" fee, especially in smaller cities.

      • Ambrose Bierce says:

        I assumed that setting aside the sales tax meant the transaction was private (used item) while some retailers (furniture and auto) routinely rebate the sales tax on marked up items. Raising sales tax works, because retailers will absorb most of the added value, and this is why inflation hasn’t gone up more than it has, if you have a commodity, Chickens for instance, you can’t sell everything you have at $2 lb, so you lower your price to $1. Consumers have a larger role in setting prices than previously thought, at least as long as markets remain competitive.

  22. Debt Free says:

    Cash is more popular in Germany, so a Visa malfunction wouldn’t have affected them as badly.

    In the U.S. we still are stuck with old school paper/linen currency. Australia has polymer currency that is virtually impossible to counterfeit. The EU eliminated the 500 Euro note to make it easier to implement negative rate policy by making bank runs more difficult, although they like to use counterfeiting, money laundering and drug running as an excuse to not produce high denomination notes.

  23. Robert_D says:

    Take “VISA” and “Credit Card” out of the post at top — and substitute “BitCoin” and “Crypto-Currency” — and you have a coherent argument against Crypto, et al, in favor of “Cash” .

    Denial of Service attack, hostile foreign power attack, EMP or just plain “unexpected” failure, will show us all the benefits of having a nice stash of cash under the mattress (meaning “Someplace REALLY REALLY Safe”)

    • L Lavery says:

      Bitcoin is decentralised so DoS won’t work. Sybil attack is its equivalent, but bitcoin’s hardened against such attacks, as you’d expect after it’s been running for circa 9 years without being brought down.

      A “hostile foreign power attack” would cost a fortune and I’m not sure it could now succeed, besides the legality of such an attack (it’d be hard, if not impossible, to get together the hardware necessary for such an attack without others noticing). I mean, is it okay for nations, or anybody, to just attack bitcoin without reason and with impunity? A lot of firms have a lot invested in it.

      Of course, if the net went down (and that’s a big if) then we’d have no bitcoin[1] but I’m not sure cash will be that much use if that happened, especially if only few have a stash. Do you think those that haven’t cash are going to let their families starve to death while those that have fill their trucks with food? Anyway, I think the state would step in before it gets to that stage.

      [1] But maybe we would, as Bloackstream have started beaming it from satellites (beta test at the moment, I think) thus making it available in places where there is no internet. As I keep saying, the future is decentralisation.

    • Javert Chip says:

      Calm down big boy.

      This 12-hr service interruption is the largest Visa’s had in about 25+ years. Visa used to brag that in the 1990s (all ten years) Visa has about 15 minutes of outage. That system has many more than 2-levels of redundancy.

      A complicating factor is merchants frequently use non-Visa 3rd-party services to transport credit/debit card transaction to the merchant’s bank for processing on Visa’s network. If the 3rd party service is down, it sure looks like a Visa outage, at least for that merchant. The 3rd party has nothing to do with Visa.

      • Robert_D says:

        Reply to L Lavery and Javert Chip,

        Wow that’s quite a foundation of a ‘logical fallacy’ that both of your arguments rest upon.

        “Something that has not happened — can never happen — because it has not happened yet.” There must be a formal name for that fallacy. Philosophy classes were too long ago, for me to care enough to search for that one.

        Examples of the certain failure of such thinking are so abundant that I will not bother to list them.

        No system is totally secure and totally fail-safe. Saying that BitCoin is decentralized is not sufficient to prove it is secure. A DOS attack, properly structured, would certainly slow it down — if not stop it cold. And to say that it would take a massive hardware investment, that would surely be noticed, is to underestimate the ingenuity of our international competitors.

        Finally, when all else fails, there will always be cash. People who have no cash will barter with those that do have it, to get some. Ever since cash became common in our various civilizations, it has persisted. Cash cannot fail until our U S Government chooses to go Wiemar. And then a billion dollars or so of antique silver and gold “cash coins” will re-appear as if by magic. And the antique coins will be revalued (not as collectibles) to accommodate trading requirements.

        From where will the old G&S coins come? Ain’t saying.

        Finally, no once ever addresses the likelihood of an unstoppable EMP attack. There is zero defense against one, should our main nuclear competitors wish to do so. Or when the sun issues another Carrington Event, sufficiently powerful and well-aimed at the USA.

        Here comes the sun :

  24. Tom Kauser says:

    Hank paulson with a three page note demanding 750 billion dollars from congress or marshall law? The CHINESE people’s gold is ready for Mr. Paulsons inspection ? Bail me out president Xi ?

  25. JungleJim says:

    The closer we get to an all electronic financial system, the more attractive target we become to organized crime rings (other than the government).

  26. Paul says:

    While electronic payment methods convenient and marginally safer(no muggings) for the consumer the downsides are increased prices, identity theft, corporate and gov’t tracking of your spending, the bloody power can go out and server crashes not to mention deliberate lockout of your accounts if TPTB don’t like what you are doing.

    Thanks but no thanks, I’ll stick with cash.

  27. jon says:

    visa shares went up today :-)

  28. WSKJ says:

    returning to location-by-phone topic for a moment,

    I always deny general “may we use your location ?” requests, but
    when I use “Maps” (iPhone icon), and ask for verbal directions
    to a specific location, Siri will give me directions from my starting
    point to destination. (usually I’m driving)

    How does that work ? Does the request for directions constitute
    a one-time waiver of my standard opt-out of tracking ?

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