Welcome to marketing 101.
I am not going to go into this too deep in an email, because this will be part
of my speech at the Summit.
Real money is a fixed asset. A gram of gold is always a gram of gold, it
cannot be produced out of thin air. There is a hard cost associated with the
creation of a gold based currency. This is why it is trusted as medium of
exchange. Unlike federal reserve notes, you can't just print more when you
need them.
When Diners Club came on the scene they had a very hard sell with merchants.
They had to sell that they were bringing in an elite class of clientele and
the risk of taking checks was removed. The small fee Diners Club charged the
merchant was justified as guaranteed payment. The customer liked using them
because they did not have to worry about carrying cash and it was sold to them
as a status symbol. After all, you are now part of the "Club". Nothing
backed diners club except a promise to pay.
Next you have Bank Americard (Visa) and Master Charge (MasterCard). They
came to the merchants with big bank backing and offered guaranteed payment,
for a price. They came to the consumers with a play now, pay later promise.
This also carried a price. The advent of credit cards brought with it the
greatest invasion of privacy in the history of the world and it was done
voluntarily.
The US Government had provided a tool for credit card issuers to uniquely
identify every individual, this was done by the Social Security Act. Card
issuers could now use that to to exchange information on idividuals and verify
that everyone was being paid on time. With the onset of computerization
buying habits are being tracked and sold.
Now lets take a look at what it costs a consumer to use a credit card.
There are card issuers out there that will give credit cards to anyone that
breathes. I will use First premier as an example. You pay a $35 application
fee to get the card. This buys you a $250 credit line, so lets go out and
spend $200 of that credit line. The bill comes in and the balance is $200 +
$3.31 interest + $5 participation fee = $208.31. If I pay off the bill right
now that $200 has only cost me $8.31. This means I paid 4% for the ability to
play now and pay later. But wait, there's more! I only have to make a $20
minium payment.
So, next month I get a bill for $188.31 + $3.12 interest + $5 participation
fee = $196.43. I have now paid $16.43 for the ability to play now and pay
later. Only 9%.
You can see where this is going. My sister has one of these cards, which is
where I received the numbers from. I made her pay off the card and cancel it.
Now let's compare using E-Gold in commerce.
As a merchant it costs me a maximum of 1% to accept E-Gold. Visa varies based
upon the type of business you are. Adult web sites pay up to 30% to be able
to take visa cards. I will use my old ISP business as an example.
Visa charges 3% of the transaction, plus a $20 monthly fee, plus a monthly
rental for the point of sale terminal. At minium I can offer a 3% discount
for an E-Gold user and break even. But wait there's more!
Now a couple of customers decide they are not happy with the service, so they
call up visa and say they want their money back. Visa of course gives them a
refund and charges the fee back to me, plus a service charge. Now I am a
higher risk so they bump my rate to 5% of the transaction. Now I decide that
credit cards are eating into my profit margin, so I decide I want to have a 5%
surcharge for using credit cards. Sorry, but that is illegal in the U.S.
thanks to an intense lobbying effort by credit card companies.
What does this mean to E-Gold commerce?
As a merchant I have to take a hard look at my cost of doing business, if it
costs me 5% for taking credit cards, I should offer a 5% discount for E-Gold
users. This creates more of an incentive for a customer to enter the system
and creates more money in circulation. An end user can fund their account for
as low as 3% This is much lower than the First Premier credit card mentioned
earlier. Plus they save an additional 2% on my merchandise or service. All
it takes is a bit of education to see the wisdom of this.
So now the question is: What start-up price?
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