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The Almighty Buck Canada

In Canada, a Government-Backed Electronic Currency 248

Posted by timothy
from the taxes-built-in-to-this-one dept.
An anonymous reader writes "Secure chips have already made it into our credit and debit cards. Next up, they could replace pocket change.The Royal Canadian Mint has been pushing forward with its "MintChip" prototype, a digital cash replacement aimed at transactions under $10, since it surfaced a year ago. The Crown corporation is factoring in developer feedback, hiring a product manager and consulting with the financial sector."
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In Canada, a Government-Backed Electronic Currency

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  • by h4rr4r (612664) on Tuesday April 30, 2013 @12:05PM (#43591545)

    My credit card works fine on transactions below $10.

    Where exactly is the need for this?

    • by gewalker (57809)

      Well, for one thing, it is anonymous by design. Secondly, it is not tied to a bank account, so you could afford to lose this and your bank account would still be safe. Sounds good to me.

      Devil is in the details, i.e., not allowing unathorized mods to the balance contained within the card, making sure debits and credits against the card work every time.

      • by 0123456 (636235)

        Well, for one thing, it is anonymous by design.

        [citation needed]

        According to Wikipedia it passes card IDs around in payment messages, which doesn't look very anonymous to me.

        • by h4rr4r (612664)

          If you can buy the card with cash, it seems pretty anonymous.
          Same as burner phones.

      • "Sounds good to me. Devil is in the details, i.e., not allowing unathorized mods to the balance contained within the card, making sure debits and credits against the card work every time."

        The devil is right there. The question is why you don't see him.

        If cash is replaced with an "all electronic" economy, you can take that moment and kiss your freedom goodbye. You have just given government and corporations control of ALL your money.

        When was the last time they proved they can be trusted? Eh? It has been so long, I don't remember.

    • Re: (Score:3, Interesting)

      by LordHatrus (763508)

      My credit card works fine on transactions below $10.

      Where exactly is the need for this?

      Credit cards companies take a cut out of what merchants later get, and it's normally a percentage, but it is not unusual for there to also be a minimum transaction fee. So, small credit card transactions aren't good for retailers, since the lose an unusually high amount of money to the credit card company. ... in fact, in the states, July 2010's Dodd-Frank Wall Street Reform and Consumer Protection Act recently legalized businesses setting a "minimum purchase with credit card" of up to $10.

      • by h4rr4r (612664)

        I am not here to keep a store running profitably. Before that law normal agreements forbade that practice. Now, I just will not shop there.

        If you want cash give me a better discount than my card does.

        • Re: (Score:3, Interesting)

          by Anonymous Coward

          Their contracts probably forbid it. Credit card transaction fees are a race to the bottom (a sort of prisoner's dilemma). Because the cost of the fees are passed on to all the consumers (regardless of whether you pay cash or not), the only winning move as a consumer is to use your credit card (and get the "rewards"). The rewards, of course, are less than the fees, and the credit card companies bank the rest while you pay a hidden tax.

          Because the market cannot correct this itself, this is exactly the thin

          • by rjhubs (929158)

            Because the market cannot correct this itself, this is exactly the thing that requires government intervention.

            If I hadn't already commented, I'd mod this up. Not only is this a good spot for government intervention but it is an acceptable place. Providing electronic ways to transfer value is no different than creating physical dollars for transactions.

        • by ShanghaiBill (739463) * on Tuesday April 30, 2013 @12:45PM (#43592015)

          If you want cash give me a better discount than my card does.

          The CC companies specifically forbid this practice in the merchant agreement. Merchants cannot charge an additional fee for credit cards, and they cannot offer a discount for cash. Gas stations are normally exempted, and a few other low margin businesses may also be able to negotiate an exemption, but most shops are required to charge the same for cash and CCs, and just absorb the transaction fees as a cost of doing business.

          • by h4rr4r (612664)

            Then as I cannot avoid the increased markup, my way is still the best.

            I am not here to make someone else money.

          • " Merchants cannot charge an additional fee for credit cards, and they cannot offer a discount for cash."

            They may not be able to charge a "fee", but they can and do raise their prices to compensate, so it amounts to the same thing.

            The only difference is that cash customers end up helping to pay for the credit card transactions.

        • If a store can’t run profitability, then there will be no store, so you won’t be able to shop there.

