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But privacy advocates fear that state bureaucrats could use the cards to pry into the personal lives of welfare recipients by tracing their electronic purchases. "Poor people are an easy mark," says Robert Ellis Smith, who publishes the Privacy Journal, a monthly periodical in Providence, Rhode Island. "They're resented by the public, which thinks they should be monitored."
The push for a cashless society is gaining momentum, however, if only because making money disappear is also a way of saving money. There are about 12 billion pieces of U.S. paper currency, worth $150 billion, circulating worldwide, which works out to about $30 for every person on earth. Keeping all that paper in use is a costly chore for the government. Most $1 bills wear out after about 18 months. To retire, destroy and replace all aging currency costs the government an estimated $200 million a year. Currency is cumbersome for businesses as well. People have to count it, armored cars have to carry it, bank vaults have to store it and security guards have to protect it.
Checks too are expensive to handle. About 55 billion checks are written every year (more than 37% of all consumer payments), and the processing costs the nation's financial institutions about $1.30 each. Banks end up losing money on about half of all checking accounts, since the handling costs often exceed the interest earned on lending out the deposits. An electronic transfer, on the other hand, costs only 15 cents per blip.
Some of the biggest users of electronic transfers have thus reaped substantial benefits. The Federal Government saved $133 million last year by paying 47% of its 815 million bills by computer rather than by mail. And General Electric, which received 40% of its $60 billion in revenues electronically in 1993, expects to spend $2.5 million less for stamps and envelopes this year because it is using computers to pay 1,000 of its suppliers.
But savings are not the only reason Americans are warming to the idea of parting with their cash. Electronic transfers are starting to become convenient. These days 23% of homes have personal computers, in contrast to 11% five years ago. As a result, some 900,000 subscribers are signed up with banking services via online information systems like Prodigy. "I don't know how I got along without it all this time," says Floraine Alba, a grandmother in New Providence, New Jersey. Alba used to write 50 checks a month. But she now uses ScanFone and willingly pays $11.95 a month to cut three to four hours off her bill chores. "Spending all day writing checks and stuffing envelopes was bad enough," adds Alba. "I then had to go stand in line at the post office."