10 Apr Cash: A Dying Payment Method?
When was the last time you used cash to make a purchase? Stop and think for a moment. Are you surprised by how long ago it was? Perhaps you don’t even remember. With the rise of chip cards, contactless payments, smartphone payment methods, and direct deposit smartphone apps, people are definitely using cash less and less. And this, of course, begs the question: Is cash a dying payment method?
To put it briefly: Most experts seem to think so. Here is why—and why you should care.
“Cash is dying and won’t be missed.”
Experts at The Telegraph made their stance pretty clear in April 2016 when they published an article titled “Cash is dying and won’t be missed.” The author points out how quickly Britain has embraced contactless payment with credit cards, stating, “…we don’t just crave ever greater convenience, but come to expect it, even demand it. A speed of service that once seemed miraculous comes to seem entirely normal.”
A December 2016 article from TransferWise echoes the same sentiment: “Whether or not we’re ready to face the issues thrown up by the demise of paper currency, it’s happening. Cash transactions worldwide rose just 1.75% between 2008 and 2012, to $11.6 trillion. Meanwhile, non traditional payment methods rose almost 14% to total $6.4 trillion. This group includes online and mobile payments, and all modern cashless alternatives.” The numbers speak for themselves. The article even points out some of the hidden costs of using cash. A Tufts University, for example, found that the cost of using cash totals to around $200 billion each year, when you factor in the costs of collecting, sorting, and transporting money as well as those of ATM fees. Moreover, according to the article, an estimated 87% of currency contains harmful bacteria.
Should I care if cash disappears?
Sure, many people have developed a habit of never using cash, but there are still some important things to think about when considering the decline of cash as a payment method.
Risk of debt
First, there is the risk of debt that comes with relying on credit. As the Telegraph article remarks, “a frictionless economy encourages us to spend money thoughtlessly.” If you are someone who has a difficult time paying off your credit card balance in full every month, then paying for some things in cash may very well be a smart financial strategy for you. Without the option of cash, you may want to defer to smartphone payment methods or apps like Venmo and Paypal for some of your expenses.
In addition, there are emergency situations to consider. While it may be hard to imagine now, there always lies the possibility of being forced into a situation where cash is the only viable payment method. If a natural disaster strikes your community, for example, cash may be the only thing that allows you to purchase the things you need while power is down.
So while we may be a society that has advanced significantly since the days of cash, there are some benefits of cash that other payment methods simply cannot duplicate.