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Revision as of 03:39, 6 January 2007
Scrip is any substitute for currency which is not legal tender, and is a form of credit. Scrips were created as company payment of employees and also as a means of payment in times where regular money is unavailable, such as remote coal towns or occupied countries in war time. When U.S. President Andrew Jackson issued his Specie Circular of 1836, due to credit shortages, Virginia Scrip was accepted as payments for federal lands. Other forms of scrip include subway tokens, arcade tokens and tickets, and "points" on some websites.
Scrips have gained historical importance and become a subject of study in Numismatics or Exonumia due to the fact of the wide variety and abundance of them.
History
Company scrip was a credit against the accrued wages of employees. In the United States, where everything in a mining or logging camp was run, created and owned by a company, scrip provided the worker with credit when their wages had been depleted. These remote locations were cash poor. Workers had very little choice but to purchase meals and goods at a company store. In this way, the company could place enormous mark ups on goods in a company store, making workers completely dependent on the company, thus enforcing their "loyalty" to the company. While scrip was a de facto form of currency, employees were rarely paid in scrip. Additionally, while employees could exchange scrip for cash; it was rarely done so at face value. Scrip in this context was only valid within that area or town where it was issued. While store owners in neighboring communities could accept the scrip as currency, they rarely provided a 1 for 1 exchange. This was to avoid the risk of having coins/currency that were worthless anywhere else.
Scrip as a de facto form of currency within the setting of the mining or logging industry was discontinued around 1952. This was not due to the "right to seignorage" or the right for a country to mint currency without it being violated.
Scrip is also related to the stock market where companies pay dividends in the form of scrip rather than paying actual currency. It is also a written document that acknowledges debt.
Modern use
Scrip is now issued in the form of gift certificates, or gift cards. The two are essentially the same, except that the cards automate the checkout and accounting processes. Cards usually have a barcode or magnetic strip, which can be processed through a standard electronic credit card machine.
Cards do not have any value until they are sold, at which time the cashier enters the amount which the customer wishes to put on the card. This number is rarely stored on the card, but is instead noted in the store's database. The major exception is in many public transport systems, and library photocopiers, where a simplified system (with no network) stores the value only on the card itself (a stored-value card). To thwart counterfeiting, the data is encrypted, though not very strongly given the relatively low amounts of money involved. The magstripe is also often placed differently than on credit cards, so they cannot be read or written with standard equipment.
Gifts cards are increasingly being offered as consumer incentives at no cost or for a substantial discount. For example, reward points given for the use of credit cards can be exchanged for a variety of gift cards and some companies will offer high value gift cards at a discount. Gift cards are readily available at a discount using online trading services.
There are websites that allow users to buy and sell gift cards. Sellers use these websites because the gift card is not to a store of their liking, and buyers because this provides opportunities to buy these cards for less than they are nominally worth at the business.
Issues
Unless the gift card is obtained at a discount (paying less than the actual value of the card), some point out that trading real money for scrip is unproductive as it then ties up that money until it is used, and usually may only be used at one store. Furthermore, not all gift cards issued are redeemed. VISA and American Express have issued pre-paid cards (not connected to any bank account) that can be used anywhere that accepts VISA or American Express credit cards or debit cards, respectively.
One disadvantage of gift scrip is that some gift card providers will charge "maintenance fees" on the cards, particularly if they are not used after a certain period of time, or the card will expire after a given period of time. Some US States have enacted laws to eliminate non-use fees or expirations but the buyer should review the gift card conditions prior to purchase.