There has been a lot of talk over the past years about the United States becoming a cashless society. While this idea was further pressed during the global COVID-19 pandemic, what is bearing out in the U.S. just doesn’t support the idea of the United States going entirely cashless.
For one thing, a cashless society would leave out a great swath of people living in the United States. As of 2020, there were 18% of U.S. households that were either “unbanked” or “underbanked” in the United States. That means that millions of American households either do not have bank accounts or have to use alternate financial services, such as money orders, check cashing services, payday loans or payday advances, pawn shop loans, auto title loans, or tax refund advances. Without access to a bank account, credit cards, or debit cards these Americans would simply be left to fend for themselves in a cashless society.
One thing that cashless advocates tout is the ease of cashless payments. However, the Federal Reserve Bank of San Francisco, in their latest payment study, 2021 Findings from the Diary of Consumer Payment Choice, found that 19% of all payments are made using cash, including 28% cash payments for in-person payments.
Cash in Circulation
Cashless diehards have also not taken into account the amount of cash currently in circulation. According to the U.S. Currency Education Program, as of December 31, 2020 there was “there was $2,040.7 billion in circulation, totaling 50.3 billion notes in volume.” U.S. dollars are not only of value within the U.S., but abroad as well. It is estimated that, “As much as one-half of the value of U.S. currency is estimated to be circulating abroad.”
With the importance of cash to the American economy and economies around the world, it doesn’t seem likely that the U.S. will become a cashless society anytime in the near future.