Topic: Does the future of money lie with prepayments (Read 228 times)

Yeah Americans definitely seem to have too much of an encouragement to spend what they don't have. There are definitely people like that here but they're much fewer.

Some of my relatives have a habit of living in interest free debt, which is nice until they start adding interest... They only have to give you a month's notice as it is. I've considered getting a credit card and spending what I have for the cashback but I'm not sure it's really worth the hassle and most intelligent people here don't care for racking up debt if they have money already (and there are popular you tubers in the US that have huge amounts of debt and seem to fantasise about it - normally with enough cash to pay of the debts too and I think most of them don't know what they're doing - since they quote the stock market making 10% returns).

I think debit cards are getting famous for one simple reason, people realized credit cards and holding yourself back from spending too much of it is not as simple as it looks. You tell yourself you know what your income is and what your spending habit is like and suddenly you have this unexpected spending you have to do, sometimes health, sometimes something else and you end up in negative.

So, prepayments are actually great because it is even better than debit cards and people could at least know what they are paying and how much money they have. All these loans and debts and so forth hurt so many lives so far and people realized it and there is a whole new generation that is willing to not go out, not buy anything and just live a bare minimum life so that they could have money for their future and their kids.

Warren Buffett loves this kind of scheme, which is why he's always had a fondness for insurance companies--they get all the cash up front and don't have to pay out the claims until an accident happens.  It's why he invested in some "stamp rewards" program many years ago, which was another business that collected cash from customers up front and might or might not have to pay anything out (I can't remember the details, but I read about it in his autobiography).

This Amazon thing sort of sounds like that, though I'm not sure Amazon is all about making a profit that way--they tend to do anything they can to increase their customer base, even if it means losing money in the short-term.  That's always been the case with them, right from day one.

Yep on both counts.  Well, not exactly the first sentence since where I come from everyone has credit cards and tons of personal debt, but personally I don't believe in buying anything that I can't pay for with cash.  Credit cards are way too expensive to use, and the temptation is too great to do just that.  But yeah, this scheme jackg described doesn't sound unfamiliar to me at all.  And even if it's ongoing, there's nothing to stop Amazon from ending it at any time, which they'll probably do once they suck in all the new customers.

I would look at the number of wallets holding >0.01 bitcoin. If it is still 7.65 million or thereabouts like it is today, I will buy big immediately and fill my boots in. If however, I find the number reduced to something like 3 million (like it was in early 2017), I would be disappointed and conclude that 700 is probably just a new fair price and nothing to get excited about.

My theory is that fair price is proportional to square of the number of wallets in line with how networks behave. Called the network effect.

I think this not a one time offer for Amazon UK and I think this is continuing and many users are loving it because of the convenient they are getting with the fast transaction that had been made by the top-up, This can really be a great thing for Amazon and for people on the UK,

And in my opinion, a bad idea for people that are a heavy spender and having a fast and convenient way of doing shopping could be an added addiction for them, but I still prefer using Bitcoin rather than overspending it on your hard earn cash.

It's actually an old way for users and companies to coexist. Users get cashback when they spend this amount or when they load up this amount, and companies use the amount of users at hand to invest more projects that could generate profit. It's a rather peaceful connection between the two.

As for the future though, well with them implementing a system as such, it honestly lets customers have an easier time when using their site for shopping. But I doubt it could last long, with how virtual currencies are popping up and starting to enroach the world with it. Sure, they may improve the system to accomodate usage of virtual currencies, but in the end, it'd still be defeated by the idea of virtual currencies.

Where I come from you pay stuff with money you have.
In the US people are too used to paying with debt. That's why it sounds new to you.

However if a company is holding significant amounts of your money they should have a banking license.

Almost all the popular shopping sites in my country now, do provide their own wallet wherein you can load or save their so when you order something you can use it with some freebies or discount, some also accepts BTC. Im not trying it first as I don't want to do prepayment when there is option to pay once it's already delivered. As long as there is other option not to do prepayment I will not use it.

I hope not. Anything that builds corporate dependence is great for them and crap for us.

In the UK at least long-established retailers have been going bust at a furious rate. If you'd prepaid you'd be just another creditor and a long, long way down the list. Lots of gift card owners discovered this to their cost. A lot of money vapourised.

Never thought of it that way to be honest. Prepayments have actually always been the less efficient methods of payment from where I come from (you get better discounts if you post-pay, or you get cheaper credits). The same with bills, if you top up a balance for bills to get credit to every month, you have the convenience of not worrying about bills, but if you actually set auto debit only on the day of the bill itself, you get a small discount on "processing fee".

I actually always thought this was to encourage borrowing. You know, hoping people spend money they have, and are forced to borrow money to pay bills -- or pay from overdraft facilities.

amazon has been offering this (at least in the USA) for a few years.

it's not that they can reinvest for higher rates. it's that their margins are much higher than 10% so they can afford to give 10% off. in exchange, they get to lock in the customer's money right now.

it also works as a marketing ploy. when people feel like they're saving money, they spend more.

Btw amazon was always offering 5% extra money on top up balance with 100$. Is that another new offer? Idk amazon but currently ebay has amazing offers, 10% cashback (ebay bucks) and 15$ off on orders over 75$. Currently ebay rocks in deals.
Btw to answer your question clearly, that thing was always existed with companies. They always offer sales on bulk buys. Every company is looking for quick ways of collecting money because they can invest that money in different things and get double win (which includes expands and etc).

I think that this strategy existed for ages.
It wasn't so known though, because it was not a need for big corporations.
Now that Amazon wants to implement it, it becomes a trend as more companies are going to follow the trend.

NO

That's actually another thing I've come across. If a utility firm don't take a payment I owe them, I have a pretty good record so they just ignore it and pick it up next month or the month after and it's probably the same for a lot of places.

Companies might just try to land people with larger payments too so they have to pay them interest...

The 10% back might also be to circumvent charge backs on cards or the "pending" transactions cards give.

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The point on gift cards is also quite interesting as they've been known to be invalidated by stores in the past so I'm surprised they're still fully in use (the UK Post Office have one that's probably a lot safer to get around this issue). HMV are the last company I know of to just invalidate cards when close to bankruptcy (some guy got arrested over trying to take what was rightfully his too)...

I actually think the opposite - afterpay and other credit based financing systems seems to be the way to go.

These are essentially replacements for credit cards, which can have high interest rates and have negative connotations attached to them. Afterpay and other companies essentially take the same idea, except putting it into a more modern paradigm.

Prepayments are going to continue be the push of retail stores, through the form of gift cards or whatnot. But it's hard to envision a massive blowup in volume, especially when there's not much innovation going on in terms of incentivising users to prepay.

This sort of model isn't really new, but it's mostly used on the finance sector: M1 Finance, Robinhood, and such, which shouldn't be a surprise.

But on an e-commerce website?  Quite weird I must say. While this move is quite bizarre(but quite smart and could end up being a really really positive thing for Amazon in terms of earnings), definitely don't underestimate the bad spending habits of people. They psychologically think that they might earn a benefit by leaving money on the Amazon platform, but they will most probably end up spending the money on some random stuff anyway. At least that's how I see it.

Amazon UK seem to have started offering an opportunity to top up an account with funds and then being given a bit extra once it is added to your account.

This might have just been in October when they could get you to top up and store funds there for Christmas or it might still be going now. This is obviously offered because companies can invest the funds deposited into their own operations and generate a better interest for themselves as it was something like 10% being offered. Is this a thing that's always existed with companies or is it new? Any thoughts on whether many systems will be more like this in the future?

Large payments with btc can thus be done in the same way too.