The Swiping World

A serious-looking young man jumps on a KBS bus and swipes an electronic card—the hourly fare is deducted, a harried-looking fellow swipes his debit card at a Kisementi ATM before heading to Chez Lando to join his buddies for a drink, hopefully very soon, tourists will be able to swipe their Visa Cards at local bars, hotels, all banks and supermarkets. Things are technologically happening in Kigali but for the most part, Rwandans are using debit. They are accessing liquid cash that is available in their bank accounts or prepaid accounts. Credit card usage in Kigali is still in the doldrums; however it is a safe bet that credit cards are surely on their way. As far back as the late 1800s, consumers and merchants exchanged goods through the concept of credit, using credit coins and charge plates as currency. It wasn’t until about half a century ago that plastic payments as we know them today, became a way of life. In fact, these days swiping plastic is the most prevalent mode of payment in the modern world. Being prevalent, of course, does not mean it is being used all over the world. Nonetheless, the recent financial crisis that affected most parts of the world including those that have not started using plastic payments left me pondering the “swiping” phenomenon. How come one country has a swiping machine at every store, shop and any vending facility while another, say Rwanda does not have a single credit card in circulation? In countries that use plastic payments, it seems near impossible for one to live without a credit card. When I arrived in America in 2008, I endeavoured to always pay using cash for all my transactions. However, it was not long before I learnt a good lesson on why I needed a card. Typically, I was treating a new friend to dinner at a fancy restaurant whose prices found me a few dollars short. Much as there was a bank around the corner, it was closed as it was too late in the evening. I wished I had a credit card to swipe at that moment and realised that it was precisely for times like this that they should be used. My new friend came to the rescue by offering to split the tab—If you are one of those ladies who think you cannot contribute to the bill after you have enjoyed a wonderful dinner, the joke is most probably on you! Besides my obvious embarrassment, I could not resist peeking at her wallet that was bulging at the seams with a colourful array of credit cards. It took her about two minutes to select which card to use. I later found out that she had over 12 credit cards. Twelve! There were credit cards from her school loans, some from her bank, a couple of cards from her credit union, then she had credit cards from some department stores like Macy’s, Marshall’s, Gap, etc and finally some cards from her favourite grocery stores. Those were credit cards only. Furthermore, she tried to clarify to me that there is a distinction between credit and debit cards and proceeded to show me about four debit cards. A few months later, I requested for both a credit card and debit card. Credit cards still made me uneasy as they denoted debt. I liked the idea of debit cards more as it involved using funds that existed in my account. It is like having cash, only that I had to swipe my card to access it. A few days shy of my 30th birthday I received the first credit card with my name inscribed on it. A sense of foreboding overwhelmed me as I looked at the red and blue plastic card. I was going to treat myself to a week-end long skiing trip (Yes, skiing!). I had prudently set the limit at 1,000 U.S Dollars, I had a swell time including my first Jacuzzi experience (but that is a story for another time). I also swiped my way through more than 900 U.S Dollars during that trip alone (Yep, that’s why “skiing” is best left to a select, determined and financially able group of people; besides all that time spent in nothing but snow, I thought, was ill-advised for a typical African like me). Furthermore, I could have easily swiped another 500 U.S Dollars. I can fully understand why it is so easy to keep on swiping, but why would anyone come up with such a disingenuous way of racking up so much debt? Contentiously, just like the proverbial one-eyed leader among the blind, why would entire economies jump onto this bandwagon? Just a few months before I applied for my credit card, I did not personally know anyone who owned a credit card. Not a single person. Now I was eagerly swiping for 1.75-dollar (Rwf900) Coke bottles as if I had been swiping the card all my life. It was that easy. How can a 30-year-old man have no idea of how to use a credit card while teenagers have had several of these cards in their wallets since their pre-teens? In the swiping world, credit cards rule. Everybody uses them. The more I thought about the swiping phenomenon, the more I got convinced that I am too old to be getting started with the thrill of swiping a credit card. With that in mind, I resolved not to use my credit card again. I was raised with the mentality of hard work and liquid cash, with the belief that nobody is going to lend you money unless you already have money in your bank account – I grew up hearing things like, “Lend me 10K, I’ll give it back to you tomorrow morning.” That the only reason one should require credit is so that you can invest in a business venture. That if you worked hard enough, you should be able to save enough for a banking institution to be able to lend you more capital to top off your investment. Now, here I was being given credit that I could have used to splurge on a gambling spree for all they cared. No, I did not need credit or credit cards. After all, I had grown to this ripe old age without using any credit, I took pride in the fact that I paid all my bills with hard earned cash. In fact, everything I consumed had been fully paid for. Well, up until the skiing trip. But why the need to swipe a credit card? According to the April 2009 Nilson Report, 78 percent of American households, about 91.1 million, had one or more credit cards at the end of 2008. A year earlier, there were 90.4 million households with cards. This dependence on credit by an entire nation had to have some adverse effects. Then the credit crunch hit America. Suffice it to say that I was the least surprised and was very sympathetic with all the frowns I noticed on most people’s faces during my subway commutes. With the aptly named credit crunch came the fall in real estate prices and before long I was considering buying one of these “free” houses with a home loan. That is when I found out about another subset of the swiping phenomenon; credit history. I had no credit history! Explaining to the local credit union my independence from “debt” (because that is what credit is), was an attempt in futility. The attendant politely asked me if I would lend money to a stranger on the street. When I said no, he used the analogy and said, “just as you would not lend money to a stranger, so would the banks not give credit to someone who has no history of being diligent with their credit card payments” hence the requirement for credit history. In effect, I had to have been borrowing money in order for me to be able to borrow more money. This did not make much sense. No wonder I have read numerous stories of how productive honest people end up filing for bankruptcy when credit card payments overwhelm them. From the skiing weekend, I also know how easy it was to get sucked into easy credit spending. The merits and demerits of credit card usage being a subject for another article or forum, may mainly boil down to exercising extreme caution and being responsible with one’s money: A simple concept that may prove daunting since the majority of Rwandans live below the poverty line. What I know for sure is that we Rwandans are notorious for taking things in stride. The old man in Umutara will calmly and wisely say “nta mugabo utagira ideni” – which loosely translates to; “Real men use credit.” However, as the Americans are wont to say, the bottom line is “Damned if you do, damned if you don’t.” “Welcome to the swiping world!” quipped the bank attendant. The author is a Rwandan Lawyer living in the U. S specialising in immigration, international trade and tax law. musinguzimartin@gmail.com