The Bank of England’s chief economist, Andrew Haldane, reckons you don’t need cash. Quite frankly, I wish it were true. It’d be nice and convenient. My mum always makes fun of the wallet full of shrapnel bulging out of my trousers.
But a life without cash implies two things that simply aren’t true – that you can trust British banks and that technology always works. Good luck with that!
I’m sure you have plenty of frustrations with technology day-to-day. But what about banks? Well, I’m here to tell you not to trust them as far as you can throw them. It’s not even about their solvency or prudence. They can’t even get basic day-to-day things right for you. Like being able to pay for things with money that you have. In my experience, that’s been nigh on impossible.
It took me more than four weeks of steady effort to set up a bank account in the UK. At one point I fell asleep in a branch at Canary Wharf. But all that was nothing compared to what happened when I finally got my debit card. Let me ask you this: what if you were broke for seven days? What if a cyber-criminal stole all the money out of your bank account? And then the bank told you to wait seven days for them to sort it out.
How would you pay for your commute to work? How would you buy school lunches? What if your mortgage payment came due, or you missed a credit card payment?
Let me tell you, it’s quite a pain in the neck
Especially if you happened to book a trip to Paris just before your bank account got emptied. More about my story in a moment. You need to know what happened to me because this January your opportunity to experience being broke for seven days in the same way is coming to London. And I suggest you avoid it.
So what happened? In short, I recently found myself broke for four days after some circus freaks mugged me. By circus freaks I mean the billion-dollar business Cirque du Soleil. And by mugged I mean the sort of electronic transaction nincompoopery that could happen to you when their show, Amaluna, comes to London. Or perhaps the same might happen to you by the hands of one of the other companies in the UK pulling the same fast one on their customers this Christmas.
It’s all got to do with something called “pending transactions”. Sounds incredibly interesting, I know. But to really appreciate the threat you face whenever you pull out a bank card while facing a computer screen, you need to know how I ended up with no money for four days…
I wanted to take the world’s most attractive girl to Paris to go and see Cirque’s show, Amaluna. Having moved from Australia, I used my brand spanking new UK debit card to do the hard work. Hotel? Booked. Flights? Booked. Cirque show?
That’s where the trouble began…
As I’m sure you know, to use credit and debit cards you have to plug in your address and name in exactly the format they appear on your bank statements and card. What you might not know is what happens if you don’t put your details in just right the first time. The “Transaction Declined” message you get is in fact just a distraction. Just like the age old sleight of hand technique an illusionist uses. You see, the “Please make sure you entered your details correctly and try again” message draws attention away from the fact that they took your money anyway. That’s right. It really means “go on, send us some more cash”.
Don’t believe me? Neither did I when my bank told me the next morning that my bank account was empty and several transactions were declined due to “insufficient funds”. But that lightning strike didn’t happen till the next day. And shortly before the flight to Paris. Meanwhile, the night before, I had tried all sorts of combinations for putting in my address and name. First I tried copying the information on the card and statement, as directed on the order page. But that failed. “Transaction Declined, try again” said the site. So I tried my full first name instead of just my initials on the card. Several attempts later I was getting nothing except “Try again” and very angry. I attempted to order eight times all up, according to the bank the next day. In the end I found a UK ticket intermediary who sold me the tickets just fine.
Anyway, the next morning the bank tells me I’m in a financial straitjacket straight out of a Cirque show in Vegas. Some ticket booking transactions had gone through. All for exactly the same seats, I later found out. Some bookings had been declined because the first bunch had emptied my bank account alongside the flights and hotel. Travelling to Paris without money is not a good idea. We didn’t go.
But that waste of money ended up the least of my worries
You see, and this is the relevant bit for you at long last, a “pending transaction” cannot be cancelled by your bank. That’s right, chargebacks don’t apply. If a merchant hasn’t accepted a pending transaction, it can’t be reversed. Pending transactions are a financial purgatory. You have to wait seven working days for them to become so old nobody takes them seriously anymore and the bank puts the funds back in your account. So if you have enough pending transactions, you’re dead broke for seven, ironically named, working days.
Of course, if you check your internet or phone banking, the funds are still there. Nobody has claimed the funds, after all. It’s only your available balance that’s hit zero. Which is the relevant one when it comes to anything outside the Never-Never-Land of online banking. And so I found myself with an empty bank account for seven days.
After telling the bank I’d been living on bread and water for four of those days, they agreed to reverse one of the transactions. Given I’d ordered the same seats multiple times, they decided a “once off expression of good will” was in order! Trying to get refunds from Cirque du Soleil was even more exasperating than having them steal the money in the first place. But that part of the story isn’t relevant to you.
Obviously I ranted and raved about this to anyone who would listen
What’s surprising is that all this happened to a friend of mine recently. She tried to order clothes online using her credit card. The card was rejected, but the funds were taken anyway. Which she found out the hard way when she couldn’t pay for her cab on the way home from work. Based on this, I suspect this sort of thing is quite a common occurrence. Which is how all this is relevant to you.
What if you found yourself broke overnight, for seven days? Just because you’d put your address in wrong and tried to order again and again because your kids really want to see Cirque du Soleil this January. You couldn’t pay for public transport. Your mortgage payment is due, but your money is in Pending Payment Purgatory. Or your holiday fails because the funds were nabbed by someone like Cirque du Soleil. It could cost you hundreds of pounds like it did me. Not to mention the humiliation and frustration of figuring it all out.
As you do your online shopping this Christmas, please beware of the Pending Transaction Purgatory your wealth could be tied up in for seven days. Perhaps have two bank accounts with separate banks. Or become a hermit living in a cave. But the obvious solution is to keep your cash. While Haldane doesn’t get his way and the government lets you hold on to it.
In the end, a combination of cash and my Australian accounts saved me
I didn’t have to live off bread and water as I had to claim in order to get my money back. Instead, some Aussie bankers and currency exchange companies had several lunches on me. Oh the irony.
So now I ask you to join me in signing the petition against banning cash. Because without it you are subject to some of the world’s least competent organisations. Your money will no longer be yours, but the bank’s. They can refuse to hand it over, or hand it over unauthorised.
A society without cash presumes banks are competent, and technology always works. Neither is true.
Category: Economics