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Unbanking America: Entrepreneur Develops Alternative to Paper Money, Banking System

With the explosion of devices equipped with encrypted technology, it should be only a short period of time before both paper currency and the rest of coins in circulation go the way of the Canadian penny.
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The Canadian government recently announced that the Royal Canadian Mint would soon stop producing that country's penny and begin taking it out of circulation.

The elimination of the Canadian penny will affect only cash transactions, which will now be figured in increments of five cents in Canada -- rounding off to the nearest cent will still take place on electronic transfers. The reason for the discontinuance of the penny is simple: the Canadian government determined that the use of the coin was outdated and a burden on the economy.

Another factor: Because it costs 1.6 cents to produce a penny, the Canadian government also loses an estimated $11 million, in Canadian currency, a year in producing the copper coated steel coin. With the uptick in commodity prices, minting coins has become expensive.

There is now renewed talk about eliminating the penny in the United States, too, which is estimated to cost the US Mint 2.41 cents to produce. In reality, no one really uses pennies anymore.

With the explosion of the use of PDAs, cell phones, and other mobile electronic devices equipped with encrypted technology, using cash money as units of value has already become antiquated for billions of people around the world as information sharing and the growth of electronic communication on the Internet has become the selected way to transact both personal and commercial business.

Thus, it should be only a short period of time that both paper currency and the rest of coins in circulation as representative money may go the way of the Canadian penny.

A Boca Raton entrepreneur and his company have developed an innovative payment system utilizing "Global Unique Identifiers," or GUID. GUID are one of its kind reference numbers used as computer encoding devices embedded in an image. The GUID could take the evolution of electronic money one step further.

Howard Katz, who is the president of Vandam Consulting Services, wants to eliminate the need of banks to hold and safeguard your "cash," too. Katz wants to "unbank" the majority of Americans from having to deposit their money in financial institutions, which ultimately allow Americans to pay their bills and buy goods and services with checks and plastic cards.

Instead, Katz's company has developed the QwikCash Transfer System, which can transmit funds between individuals, organizations, corporations, and groups of people electronically with customers. That system uses either vending machines found at convenience stores, or other locations in a community, or employ Internet web portals on their PDAs or computers to deposit money and to pay bills using patented two or three-dimensional bar code GUIDs.

No more trips to the bank, ATMs or Western Union: Instead of using cash and coins or swiping plastic, QwikCash would allow people to pull out their cell phones, or even use bracelets and other jewelry with a GUID code embedded on them, to make deposits and transact their personal or commercial business anywhere-and on a 24/7 basis.

"Right now, there are millions of Americans that are "unbanked," mostly immigrants and poor people, who don't use banks because they don't make enough or lack a minimum balance to open a checking or savings account. What QwikCash will allow both consumers and merchants to do is forego the use of money as we now know it and unbank themselves too from their costly traditional banking accounts," said Katz.

Americans are continuing to pay billions each year for brick-and-mortar bank and financial service accounts and debit and credit card merchant and transaction fees. These transaction fees hurt merchants, consumers, and the American economy.

For example, CNBC this week reported that credit card charges to gas stations drive the price of a gallon up to 10 cents more and that last year convenience stores alone paid $11.1 billion in credit card fees.

Much like the cost of making a penny has made it archaic, the financial industry's penchant to soak consumers and merchants on plastic charges is getting too impractical and way too costly for Americans to shell out of their decreasing paychecks.

Unbanking America by using GUIDs instead of greenbacks and coins as currency will be not only more efficient and convenient, but has the potential to free our economy from the crippling costs that come with using banks and their plastic.

If Howard Katz has anything to do with it, in 21st century America,"a GUID saved will be a GUID earned."

This article appeared in the Editorial Page of 'The Sun Sentinel' on April 19, 2012.