          Or, here is a different way to look at it. CC processors are an oligopoly with interests in keeping CC high, which hurt both the consumer and the shop owner. I tend to be on the free market / liberation side of things, but here is a case where the market is being distorted, and this seems to be a good experiment as breaking this oligopoly. It looks like it has some of the benefits of Bitcoins (bei

          • by h4rr4r (612664)

            Oh noes, I shall have to find another store!
            Perhaps order something online and have it shipped right to my home or office!

            Unless this leads to reduced costs I would not give a damn. If this does not reduce the prices in the store, then it makes no difference to me.

            I would be fine with even a tax paid for system to replace credit cards, but I will still use the credit card if I make out the best that way. That the merchant can't instead of won't give a discount for none credit card users does not matter to m

        • by Trepidity (597)

          I don't think the stores actually want the business of the kinds of people who would raise a stink over not being able to pay for a $2 purchase with a credit card. If those kinds of customers are scared off, so much the better.

          • by h4rr4r (612664)

            Cool, then I won't make a $200 purchase either.
            No problem.

            Stores for exactly the reason I listed do want $2 credit card users. They are the same people who make bigger purchases. Short of some rare occasions I don't carry cash. So I am not raising a stink, just walking out since I can't pay.

            • Even if I have cash, I'd rather pay my small amount with a credit card so I don't get change back. I don't like change, and I don't want to have it in my pockets. I've used a debit and credit card on $0.20 transactions before. Stores don't mind. That gas station I just spent $0.20 at is also the place I spend over $100 a month at. I can promise you, they are not the only station in town. If they anger their customers, they will go elsewhere.
    • by Samantha Wright (1324923) on Tuesday April 30, 2013 @12:24PM (#43591783) Homepage Journal

      Transaction fees. The policy for how this is handled varies from vendor to vendor, and some won't accept transactions below ten dollars at all. More obnoxiously, many put a 25 cent transaction fee on any direct bank debit (Interac) transaction under five dollars, and some will play with variations like 30 cents, or no limit, or something else. Supposedly this balances out the very small flat cost of all Interac transactions, but ultimately it means you're punished for using your card instead of coinage.

      Otherwise, however, the debit system is quite successful, and some people can afford to not even have a credit card. If MintChip can genuinely avoid all transaction fees, it'll be the greatest thing since sliced bread for that alone.

      Other goals of the system are account anonymity (a government building an anonymous financial system? say what?) and permitting arbitrary peer-to-peer transactions like PayPal... but with no intermediary. Unfortunately they have yet to figure out how to make people RTFA.

      • by h4rr4r (612664)

        Afford not to have a Credit Card?
        A credit card is more advantageous as you have more money. I get 1% back on most purchases and 5% back on some. I always pay it off every payday, so twice a month. So I am taking a loan with a negative interest rate. Why would you not borrow money, if the payoff was less than the loan?

        I see by your UID you are new here, but on slashdot it is traditional to not read the article. Advanced users don't even read the summary.

        • by Zemran (3101)

          I see by your UID that you are new here but on /. no one reads the article although we always criticise others for not doing so :-)

    • by cayenne8 (626475)

      Where exactly is the need for this?

      Well, the govt wants to finally close the tax hole on cash transactions.

      No more will you be able to do casual transactions for cash and NOT be collecting taxes for it.

      The electronic stuff is much more traceable, I imagine govt types have to reach for a tissue every time they think about getting rid of cash once and for all, and having every transaction fully traceable.

      • by h4rr4r (612664)

        The article claims this to be an anonymous transfer method.

        Also, you can always get foreign currency or gold, or silver, or some standard good. In some prisons canned fish became currency among prisoners because they were not allowed cash and no one wanted to eat the canteen's canned fish. So long as their are goods and services people want to buy without traceability they will find a way.

    • by ShanghaiBill (739463) * on Tuesday April 30, 2013 @12:36PM (#43591905)

      My credit card works fine on transactions below $10.

      Where exactly is the need for this?

      1. Credit cards do not do peer-to-peer payments. If my neighbor's kid mows my lawn, I cannot transfer $5 from my CC to his. If my daughter sets up a lemonade stand, she cannot accept CC payments.

      2. Credit cards do not do anonymous transactions. Plenty (most?) people want to occasionally conduct transactions where neither the buyer nor seller disclose their identity.

      3. Transaction fees. Visa and Mastercard charge high fees, and operate a cartel that keeps out competitors.

      4. No assurance of payment. Even if the transaction is approved, the seller can still be subjected to a chargeback, and has no assurance of actually receiving the money.

