Virtual Cards

Virtual cards

1. http://business.financialpost.com/2011/04/23/smart-phone-money/
2. http://www.articlecell.com/Article/Advantages-and-Disadvantages-of-Virtual-Credit-Card-Processing/989668
   3. http://money.cnn.com/2011/04/28/technology/facebook_credits/?section=money_latest
   
   

1.      How long do you think it’s going to take to get to all virtual cards?  How many years?
(1 point)

I think that this world will start using virtual cards in 30 years.  In 2040, I think virtual cards will dominate and there will be no more coins or paper bills anymore.  Paper bills, coins, and our credit cards are very inconvenient to carry around.  Also virtual cards allow us to make purchases anywhere we want.  The transaction is accounted at a much faster process and we don’t have to go to the store to make a purchase anymore.  If we started using virtual cards, we no longer have to carry our wallet and we only have to carry a smart phone.  Also there are some signs where virtual credit cards are being used in some countries such as the United States.  Right now there are some signs that virtual cards will one day take over.  For example, Facebook right now is starting its own virtual economy as our currency is going through a major change due to our highly advanced technology.  However a sudden change in our currency may receive a negative response from the public so that is why gradual change is necessary instead of quick immediate changes.  Therefore I think it may take about 30 years in order for people to accept virtual cards.

2.      Why? (1 point)

Virtual cards will one day replace coins, paper bills, and credit cards because it is more convenient to do it virtually than carrying a wallet full of cash with you all the time.  Virtual credit card processing devices have been the new trend in electronic business lately.  Many people do business online on the internet just because it is more convenient.  With our highly advanced Internet, any credit card device is compatible with any Internet connection.  However having virtual cards completely replace paper bills and coins is a very serious matter to this world.  Some people are in favour of having virtual cards to dominate our currency and some people are against in having virtual cards.  There are both advantages and disadvantages of using virtual cards.  One reason why people support using virtual cards is because unlike credit cards, there is less chance of having credit card frauds.  The virtual credit card process uses only one number for a transaction.  Once the number is used, it cannot be used again.  Since the amount of spending is fixed, the virtual credit card process is very safe.  It is also very difficult to hack into these cards because they expire in shorter period of time than our regular credit cards.  On the other hand there are some disadvantages of using a virtual credit card.  In my opinion I think it may take as long as 30 years until we start using virtual credit cards because I think it will take that amount of time for more people to accept the idea of virtual credit cards.  Some people may think that virtual credit cards are a great method of making purchases and payments however there are also some people who do not accept the idea of using virtual credit cards.  According to one of the laws of circulation of money, money must be recognizable and readily accepted.  If people do not accept virtual credit cards, than it cannot play the role of money.  One disadvantage of virtual credit card is that the retail store must take a risk with its goods.  The goods are delivered to the customer before he/she makes the payment of the goods.  If the customer is not willing to make the payment after the good is delivered, the retail store suffers the lost.  Also another disadvantage of using virtual credit card is that virtual credit cards have short life spans as they are expire very quickly.  It is a big hassle for the customer to keep renewing their virtual card.

3.      Who will not be on board with this new virtual wallet? (2 points)

Seniors will not be on board with this new virtual wallet because they are not used to using very advanced technology.  In their childhood generation, technology was not very well developed and they continued life with little reliance on technology.  Since seniors did not work with technology that much in their lives, they have little knowledge about our new technology.  If credit cards, paper bills, and coins have been replaced by virtual credit cards, seniors will have trouble using these highly advanced devices and they may not accept virtual cards as a form of money.  Also people who live in rural or farm areas may not accept virtual cards as a form of money because they rarely interact with technology in their lives unlike people who live in urban areas.  People who live in rural or farm areas accomplish tasks with little reliance on technology and it is very unlikely for them to carry smart phones around with them.  If virtual cards become our form of money, people in rural or farm areas will be very likely to reject it. 

4.      What companies are going to be affected negatively by this? Name 3. Please name 3 industries, not 3 companies. (3 points)

Companies who sell and manufacture wallets will be affected negatively by this because if one day virtual cards replace all our cards, we no longer have a purpose of carrying wallets with us, so the demand for wallets will decrease.  Some examples of companies that sell and manufacture wallets are Marc Jacobs and Louis Vuitton.  Convenience stores and small restaurants who normally only accept cash will be affected negatively by this because they do not have a large sum of money to invest and install one of these mobile devices in their store.  Since paper bills and coins are no longer used by consumers, there will be a lower demand for convenience store goods.  The main purpose provided by convenience stores is that they provide goods that are convenient to customers because they are usually located near people’s homes.  However that problem is already solved with virtual cards because it provides convenience that the consumers do not actually have to go to the store and make purchases.  They can make purchases anywhere they want with their virtual card.  An example of a convenience store is Sunnyside Market (a convenience store that is located on Victoria Street on 58^th Avenue).  Industries that produce metals such as copper will be affected negatively.  Since coins and paper bills are no longer needed, the government does not need to make any orders of copper and other metals from mining industries that are necessary to make coins.  One example of a mining company who sells copper and other metals is Capstone Mining Corporation.  Since there is 1 less purpose for copper and other metals, there will be less demand for their products and as a result, their sales would decrease.

5.      Who is going to make money from this? Name 3. Please name 3 industries, not 3 companies. (3 points)

Mobile companies who sell smart phones and highly advanced devices such as Apple Inc. and Research in Motion Ltd. will make money from this because since everyone requires a smartphone in order to make purchases and to process transactions.  Credit card companies such as Visa and Mastercard will make money from this because even though there are no more physical credit cards, they still control the transactions being made.  In the past few years, credit card companies (Visa and Mastercard) have been working on more limited contact-free payment methods using NFC (Near-field Communications), the technology that will revolutionize and replace our old wallets one day.  There is a high demand for this method and credit card companies can still collect interest from people’s debts.  Also credit card companies and other card companies no longer have to waste money and time on manufacturing the physical credit card.   Companies who provide internet services such as Google and PayPal will also make money from virtual credit cards.  Since virtual cards involve with high use of Internet and online services, there will be a higher demand of using those services.  Since coins, paper bills, and actual credit cards are eliminated by virtual cards, people can only make online payments either on the computer or on the mobile phone.  This method will eliminate the competition of method of payment and therefore companies such as Shaw and Telus who provide Internet services will benefit from virtual cards.