Are we on our way to becoming a cashless society?
As we have discussed in previous blog posts, digital payment
options are increasing exponentially and as such, people are paying with cash
much less often. It is much more
convenient when you can simply pay with a swipe of a card or a few clicks on a
computer or smart phone.
Take a moment and think about the purchases you made this
week. How many of those purchases were
made with cash? If you did use cash, did
you have an option to use some form of digital payment? You can use plastic or an online account to
pay for almost anything these days. Even
vending machines now take credit/debit cards for payment. As we have been working on this project I have been
convinced that we are well on our way to saying goodbye to cash.
Then, I started researching for this particular blog
post.
It seems as though the answer isn’t as clear as I thought.
There are many articles with headlines indicating that we are quickly on the way to becoming cashless, but once you read more closely, most agree that it will never happen, at least not completely. For example, Christopher Mims states “The problem with all of the arguments for a cashless society is that they’re rational, and our attachment to cash is not.” (1)
There are many articles with headlines indicating that we are quickly on the way to becoming cashless, but once you read more closely, most agree that it will never happen, at least not completely. For example, Christopher Mims states “The problem with all of the arguments for a cashless society is that they’re rational, and our attachment to cash is not.” (1)
Even a study conducted by Mastercard concludes that we are
quite a way away from becoming totally cashless. While the value of cashless transactions is
higher, the number of actual cash transactions outnumbers those without cash,
as depicted in the graph below. (2)
One reason there is constant hype and headlines convincing
us that this is coming is because banks and financial institutions will win big
if we were to become cashless. Fees from
debit card transactions and the high profitability of credit cards are a big
income boost for them. Also, government
would benefit from a cashless society because of the cost associated with
printing, storing, moving and guarding actual cash. (3)
For the average consumer though, there is a higher personal
cost of ditching cash. Psychological
research clearly shows that when we spend actual cash, we spend more
sensibly. Of all the possible forms of
payment, cash is the one that actually causes us to be mindful of what we are
spending. It is more transparent and
connects us to the fact that we are parting with our money. (4)
It is still too early to make a prediction of where this
will lead, but it appears that, for our own sake, cash will be around for some
time to come. That’s not to say it will
never disappear. If you had told me 10
years ago that my phone would serve as a wallet, calendar, camera, video
recorder, alarm clock, and all the other things I use it for, I would have
laughed in your face. Now I sometimes
think my smart phone is actually laughing at me.
(1) Mims, Christopher. "Why We'll Never Get a Cashless
Society." MIT Technology Review. MIT Technology Review, 28 Feb.
2012. Web. 29 Oct. 2013. <http://www.technologyreview.com/view/427088/why-well-never-get-a-cashless-society/
(2) Mims, Christopher. "We Are so Far Away from the
Cashless Society, Reveals New Study from Mastercard." Quartz. N.p.,
27 Sept. 2013. Web. 29 Oct. 2013.
<http://qz.com/128891/we-are-so-far-away-from-the-cashless-society-reveals-new-study-from-mastercard/>.
(3) Jones, Alex. "A Cashless Society May Be Closer Than
Most People Would Ever Dare To Imagine." Infowars A Cashless Society
May Be Closer Than Most People Would Ever Dare To Imagine Comments. Free
Speech Systems, LLC Company, 30 Mar. 2012. Web. 29 Oct. 2013.
<http://www.infowars.com/a-cashless-society-may-be-closer-than-most-people-would-ever-dare-to-imagine/>.
(4) Burkeman, Oliver. "The Cashless Society Is Coming.
More Reason than Ever to Use Cash." Web log post. The Guardian.
Guardian News and Media Limited, 27 Sept. 2013. Web. 29 Oct. 2013.
<http://www.theguardian.com/news/oliver-burkeman-s-blog/2013/sep/27/cashless-society-spend-money-clinkle>.
I couldn't agree more with this post. I wish we could do away with credit/debit cards because people get into so much trouble with credit cards and end up in debt for years. That doesn't happen with cash. But I guess its sort of a double-edged sword in a way because without all of these new technologies, things like online buying become impossible again.
ReplyDeleteI have experienced first hand the perils of credit card shopping, but in today's world, you almost have to use a credit card for online purchases.
ReplyDeleteAny time you make reservations of any kind, they require a card number, and credit cards are safer for this than debit cards. With a credit card, it is much easier to dispute and resolve an issue if an unauthorized user uses your card. No actual money has been stolen from you, and the credit card companies are good about helping in these situations. However, if someone gets your debit card information, your money is gone unless you can get your bank to agree to reimburse you.
