Cash is here to stay - we know, you've heard that before. Rather than declining in popularity in recent years as predicted, it has actually remained a leading form of payment in many parts of the world. In a study of 2019 payment habits in the United States, 24% of Americans said that cash is their preferred payment method, a statistic that has held steady over the past few years. About a quarter of Americans also reported a preference for cash in 2016, 2017, and 2018, and the percentage of self-identified cash users actually increased by one percent between 2018 and 2019. Sure enough, 26% of all purchases in the United States in 2019 were made with cash - only 4% lower than the percentage of purchases made with a debit card, which was the most common payment method in the United States in 2019.
These statistics present a very different narrative than the oft repeated one that condemns cash as a thing of the past and insists the way forward is to phase it out entirely. Considering the ubiquity and convenience of cashless payment options in our postmodern world, why does the use of cash persist?
First of all, while cashless options claim to have the advantage of convenience, or to have improved on that aspect, sometimes practical is preferable. Many people like to keep cash on-hand for small purchases because it helps them budget and prevents credit card debt from creeping upward. In 2019, nearly half of all payments under $10 in the United States were made with cash. Not to mention, the flat fee that’s sometimes tacked on to card payments makes cash the obvious choice in small-spending situations. Some businesses even demand cash payment for small purchases.
In the United States, where small purchases account for the majority of cash use, large cash payments are frequently associated with fraud. If a person tries to spend hundreds or thousands of dollars in cash at once, they might be accused of attempting to evade taxes, or the transaction might be treated as suspicious due to the lack of an audit trail. In the majority of U.S. retail stores, bills as small as $50 are automatically suspected of being counterfeit and must be verified before they are accepted. Yet, in many other countries, some of which boast exceptionally successful economies, large cash payments are common and unencumbered by stigma.
In Germany, for example, cash is the dominant payment method, despite the fact that Germany is also a technology leader. German citizens overwhelmingly prefer cash, citing reliability and privacy protection as two of the most prominent reasons. In 2018, 48% of purchases in Germany were made with cash - that’s double the percentage of total purchases made with cash in the United States during the same year. Likewise, the average person living in Germany carries over twice the amount of cash in their wallet as the average person living in the U.S. does. These findings suggest that cultural norms, not logic, play the biggest role in shaping a person’s feelings toward cash.
It’s also important to remember that access to a bank account isn’t a given for everyone, and many people around the world are not in a position financially to open one even if they want to. Cash remains an essential method of payment for those who have no alternatives. But even for those of us with access to convenient digital banking, carrying cash is great insurance in case of an emergency. Sometimes technology doesn’t do what it’s meant to, no matter how well designed, whereas cash in your wallet is guaranteed to work when you need it.
Last, all other reasoning aside, some people just like the experience of using physical money, and that’s okay. There will always be those who would rather write a letter than send an email, or would rather choose products from a shelf than shop online, and there will always be people who would rather feel the paper money in their hands than swipe a card or tap a phone screen. There’s a sense of realness to physically handling cash (and perhaps even checks?!) that some find attractive, and that can’t be recreated digitally. It just comes down to personal preference, and cash will endure as long as there are people who intentionally choose to use it.
While cashless payment methods keep getting easier and more convenient, there’s no sign of them driving cash out of the picture completely, nor any reason to believe the two won’t continue to coexist, though maybe more peacefully in some societies than in others.