Taking the Card out of Credit

Square turns smartphones into money making machines.

A post last week on Mashable.com discussed the declining use of credit cards. Some argue that as technology changes the way we pay, and consumers grow increasingly frustrated with high rates and fees, the way we think about credit will change. I agree I may never own or use a credit card, but let me ask you one question. How long have people had credit scores? In ancient times it was called a reputation. You either paid your debts, or you didn’t and people would come knocking at your door. Since the introduction of plastic cards, systems were set in place to track and monitor how often you spend, how much you spend, and your ability to pay. Can you purchase a car without a credit score? What about a house? Whether making an expensive purchase or starting a new business with a bank loan, the credit score is such a widely used piece of data that it has to stick around even without a plastic card in your wallet. In the future we might use different platforms for commerce, but there has to be a way for a merchant to determine your reputation. A credit card shows that someone has taken on risk because they believe you will pay your debt. And ultimately there is no system where someone will take on risk for free. Technology changes rapidly; the idea of credit will not.

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