I do agree that I am much less likely to overspend with cash though. It seems much harder to hand over a $20 bill than it is to hand your credit card over for a $100 purchase.
This was a great post, I too am surprised to hear that we aren't as close to going cashless however I can see both sides of the issue. Cash is really safe because unlike credit and debit cards with cash you can't spend what you don't have, however it is so nice not having to worry about going to the ATM to get cash out. My bank has really been pushing using our cards by offering incentives with using my debit card at certain stores by offering discounts or sending me coupons when I use my card at a store. Also I hear some credit cards give you points for every dollar you spend that you can trade in for gift cards, electronics, etc.
ReplyDeleteA lot of retailers and service providers also like their customers to use a debit transaction instead of a credit one because their surcharge is less. This relates directly to what I mentioned above. When you use credit, and you have issues, sometimes the credit card company has to absorb these losses. Therefore, they pass that onto the retailer by charging more per transaction. If you chose a debit transaction, the amount is directly taken from your account so it is between you and your bank to work it out.
ReplyDeleteCash will always be around regardless of what anyone thinks. I am one who uses my debit card and online services a lot. I have come to the point where I barely ever have cash on me but think about it, how can we live in a world without the power of the paper bill. I just can't see the reality in that. I think it would be kind of awkward, I would really feel the world is about to end. Besides as stated previously, there are still many people who don't even use debit cards credit cards, but they are mostly the older generations. But you never know, anything can happen so I wonder if this would ever be a cashless world. Maybe after all of the Baby Boomers and Generation Y pass away we could revert to that because now a days most younger folks do debit and credit...What does anyone think about that??
ReplyDeleteSince this blog is just a snippet of the entire project, I focused only on the United States, but some countries are trying to force its citizens into giving up cash. Israel, for example, is one of these. While some citizens are fighting it, the government there has much more control than ours does here in the States. There are several articles out there, but the one below is pretty informative. The article explains how they will implement it without actual credit cards.
ReplyDeleteThis is truly one of those interesting subjects to watch unfold.
http://www.timesofisrael.com/government-dream-of-a-cashless-society-already-a-reality/
The Financial System of today’s world is an innovation. I actually go to the ATM less than I had been in the past, I actually don’t need cash as much. I usually pay with credit or debit card, but the problem is that I see myself having less control of what I spend. One disadvantage could be “PRIVACY”, we don’t want our transactions to be public. We always get calls Credit card companies. They call you and say “you were in New York yesterday and bought this or that”. I have a friend that have a huge debt with credit cards shopping, he just can’t get control of what he spends.
ReplyDeletenice topic
Privacy does tend to be an issue, but sometimes that can be a good thing. We mentioned earlier about security, and by monitoring our habits and spending trail, our financial companies can protect us from fraud. A former boss of mine got a call at the office one day from his credit card company because his card had been used in two different cities within an hour. He physically had custody of his card, which he had used to buy lunch, but someone else had "used" the exact same card in Atlanta, GA just prior to that. The card companies computer system threw a flag which sent the notice to a person to investigate. After calling him they decided that his card had probably been skimmed (see previous post concerning this topic) so they cancelled and he destroyed all cards associated with that account. Had the company not used this technology, this could have become a serious problem before it was recognized.
ReplyDeleteAwesome blog! Great topic! I love the topic because it is something that relate to everyone in the society. Honestly, I don't even remember when was the last time I carry cash in my wallet. People just don't need cash anymore. Not only because we can pay by card by just swipe it, but also because of the inconvenience of coins. However, one of my friends told me she felt insecure if she didn't take any cash with her. I think it is understandable because cash is the idea of currency after all. Again, great blog! Made me think a lot.
ReplyDeleteI personally only use cash and this has had both positive and negative affects on my life. I believe that we are more responsible financially if we only use cash because it feels different to hand someone bills instead of swiping a card. However there have been many times in my life that I felt like i needed a card. Whenever you have an issue such as your car breaking down that you do not expect you are not going to have enough cash on you to get it fixed or even possibly to take a taxi home.
