The reports of cash’s death are greatly exaggerated
There’s no questioning physical cash is in decline – according to Euromonitor International, 2016 saw cards overtake cash as the dominant payment method worldwide.
Between cards, tap-and-go functions on our smartphones thanks to Apple and Android Pay, as well as the rise of cryptocurrency like Bitcoin, who needs notes and coins bulking out their wallet?
But there’s a reason money – in whatever physical form it may take – has been around for an estimated 10,000 years, and there’s still reason to believe we’ll be using cold, hard cash for years yet.
What happens when the lights go out?
What small business hasn’t had their card machine mysteriously go kaput?
Whether it’s the fault of your ISP or the machine, getting back online is a priority and the more immediate issue is keeping sales ticking over.
So, the hastily, hand-scrawled “Sorry, cash only” sign goes up. Because cash always works.
As Bhaskar Chakravorti and Dr. Benjamin D. Mazzotta wrote in their paper ‘The Cost of Cash in the United States’, one of the main appeals of cash is that, “It requires no intermediaries; any two counterparties can come together face to face and transact with precision and speed.”
When card machines or internet connections get involved, there’s a third party to rely on. Cash is simple: if you’ve got it, you can exchange it directly for goods or services – there’s no need for someone else to facilitate the transaction.
You can’t hack cash
Cashless payment options might be quick and easy, but security challenges still need to be overcome before mass uptake.
In fact, according to Drop Labs, the most rudimentary means can be used to hack cashless payment technology such as Apple Pay. Fraudsters simply purchased stolen identities, complete with credit card information, and used this to convince both the software and manual checks that they were legitimate customers.
So, while a cashless society may imply a safer society, potentially limiting crimes involving cash theft, money on cards and phones can be stolen too – it just requires a different skill set.
But cash can cost money
As of 2016, a single U.S. penny – which is worth one cent – cost 1.5 cents to make. Likewise, one nickel – worth five cents – costs around 6.32 cents to mint.
It’s getting to the point where cents no longer make sense.
Then there’s the time cost of using cash for a business. Tap-and-go facilities for both cards and phones are done in a matter of seconds, and remove the time required for someone to work out correct change.
Card up, but don’t cash out
There’s no question you need to prepare for a future – a pretty immediate one at that – where card and phone payments are your bread and butter.
But don’t ditch the cash drawer just yet.
If nothing else, where’s the magic in the Tooth Fairy giving your kids a bank transfer for their milk teeth?