Mar

15

 Electronic payments is an industry that I perceive to be fertile for large growth, and I am invested accordingly. Two books worth reading on the subject are The PayPal Wars and Paying With Plastic .

My favorite of the two is The PayPal Wars which was written by an early employee of the company. Besides offering a great entrepreneurial story which described all the tribulations that nearly sunk the company on multiple occasions, it's about a business that was founded on Libertarian thinking.

The author quotes PayPal co-founder and current hedgefund manager Peter Theil's vision in starting the company:

"Of course, what we're calling 'convenient' for American users will be revolutionary for the developing world. Many of these countries' governments play fast and loose with their currencies. They use inflation and sometimes wholesale currency devaluations, like what we saw in Russia and several Southeast Asian countries last year, to take wealth away from their citizens. Most of the ordinary people there never have an opportunity to open an offshore account or to get their hands on more than a few bills of a stable currency like U.S. dollars."

"Eventually PayPal will be able to change this. In the future, when we make our service available outside the U.S. and as Internet penetration continues to expand to all economic tiers of people, PayPal will give citizens worldwide more direct control over their currencies than they ever had before. It will be nearly impossible for corrupt governments to steal wealth from their people through their old means because if they try the people will switch to dollars or Pounds or Yen, in effect dumping the worthless currency for something more secure."

The other book, Paying With Plastic, is an in depth book that describes just about everything one would ever want to know about electronic payments. I'm a bit apprehensive to buy anything published by MIT Press but it wasn't as dry as I imagined and kept me interested.

Describing how important the development of the industry is, the author offers this perspective:

"Although cash and checks may not be toppled for generations, if ever, payment cards have nonetheless wrought a revolution. Humankind has seen only four major innovations in the most routine aspect of economic life—how we transact with one another; the switch from barter to coin around 700 BCE; the introduction of checks by the Venetians in the twelfth century; the shift to paper money in the seventeenth century; and now the payment card. Let's be clear again, though—it is not the card, it is the digits, and as we will see, when it comes to the electronic transfer of funds, plastic cards are not the only game in town."


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  1. Alan Millhone on March 15, 2007 8:11 am

    In my small town of Belpre,Ohio we now have seven ‘cash till payday’ locations. One of them offers for a $9.00 set-up fee your own VISA account that you can put money into for $1.50 at each time of deposit. Many in America are ‘unbanked’ and this now offers anyone the opportunity to have a PayPal account to pay for eBay purchases,etc. The person I know who told me about this card is depositing money as he can in order to eventually purchase a notebook computer at a local Circuit City Store. It is a method to encourage saving and also the added benefit of having cash at hand and yet not having to carry any currency on your person. With this card you are also given a PIN number for security.

    Both books that Mr. Carlson speaks look very interesting.

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