ReplyDeleteExcellent blog. I found the bit about people being more careful when spending cash as opposed to card or some other form of payment very illuminating. I definitely budget more when I am using cash, as I can instantly see my overall balance of cash declining. With debit or credit cards, I am not made instantly aware of my declining balance, therefore I think about it less when making a purchase. I also attempt to try to make my cash purchases "round up" closely to the next dollar, as I don't like carrying change around at all. I think cash will always exist, at least in my lifetime, but I wonder about the implications if it were removed. I imagine it would be much more difficult for black market enterprises (drug dealing, illegal gun purchases, prostitution, etc.) to occur, which could be a potential cause for the federal government to consider going cash-less.
ReplyDeleteI found your blog very interesting, I use to hate the fact that my company for my debit card guarded my account so closely, as they have froze it many times. When I went back to school and had numerous charges on the same day for books, supplies, and rent, they froze my account until I could call back to confirm they were in fact my charges. But as of 2 weeks ago my thoughts on this have changed drastically, I had a large amount of fraudulent charges placed on my debit card account and my company called me within the hour. After filling out the correct paper work, my money was on its way back to me with minimal headaches. I have been very conscious lately to never allow my cards to leave my sight, and using cash for almost all of my transactions.
ReplyDeleteThis blog was very much needed. I really do think we are going to a cashless society. There is only one think i pay for that uses cash, my haircut, but even then i have use electronic payment before, but 90% of the time its cash. Even though this is more efficient and effective. We will wish for cash back one day, everything in a virtual world scares me. Some day this will cause huge problems, ill probably never live to see it though.
ReplyDeleteIt is an interesting topic. That is what i was thinking before too. World turns flat! It is really convenient to swipe or click to make a payment. But i actually still prefer pay in cash. By paying in cash, i feel like i have more control on what i spend rather than credit, debit card. As i spend time to count money to pay, i can actually FEEL how much i spend, but just swiping my card, it is hard.
ReplyDeleteI think that nowadays we can pay almost all the things that we need with credit/debit cards. They enable us to make any transaction or payment easier and faster than cash. I still prefer to use cash to make payments because I feel that I have the control of how much I am spending and sometimes I feel insecure giving information of my credit/debit card to purchase something on the Web. For that reasons, I feel more comfortable paying most of the things in cash.
ReplyDeleteThis is intriguing because I haven't thought of a cashless society before and as interesting as it may sound, it's probably not something that would really benefit us. It's scary to think about that it could happen in the future. It's true that I barely pay anything using cash nor do I ever have cash on me to pay for things. Every form of payment is either done by my credit/debit card, check, or online payments. It is true that when I do have cash on me I am more cautious to what I'm spending it on. It last a lot longer too, but with my credit/debit I tend to spend more because it's so easy to just swipe it until you see the repercussions.
ReplyDeletePaying with a Debit/Credit card is really convenient, but I hope that cash does not disappear. I like the ability to have different payment options, and I always imagine that if I am stuck in the middle of nowhere, America, cash would be more valuable because it is accepted everywhere. However, after thinking back on it, I have not paid with cash in a while.
ReplyDeleteWhat a good blog!
ReplyDeleteAlthough I don't believe that cashless society will ever come, at least in the near future, I am personally live cashlessly: I swipe my card to pay grocery, gas, food in restaurant etc. I get paid by check or through direct deposit. Is it because I don't like having coins?
But just by thinking about the huge risks and disastrous results of online criminal if all money is restored and used digitally, I hope that day will never come.
With how the world is becoming more technologically advanced its hard to believe that cash still prevails as the primary form of payment. I personally think it should be the only form of payment, eliminating the opportunity to spend what you don't have thus not affording accumulating a bunch of credit card debt.
ReplyDeleteJonathan, how do you feel about debit cards?
ReplyDeleteWith a debit card connecting to your checking account, you cannot spend more than you have. Also, many students are able to eat at the various food venues across campus because of the 49'er debit card program.
Do you feel that this form of payment is the same as cash since you cannot spend more than you have?
I
I don't think we'll be a cashless society any time soon but its definitely somewhere in the future. Becoming a totally cashless society will take some time because quite frankly it would ostracize an entire sub-culture that works illegally, or engages in other activities that require only cash payment. However, this was a very interesting read!
ReplyDeleteAs a waitress, it would be very interesting to see how tips would be adjusted without cash. I also agree that cash is psychological. The other day I was in the grocery store buying chocolate milk and cinnamon roles against my guilty conscience. When it was time to pay, I had all this cash in my wallet but for some reason wanted to use my debit card. I later realized it was probably because I knew I really shouldn’t be eating all of that heaven and by using my card made it seem less of a problem because it didn’t seem as if I was losing as much.
ReplyDelete