New Ways of Paying
WHY YOU SHOULD CARE
Because currency — and not necessarily cash — makes the world go round.
By OZY Editors
The financial crisis in Spain is pushing Spaniards to think financially outside the box. The most controversial initiative is the creation of “alternative” or “social” currencies. And while their specific mechanics vary, they mostly work as an exchange system: If you have goods or services to offer to the community, you gain credit that you can then use to buy whatever else is available through the network. Farmers and small shops have embraced the system, as have individuals who have been able to trade skills for merchandise. Local currencies are also flourishing — with a surprising number of communities in dozens of countries doing it their own way. But is it just a temporary craze? Read the story here.
There’s no such thing as a free lunch, we’re told — or is there? Around the world, a smattering of businesses are experimenting with a new pricing model that lets customers pay what they want. Some of these firms are even managing to stay afloat. That’s partly because of something behavioral economists call “self-signaling.” When given the chance to choose how much to pay for a sandwich, album or taxi, very few of us are callous enough to pay nothing. But some are uncomfortable with making the decision of what to pay: We then have to confront how generous or selfish we are. As with any business model that takes a bet on human nature, PWYW can be risky. Oftentimes it flops. Read the story here.
The digital currency bitcoin might be a great solution to the problems of 326 million Africans who lack access to basic banking services. Especially if you’re a member of the large and expanding African diaspora, and you want to send money home to Grandma or the hubby left behind. The problem: You couldn’t count on mobile payments for that money sent home, known as foreign remittances. The most common vehicle for such payments, Western Union, tends to charge onerous fees. Which makes bitcoin very appealing, if you can get past the expensive exchange rate. Read the story here.
The data-drenched economy might not be all good news for your pocketbook. We’ve long brought certain assumptions to shopping, expecting to get a better price when we buy in bulk and to enjoy perks for frequent patronage. And that everyone pays the same amount for the same beer at the same retailer. But times are changing, and so are the core precepts of modern consumption. In the data-driven economy, the more you buy, the more you may end up getting charged. The more faithful you are to a certain company, the easier it is for the company to take advantage of your loyalty. This “recent phenomenon” at play means the consumer might be worse off. And the reason is simple, if creepy. Read the story here.
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