There was a time when the mint would sell coins and bills at face value. The problem is, people started using that for manufactured spending to rack up credit card points. They added a premium to prevent this.
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.
I agree it's not specific to MS. But MS was probably inducing much more demand and thereby making them eat more fees than they planned to. (I don't have any inside information though.) Adding a premium would make it a little less attractive to MSers.
> 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).
> What I don't get is why the US Mint would care one way or the other for the concerns of credit card companies.
Hard to say what their reasoning is. It could be pressure from the credit card companies. Or it could be that someone at the mint decided they don't like the idea of people gaming the system.
At the end of the day, it's not a positive-value economic activity. And if enough folks started buying coins for face value just to churn credit card points, there would be financial losses for the mint/and-or the credit card company.
That seems ... odd. I can pay my apartment rent with a debit card with a fixed transaction fee (eg, $999.99 and up to $1,999.99 the service fee is $4.95), while covering it with a credit card has a different fee structure of a flat 2.95%. This is with Rent Cafe in NYC, and from what I can tell, it's a very widespread platform across the country. The 2.95% fee specific to credit cards will wipe out the points earned for a credit card under almost all circumstances.
Platforms like RentCafe are highly configurable to support local laws, because the nature of landlord/tenant law is that it is highly variable by state.
Going though that same effort is a waste of time and implementation budget for something like selling novelty bills.
Fair enough - in which case the Mint just needs to pad the sale price a bit to cover interchange fees, and make a little extra on top, and shipping can be extra. 10% on top of the face value should be more than enough, and would have the side effect of sapping any would be manufactured spend. Yet the prices on the Mint are way above that - it looks like more than 50%. Sure, if the novelty or collector market values it at that premium, great. What I struggle to understand is that this is primarily to combat manufactured spend. I still don't see why manufactured spend is a problem for the Mint to solve, rather than the credit card companies.
> We cannot use any tax dollars to fund our numismatic operations.
> The United States Mint’s numismatic programs are self-sustaining and operate at no cost to the taxpayer. Any excess funds are returned to the Treasury General Fund to reduce the annual budget deficit of the federal government.
I calculated the "cost per dollar" of all of the offerings on the website at the moment.
The best "deal" is the most expensive – $100 x 16 for $1,860, at $1.16 per dollar.
The worst deal is the cheapest – $1 x 5 for $18.50, at $3.70 per dollar.
