A recent study conducted as part of Skrill’s Future of Money revealed that 21% of Britons believe that physical money will vanish within twenty years. Although that may seem like a high percentage, it still leaves 80% of the population believing that cash will remain even after twenty years.
However, in practice Britons are already carrying and using far less cas than they ohce did. A third of Britons carry less than GBP5 in cash and are more likely to use a plastic card or pay via mobile phone. In fact, the same study revealed that 13% admitted to buying additional items in order to reach the minimum required for a credit card purchase.
This study is interesting since Britons have a long standing tradition and greater prevalence of using cash when compared with US consumers who moved to checks, followed by credit and debit cards. The take away from this study might be that although consumers are shifting much of the buying behavior to favor cards and mobile payments, cash is still very much alive and well.
One argument in favor of cash is that it's easier to stick to a budget when spending cash. With cash, you can only spend what you have. There are no NSF fees and no going over budget. But, a more compelling reason that physical money is here to stay is the ease of negotiating cash. When you hand cash over for a purchase the merchant or seller immediately has access to the funds. There is no guesswork to determine when or if the payment will be settled and there are no direct fees associated with processing the payment. There is still some cost associated with accepting cash since it still has to be handled, secured and ultimately deposited in a bank
Perhaps the greatest argument for keeping physical currency is the ability to make anonymous purchases which is the cornerstone to any free society. Until there is a viable alternative to cash that has both the properties of immediacy and privacy, cash is here to stay.
What do you think? Will the US move for a cashless society?
Source: PaymentEye October 2012