Why are advocates of a “cashless society” so against cash? Mostly because of, well, money.
Yves Mersch, a member of the Executive Board of the European Central Bank, wrote in a 2017 article advocating for a cash society that advocates for a “cashless society” tend to fall into three camps: “The first camp, the alchemists, wants to overcome the restrictions that the zero lower bound (ZLB) imposes on monetary policy. The second, the law and order camp, wants to cancel the primary means of payment for illicit activities. And the third camp, the fintech (financial technology) alliance, anticipates major business opportunities arising from the elimination of the high storage, issuance, and handling costs of cash that the financial industry currently faces.”
However, what these camps don’t take into account is the popularity and necessity of cash in our society.
Cash is Popular
In a 2019 poll, GoBankingRates.com conducted an online survey, polling 1,000 people from across the U.S. Their findings indicate that cash is still popular among Americans. 37% of respondents cite cash as their preferred method of payment, which is well beyond credit cards, which only 22% of respondents preferred.
Additionally, “Thirty-four percent of Americans who prefer cash said it’s the safest payment method that helps protect against fraud, and 33% said they use it because ‘it is accepted at most places and vendors.’”
In their report, 2020 Findings from the Diary of Consumer Payment Choice, the Federal Reserve Bank of San Francisco found that consumers used cash for 26% of all payments and about 47% for all payments under $10.
In fact, by the end of July 2020, the year-on-year growth of the value of cash in circulation in the U.S. reached almost $228 billion.
Cash is Important
All this aside, the need for cash in our society really comes down to opportunity and equality. In their 2019 Survey, “How America Banks: Household Use of Banking and Financial Services”, the Federal Deposit Insurance Corporation (FDIC) found that “An estimated 5.4 percent of U.S. households were “unbanked” in 2019, meaning that no one in the household had a checking or savings account at a bank or credit union (i.e., bank). This proportion represents approximately 7.1 million U.S. households.”
The survey also found that, “unbanked rates were higher among lower-income households, less-educated households, Black households, Hispanic households, American Indian or Alaska Native households, working-age disabled households, and households with volatile income.”
This means that a disproportionate number of households that are unable to function in a cashless society are from minority groups. Ensuring that cash is accepted at businesses and remains a vital, viable form of payment levels the playing field.
In a society that is already struggling with record unemployment and underemployment, we need to strengthen our resolve to assist those less fortunate in any way we can. Allowing for cash payments does just that.