Cash is No Longer King

176958068It is no longer “all about the Benjamins” or at least the paper ones. In the past having a wad of bills in a money clip was the best way to demonstrate one’s financial means to pay for goods and services. Paying cash was often a means to bargain for a lower price (this is still the case with small vendors). However, we are quickly moving to a far more cashless society. Moving to less cash is clearly a trend as the Pew Research Center in December 2018 found that 29% of adults made no purchases with cash during a typical week compared to 24% in 2015. And the converse is true as well with those who made almost all their purchases with cash have declined from 24% to 18% during the same period.

However, there has been push back to businesses who do not accept cash. There is still a large % of “un-banked and under-banked” population particularly in poor regions. In Philadelphia for example (one of the poorest large cities in the U.S.) 6% of the residents have no banking relationship at all, and more than 1 in 5 were considered under-banked according to 2017 FDIC data.

States and large cities have passed laws requiring retailers to accept cash. And some are barring landlords from solely requiring electronic payments.

Assuming that retailers continue to accept cash, is the move to being more cashless society really a bad thing?

No, it’s not. Clearly debit cards, credit cards, PayPal, Venmo Apple Pay, all facilitate purchases. Personally, I have evolved to far more electonic purchases than cash. I have the discipline to spend the same electronically as with cash (that discipline is not universal) and I reap the cash back rewards for doing so. Also from a business perspective it provides a better means of record keeping.

But clearly there are pros and cons of cash vs. electronic payments both for an individual and for society at large:

Cash pros

1. Discipline for those who need it

2. No debt

3. Psychological benefit of not outspending your budget.

4. No exposure to data breach

Electronic pros

1. Convenience

2. Lower crime

3. Facilitates online purchases

4. Cash Rewards

5. Always a paper trail (that’s good in general, but not if you are hiding something)

From the business side, I am still amazed at some businesses which ONLY take cash. Clearly, they are trying to shelter some of their income and pay less taxes as they seek to reduce card transactions expenses, but not offering a card option is foolish. Conversely a business which doesn’t allow cash payment is also foolish (and will be prohibited) and will eliminate a portion of their consumers.

But the overall trend is clear…while we will never fully get there, we are surely moving more cashless than ever. Less paper makes my wallet thinner (except for those credit cards)

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