      • by h4rr4r (612664)

        1. There are lots of way to do exactly that. Paypal for one. There are even swipe attachments for smartphones.

        2. It sounds like this card may not crack that nut. Since it sends cardID during the transaction you will have to replace cards frequently and never use them to pay something like a bill that shows who you are.

        3. this will have to have some fees. Even if taxes pay them.

        4. This is an advantage not a downside. If I get home and my widget is broken and you refuse to replace it I get my money back. Cash

        • I don't think a kid on a lemonade stand can officially accept paypal, isn't it 18 and older? Same with any merchant account which would let a kid mow a lawn or do all the normal things that kids can do for cash.

        • by gbjbaanb (229885)

          1. doubt many people have a paypal card, and many people don;t trust them.

          2. anonymous transactions are overrated, but as long as its not an online transaction that is subject to all sorts of vetting, I'm ok with it.

          3. just like cash, no fees, except what you pay in taxes in order to run the treasury and the mint.

          4. Try going to a market stall and buy something really cheaply, if you get home and find its bust, you have yourself to blame. No big deal, you entered into the transaction knowing the risk. I'm s

          • by h4rr4r (612664)

            I would be more likely to pay cash for a car than fruit.
            For the car I likely have to go to the bank anyway for a bankcheck, so I might as well use cash.

    • by Pope (17780)

      We (Canadians) don't need this at all. All the major banks are rolling out tap-to-pay for their debit cards, which generally have a $50 limit by default. There is literally no point for the Mint to go anywhere near this.

      • But when they screw it up, I can jack up the chip and buy a ton of shit in Canada for fake money! Easier than counterfeit.
      • by h4rr4r (612664)

        So how do you buy something larger than $50?
        You have to change payment methods?

        I get charged $0.50 when I use my debit card. So I never use it as debit.

        • I get charged $0.50 when I use my debit card. So I never use it as debit.

          I get 10 or 20 "free" debits a month, but never use debit except in emergencies. With debit, your cash is transferred out almost immediately. With credit, it's moved later. In theory, you'd get disputes resolved much easier if the merchant doesn't already have your cash.

        • by Minwee (522556)

          So how do you buy something larger than $50?

          Then you have to insert the same card into a card reader, authenticate with a PIN and then approve the transaction. For smaller payments you can skip all that.

          I get charged $0.50 when I use my debit card. So I never use it as debit.

          The problem isn't with the concept of debit payments, the problem is that your bank sucks.

          • by h4rr4r (612664)

            I agree on that one.
            I also shy away from it since you can't chargeback and no rewards. If they offered a discount I would use it.

    • I'm fed up with banks, Paypal, Interac, and other middlemen taking a cut of every transaction. My governments have a legal right and a need to tax us but I didn't sign up for a 3% premium on all goods just to benefit the banks. I don't particularly trust my government but I don't distrust them as much as banks and other commercial enterprises.
  • by slashmydots (2189826) on Tuesday April 30, 2013 @12:16PM (#43591683)
    Let me fast forward this a bit because MintChip was discussed on the bitcoin forums months ago. It's bullshit. It's set up completely wrong. It's horribly insecure. It's like a spy-on-you version of bitcoin. Even the encryption style was massively flawed from what I heard. It's absolute, utter crap.
    • Re:mint shit (Score:5, Insightful)

      by h4rr4r (612664) on Tuesday April 30, 2013 @12:21PM (#43591729)

      I am so sure the BitCoin folks have no incentive or ideological basis that might taint their view of a workable solution other than their own.

    • by CastrTroy (595695)
      I really don't see how a currency can be digital, decentralized, and anonymous. If that's the case, then whatever amount the card says it has, it has. Sure you can put in all kinds of encryption and digital signatures, but at the end of the day, you're trusting the card. It's like those photocopier or transit pass cards. If they aren't centrally managed, eventually they all get cracked. And the incentive to crack these things will be very high. Even if you have to make 10,000, $10 transactions to make
      • by wronkiew (529338)
        You really need to familiarize yourself with how crypto-currencies work. To a certain extent, it is the burden of the issuer to prove that their system is secure, so you can rail on how insecure digital, decentralized, and anonymous currency is all you want. However, consider this. Bitcoins are being used in everyday trade right now. The market cap is > $1B last I checked. The FIRST TIME the core algorithm is hacked to give someone free money, the total value of the system drops to $0. That $1B represent
  • by Anonymous Coward

    Sounds a lot like the now pretty much dead "ChipKnip" scheme we had in the Netherlands. It wasn't practical; it died.

