Should we be moving towards a ‘less-cash’ society?

Consumers today have more ways to complete transactions than ever before, from tried-and-tested methods like credit and debit cards to more recent innovations such as contactless and mobile wallets. Amongst all this, there’s old-fashioned cash – a form of payment that has its drawbacks, but remains highly popular.

It’s not uncommon to hear that we’re moving towards a cashless society, with countries like Sweden leading the way, but with so many consumers still relying on and valuing the benefits of notes and coins, it’s been suggested that a ‘less-cash’ society could be the way to go, without eliminating it altogether.

Why consumers still love cash

According to the Q2 2016 Global Cash Index from PYMNTS.com and CardTronics, €2.2 trillion of cash was used for payments across western Europe’s 15 largest economies in 2015. That figure is forecast to rise to €2.2 trillion by 2020.

Cash also looks set to be around for decades to come in the US, with the Chicago Tribune noting in a recent editorial piece that many Americans “still cling to currency”. There was approximately $1.46 trillion in cash circulating around the US economy as of June 1st 2016, according to the Federal Reserve, so it’s clearly going to be some time before society becomes cashless, if indeed that ever happens.

There are many reasons why people still value cash. Some people like the security and reassurance that comes with storing money as notes and coins in their back pocket – rather than numbers on a digital screen – while others appreciate the universal usability and convenience of cash. As Jonathan Simpson-Dent, chief commercial officer of CardTronics, noted: “Try telling someone in a café in Florence to pay for their cappuccino with a contactless card – it’s just never going to happen.”

He added: “We are seeing a hunger to keep using cash – it’s not an arm wrestle between digital contactless and cash – it’s about how people want to run their lives.”

The downsides

While there is likely to be some resistance to the idea of society going cashless, it should be acknowledged that reducing the amount of cash flowing through the financial system would deliver some important benefits.

In a recent article published in the Guardian, Kenneth Rogoff, professor of economics and public policy at Harvard University, stressed that, while he doesn’t advocate going cashless, a ‘less-cash’ society would be “a fairer and safer place”. He pointed out that an over-reliance on cash has some very serious disadvantages, such as facilitating crime through anonymity and allowing unscrupulous employers to pay undocumented workers.

“Scaling back paper currency would hardly end crime and tax evasion; but it would force the underground economy to employ riskier and less liquid payment devices,” wrote Professor Rogoff. “Cash may seem like a small, unimportant thing in today’s hi-tech financial world, but the benefits of phasing out most paper currency are a lot larger than you might think.”

Jason Lane, group executive for European market development at MasterCard, made a similar point in an article for EurActiv, in which he stated that “a cashless society is a fairer society”. Mr Lane argued that the increased transparency provided by electronic payments makes it easier for governments and law enforcement agencies to combat VAT fraud and clamp down on the shadow economy.

It’s impossible to predict if our society will ever become fully cashless, but it’s clear that a large-scale move away from physical currency and towards electronic payment systems would have to be carefully managed, taking into account the needs of those who continue to value and rely on cash.

Written by Cleopatra Mavredis

Cleopatra Mavredis

Cleopatra is NCR’s Global Marketing Manager for Channel Solutions and has more than 20 years of experience in the ATM industry. NCR’s channel solution portfolio is comprised of APTRA Vision, Inetco Insight and OptiSuite solutions.

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