The specific US version was an attempt to bootstrap acceptance of the $1 coin-- if you could get a box of 500 shipped to your door, you'd spend them and eventually they'd displace $1 notes. When they went straight back to the bank, no circulation occurred, and they were burning merchant fees and shipping costs for nothing.
Some other countries used "selling coins at face value" as an explicit financial hack based on seignorage (the value of a coin in excess of its buillion content).
Canada used to sell commemorative $20 (and then on to $50, 100, and possibly $200) coins with modest silver content based on this model.
If someone pays $20 for $10 worth of silver, the government profits $10-- as long as the coin disappears into a collector's binder and never enters circulation.
So it worked fine as long as collectors bought them. When people bought them to generate card points, and immediately took them to the bank to exchange for more conventional currency, the plan fell apart, and Canada abandoned the programme.
It's a shame these programmes were sabotaged and died. The idea of "instead of stuffing a banknote or gift card in an envelope, I can give you a pretty collectible and feel confident that if one day you need the money bad enough, you can still spend it" was a nice idea while it lasted.
I believe in some cases there was no premium at all, not even shipping, so widespread manufactured spending was losing the Mint much more money than they were prepared for when they started the program.
I don't follow. Why would Manufactured Spend specifically cost the Mint money? It's not great for the credit card company, sure, but why the Mint? If the Mint was previously eating the interchange fees & shipping, ok, but that's not a manufactured spend specific issue.
> credit card companies aggressively shut down manufactured spending when they notice it.
I'm familiar with the concept of manufactured spend, and why credit card companies would try to clamp down on it. What I don't get is why the US Mint would care one way or the other for the concerns of credit card companies. The usual way to eliminate manufactured spend would be to add a credit card specific transaction fee that cancels out the spend points. By the Mint increasing the base price for everybody, this affects even people who might be paying with a debit card, or an ACH transaction (not sure if they're options, just positing).
hakfoo|1 year ago
The specific US version was an attempt to bootstrap acceptance of the $1 coin-- if you could get a box of 500 shipped to your door, you'd spend them and eventually they'd displace $1 notes. When they went straight back to the bank, no circulation occurred, and they were burning merchant fees and shipping costs for nothing.
Some other countries used "selling coins at face value" as an explicit financial hack based on seignorage (the value of a coin in excess of its buillion content).
Canada used to sell commemorative $20 (and then on to $50, 100, and possibly $200) coins with modest silver content based on this model.
If someone pays $20 for $10 worth of silver, the government profits $10-- as long as the coin disappears into a collector's binder and never enters circulation.
So it worked fine as long as collectors bought them. When people bought them to generate card points, and immediately took them to the bank to exchange for more conventional currency, the plan fell apart, and Canada abandoned the programme.
The UK flavour had a particularly ugly endgame-- the mint basically told banks not to accept them as deposits (https://www.thisismoney.co.uk/money/news/article-3390519/I-b...) which did nothing positive for the programme's long-term survival.
It's a shame these programmes were sabotaged and died. The idea of "instead of stuffing a banknote or gift card in an envelope, I can give you a pretty collectible and feel confident that if one day you need the money bad enough, you can still spend it" was a nice idea while it lasted.
scintill76|1 year ago
valarauko|1 year ago
rybosworld|1 year ago
valarauko|1 year ago
I'm familiar with the concept of manufactured spend, and why credit card companies would try to clamp down on it. What I don't get is why the US Mint would care one way or the other for the concerns of credit card companies. The usual way to eliminate manufactured spend would be to add a credit card specific transaction fee that cancels out the spend points. By the Mint increasing the base price for everybody, this affects even people who might be paying with a debit card, or an ACH transaction (not sure if they're options, just positing).