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With the emergence and growth of cryptocurrency, portable POS systems and digital wallets such as Apple Pay & Samsung Pay, a lot of people anticipate paper money to die down in the future and usher in cashless societies where 100% of money transactions will be electronic. Now it is true that with all the new paying technologies mentioned above, fewer americans carry paper currency. But does that necessarily mean we’re about enter a cashless future?
As mentioned in the New York Times article “Will Cash Disappear?”, cash is very unlikely to go away any time soon. Actually, according to theconversation.com, a study has shown that cash usage in the United States is still high relative to EU countries. But why do you think that is?
We’re living in a digital age where one of the most valuable resources we have is privacy. Throughout many social media networks and ecommerce/retail providers, we entrust in them a lot of essential information such as DOB, SSN, credit & debit card information, and bank account numbers. Facebook in particular has been in hot water over privacy issues, with another recent security breach exposing the data of over 50 million user accounts. And even in the absence of a breach, some of these platforms sell your information to third-party distributors for advertising purposes.
People will say that indeed cash is a more private way to make transaction but credit cards and electronic payment systems are more convenient, faster and easier to deal with than having to handle lots of bills and coins. But people care for their privacy, now more than ever. And in the case of money and transaction recording, they do not necessarily want every single one of their purchases electronically recorded and stored; for that reason people tend to feel more ‘secure’ when carrying paper money in their wallets (which we’ll get more into shortly).
Cash is the most common way to make untraced money transactions; it is a unique mean of payment “that anyone can transact, any time, any place, with no third parties involved”.
On a similar note, security is also a modern concern for anyone paying with alternative payment systems. What you gain in convenience for yourself, you lose in convenience for others. Credit bureau data breaches put your valuable information such as bank account information in serious jeopardy. Credit card and debit card hacks have increased over the last decade with more volume.
And what about computer problems? Wifi networks not responding or even worse, unsecured and fraudulent wifi networks trying to steal your information? No access to electricity/internet during a crisis? What about the fees incurred with each POS credit card transaction? If you take all that into account as well as all the technologies available to us nowadays to handle high amounts of cash quickly and simply such as digital bill counters, coin counters and sorters and money scales, you will realize that we will always benefit from keeping paper money alive.
Have you ever gone on a short vacation trip and set a modest budget for yourself? And yet, when you return, you realize you’ve overspent and doubled over your budget? What’s the first thing you look at? Your credit card transactions.
Research has shown that people who use credit and debit cards are much more likely to overspend than cash owners. A drink here, a meal there, a few round-trip Uber rides...they add up. And it’s so easy to swipe without thinking and subconsciously (or consciously, in some cases) tell yourself that you’ll sort it out when you get back home.
With cash, it’s value that you can touch. Every single time you pay with bills, you have to reach into your wallet and see how much money you’ve got. Your memory keeps an account of how much you have overall and how much you’ve taken out.
Remember when TV was supposed to kill off radio? And when the internet & streaming services were supposed to kill TV? Digital media was to render print media obsolete and, of course, electronic payments were supposed to bury cash in a 6 foot hole?
Modern methods will always pose threats to traditional methods but people often make the mistake of assuming one has to replace the other, when in reality all of these methods can be used in conjunction.
As we’ve progressed through a plethora of new payment methods, cash is still holding its own. While the overall usage of cash has decreased, the percentage of Americans who never use cash has only increased from 10% to 12%. Why? For some of the reasons we just mentioned, as well as people generally being resistant to change. Older people in particular, are hesitant to try new technological methods and prefer to stick to their old, tried-and-true methods.
Also understand that there are still businesses such as bars, restaurants, food trucks and corner stores that are “cash-only”. Whether you feel they’re worth it to always keep some back-up cash on you is dependent on their quality and your perception. And while money-splitting is easier with the emergence of mobile payment apps such as Venmo and CashApp, know that not everyone is comfortable with transferring money through an app yet. So if you’re out with a group, splitting with cash is still the most reliable, fastest, and pain-free experience.
The reports of cash’s death have been greatly exaggerated. While there is no doubt that we’re ushering in a new era of digital currency, it doesn’t necessarily mean that cash will be left like dust in the wind. With questions about privacy and security becoming increasingly more relevant in regards to digital payments, don’t say goodbye to Ben Franklin just yet.