  • by nimbius (983462) on Tuesday April 30, 2013 @12:29PM (#43591829) Homepage
    credit cards have been digital currency for decades, wallstreet doesnt trade in physical bonds or stocks anymore, theives steal credit cards more than cash, and the concept of a 'processing fee' in an era of such ubiquitous computing is absurd. the easiest way to digital currency is to use the system in place and be gone with visa and mastercard endorsed 'debit' cards.
  • by iggymanz (596061) on Tuesday April 30, 2013 @12:42PM (#43591971)

    the end game will be cashless society so banks and the government in their pockets get a piece of any action. If government labels you a "terrorist", your ability to buy, hold money and sell gets instantly revoked. convenient way to make everyone in an area come in for "questioning" just to get their "privileges" back

  • by Mox Factor (2911587) on Tuesday April 30, 2013 @01:14PM (#43592323)
    we have the Octopus card in Hong Kong which works for convenience stores, subway and other transportation fees, and some retailers like Starbucks or our local supermarkets. it can only be topped up to 500HKD($64.43USD) at any convenience store or subway station and is anonymous. it uses an RFID chip, so it doesn't need swiping, just place close to the machine will charge the card. same goes for Japan's Suica card, which was only for Tokyo before but has just gone national. having an electronic currency card is wonderful, instead of having to pocket so much change for those times u need to use the payphone or pay for a one time bus ticket or buy something from a vending machine. and it's not attached to my credit or debit card, so i can hand it to a relative or friend when they visit me in Hong Kong, or i can buy a Suica card in Japan and use it just for the duration of the trip without worrying about daily exchange rates.
    • we have the Octopus card in Hong Kong which works for convenience stores, subway and other transportation fees, and some retailers like Starbucks or our local supermarkets. it can only be topped up to 500HKD($64.43USD) at any convenience store or subway station and is anonymous.

      While the card itself isn't linked to you by name and so can be passed around, wouldn't paying for the top-up require credit card or some other electronic funds transfer which could be linked to you (or someone close to you if they're topping it up)?

      I suppose you could withdraw $500HKD in actual cash, then use that to pay for the top-up, but that kind of defeats the purpose of these cards...

      • by Microlith (54737)

        While the card itself isn't linked to you by name and so can be passed around, wouldn't paying for the top-up require credit card or some other electronic funds transfer which could be linked to you (or someone close to you if they're topping it up)?

        The Japanese, for instance, love cash. And when you top up a Suica card, it's done at the train station and they take bills directly, I have no idea if it's even possible to use a card.

        It might be an inconvenience to take cash and put it on the card, but it's a

  • by kruhft (323362) on Tuesday April 30, 2013 @01:20PM (#43592379) Homepage Journal

    After trying to get them to support Linux and even offering to do the development to get it to work with Linux they informed me that the hardware requires a binary blob and that Linux would never be supported.

    Some other developer also found an easy way to pull money off the chip without permission using a bit javascript and I wasn't too impressed with the design and security.

    There's a hard limit (1000?) transactions per chip so once you go over you need a new chip. I found that quite odd but maybe that's the limit to the amount of transactions this "anonymous" cash system can hold.

  • He who controls the databases, controls everything .
  • âoeToday, people obviously use coins. They use bits of metal and bits of paper. "

    Really? I doubt it. I for one hardly ever even carry cash. I always just use my debit card.

    I honestly dont see the difference between this and a debit card as this system still uses a "broker" in the middle that knows the value of your account. other than this is more limited in its use (to $10).

    Only If they came up with a way to eliminate the need for an account with the man in the middle then it would be a replacement

  • A government run, patented, closed source electronic currency = do not want.

  • BTDTGTTS. Visa Cash [wikipedia.org], stored electronic value on a chip (same chip as the debit or credit application) tried this: some cities trialled it, including the one I live in... Visa Cash needed the merchant to settle through the Visa network and was generally loathed because it was too slow to be useful.

    Mondex [wikipedia.org] was released before that, and was more sophisticated in that it allowed card to card transactions. This too was trialled in multiple locations.

    Both have disappeared pretty much without a trace, usurpe

  • Not hardly, this site even had a story with the title "Smartphone Used To Scan Data From Chip-Enabled Credit Cards". There is also the Cambridge chip and PIN attack from 2010. It's all just a matter of time before getting your Credit Card defunded becomes widespread. It never ceases to amaze me at the amount of people so ignorant as to put their entire trust and own life in the hands of Technology; when Technology has proven to us it's unreliable nature.

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