Paying for goods with a card is psychologically less painful than paying by cash, according to one study. Over the past two years, people have used cash less often as many businesses chose to stop accepting cash payments during this period. This has stopped people from carrying cash around. In fact, just 16% of individuals say they always have cash on them. So, is cash likely to become a thing of the past, or is it here to stay?
Going cashless
The majority of the public doesn’t like cash. The preferred payment method is via debit or credit card, with 59% typically opting to pay in these ways. The reasons given for this preference include convenience, safety, hygiene, and better financial control. When people carry cash around, 36% use it for small purchases, 10% for tips, and 8% for locations where only cash is accepted. A recent study found that one of the youngest generations in society prefers cash over any other payment method. Generation Z chose it as their top payment choice and were the only generation to do so. Millennials and generation X were found to favor debit cards, while baby boomers opted for credit cards.
Bankless Americans
The National Survey of Unbanked and Underbanked Households revealed that 14.1 million Americans don’t have a bank account. It’s safe to assume that these individuals rely heavily on cash. Until the whole of the U.S. population has access to a bank account, there’s no way that physical money is going to become completely obsolete. But why don’t these people have a bank account? The top reason given in the FDIC Survey was “not having enough money”, while 16.1% said they “didn’t trust banks”. Thankfully, it is easier than ever to identify a reputable bank from a lender trying to take advantage. Factors such as not being transparent about rates, hefty fees, and a difficult application process should raise alarm bells. An honest lender will want the best for their customers and will provide all the necessary information and tools to achieve this.
The risk of going cashless
Despite most Americans preferring cards to cash, 77% of people don’t want businesses to stop customers from using cash. Banishing physical money would also be a real risk to the economy. Not only will it stop the millions of bankless Americans from making purchases, but the sole reliance on technology is risky. Card payment systems often go down, forcing businesses to accept cash only. But if there is no cash, businesses come to a standstill and customers get frustrated. The other option is freebies are given out which costs businesses money. It does happen, though, as Chick-fil-A was forced to give out free meals when their payment system went down in 2021.
It seems very unlikely that America will become a cashless society anytime soon. There certainly are benefits in using cards over cash, but it would be inconvenient for too many people and businesses to completely get rid of physical money.