What if cash goes away?
This is the question that plagues the ATM industry. What if people go completely to cards, mobile or some other form of digital payment? Of course, it’s fairly easy to make the case that cash is going away based on declining usage. In 2019, it accounted for 26% of all transactions in the U.S., before falling to 19% in 2020 as concerns over cleanliness during COVID-19 caused customers to spurn cash.
Overseas, concerns have risen over the solvency of cash in places such as Australia, where the cash transportation company Armaguard has said that declining cash usage may make its business unable to operate.
All that being said, cash may certainly continue to fall in usage, but there’s good reason to think it won’t go away entirely.
For one, an article by the Federal Reserve Bank of Boston pointed out that “conditions were ripe” for a “fatal cash crash” during the pandemic, but that did not occur.
“In 2021, cash use accounted for about 20% of all payments, and then about 18% in 2022, making it the third-most used payment method in the U.S. That leveling off after 2020 has experts thinking cash use may have found a ‘floor’ it won’t fall below for a while,” the article stated.
There are multiple reasons why cash will continue to exist, and the leading ones are listed below.
Budgeting
Credit card debt is a huge issue worldwide, especially during difficult economic circumstances. And even with debit cards, it is easy to swipe first and ask questions later.
Cash meanwhile provides a great way to budget for certain expenses, such as groceries, restaurants, gas and other purchases.
Due to its physical nature, it is very easy to see how much cash you have left and budget accordingly for purchases. For individuals trying to be more responsible with their finances or spend more effectively, cash is an unmatched tool.
Cash-only vendors
Despite the trend towards certain businesses going cashless, there still are many cash-only places in the U.S. and abroad.
Businesses ranging from mom and pop stores, stands at festivals or rural stores may prefer or only accept cash as payment for a variety of reasons, ranging from the costs of accepting digital or card payments or lack of reliable Wi-Fi.
Either way it’s good to have cash on hand for special events or road trips, because access to digital payments in not guaranteed.
Flexibility
Customers appreciate having options when it comes to all matters of services, whether that be ordering preferences, customizable products or payments.
According to a GoBankingRates survey in 2023, 30.85% of U.S. adults keep between $101 and $500 at home just in case, while only 16.65% said they had no physical cash at all, as reported by Yahoo! Finance.
Many keep this cash at home for use in times of an emergency or simply to have some on hand.
Ultimately, customers want the flexibility to make payments with the method they prefer, whether that be cash, card or app.
Privacy
A final reason is that people respect the privacy of cash. With digital payments, there is an immutable record of every purchase made, but cash leaves no such record.
People still demand the privacy of cash, as a recent protest in Australia revealed. Australians took part in a ‘pull out cash day’ on April 2 to go around and withdraw cash from ATMs to show banks that they still want the option of cash open for their society.
Is cash king?
Cash may not be king anymore, but it is still royalty, and its title should be respected. While its usage may continue to decrease, I don’t think it will ever fully go away. Customers appreciate the physicality and practicality of cash too much for that to occur.
I believe it’s not a matter of whether cards will destroy cash but rather how much cash people will carry in their wallets in the coming years. Either way, ATMs will continue to provide a necessary service for customers in the years to come, no matter how much cash they need.
Categories: Cashless Society
