Small- Business Risk: Your Electronic Commerce Wallets.

Are you a business owner who wants to sell your goods and services to a trading partner based across the Atlantic? If so, the company is likely to be Visa Checkout, owned by Visa. (It’s also owned by online retailing giant Amazon, of course.) In response to a request for information from The Economist, Visa estimates that small companies today sell some $500 billion annually to trading partners through Visa’s digital marketplace.

But what if it went awry? Imagine, for instance, that a trading partner, mainly located in Africa, suddenly decides to barter in cocoa. “Chocolate” is significant: It’s not just a great food product. It’s something that most small businesses have needed to obtain through a trusted intermediary for some time. The farmer is likely to refuse to sell for peanuts or beans — that’s just not what he’s used to receiving. But now he’s going to “trade” in cocoa, which is far more common, and at a much higher price.

Trouble is, if there was only one default, that loss could be terrible. At roughly $10 a pound, you can imagine a Brazilian farmer selling all his beans in exchange for something like $13 apiece. If that happens, the Brazilian farmer not only loses about half of the beans, he would have to go back to the cocoa farmer in Africa and deal another $10. Just bad luck. So badly could this default hurt his export business.

Or how about an even worse one?

Suppose that farmer, thanks to bad luck, gets sold to the Ivory Coast, where he’s going to have to pay $21 for cocoa beans. The Ivory Coast, trying to recoup its payments, is going to have to sell its beans for a much lower price. For the farmer, this is a lot of beans, and he has no way to pay for them unless he goes back to the Ivory Coast and buys beans from a fellow cocoa farmer.

For the farmer, this is not a helpful arrangement. Just imagine, he has to put $1,000 into a bank account with a deposit and a withdrawal limit. But his trade partner, who’s on the Ivory Coast, is using the Ivory Coast’s debit card, in order to make his withdrawal — and he can go to any ATM in the world, and every ATM company knows that all you have to do to get cash is swipe your debit card. (The bill under consideration in Congress, for example, makes it possible for people to pay off taxes by forcing a bank to lend it the cash — but if you imagine paying back a cashless bill, that depresses the tax receipts.) A farmer, with no physical cash, in a country like the Ivory Coast, has no choice but to go to the ATM. And he’s not going to be able to do that many times to buy beans — especially if his colleague’s use the same ATM to cash his withdrawal.

So what if the risks get out of hand?

It’s not impossible. Look at Venezuela, where the inability of everyone to pay their bills has led to a wide swath of the productive middle class selling everything to China. Granted, that could be a bad development for everyone, but it’s even worse for the farmers there. The run on the Chinese banks has become so big that the Chinese people are simply refusing to buy more food. That may end up being necessary for the survival of the country. But the risk is still enormous — and it could become particularly so if the farmers move to other banks.

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