Is cash dead?

You don’t need to be a member of the royal family to never carry cash.

They don’t carry cash because they don’t need to pay for anything, but the rest of us may be following their example. We still need to pay of course, but we don’t need cash to do it.

There is no need to carry money when you can buy goods and services with a card. Wearable tech and biometric payments might mean we don’t even need to use plastic to pay.

If current trends continue to their logical conclusion, won’t cash soon be obsolete?

Some say cash is already on the way out

Credit and debit cards and digital payments such as PayPal and Apple Pay could run a cashless world. Charity collectors and even buskers have found ways to go cashless.

The UK isn’t alone in enthusiasm for cash-free commerce. Nordic countries are leading the way, with Sweden ranking top in the EU for card payments, followed by Denmark and Finland.

There could be some big advantages. Cash actually costs money. It is expensive to produce, and although the new plastic notes are supposed to last longer as well as be harder to counterfeit, they still represent a large cost. Coins are even worse, with ‘coppers’ and most ‘silver’ costing more to produce than they are worth, despite the fact they are now nothing more than plated steel.

Cash is all too easily lost or stolen. If we did away with it, we could avoid the security costs, while banks could save on strong rooms, counting and handling costs.

We really are at the stage where we can replace cash with electronic payments.

Sub-Saharan Africa has shown the possibilities, embracing ‘mobile money’ based around mobile phones to overcome a lack of conventional banking facilities. Kenyans began to adopt a system called M-Pesa and today it is used by over two thirds of the adult population. Users top-up their accounts and transfer money with a text message; the recipient then takes their phone to a vendor. No banks are involved. A modern economy can work perfectly well without cash if it has to. 

Others are not so sure

But it may be a little too soon to write off cash just yet.

Cash is physical. We can trust it to still be there if the power goes out. As recent problems with TSB and the international Visa payment infrastructure have shown, electronic money on your phone or card is not quite as dependable as notes in your wallet. A computer glitch on the other side of the world, a power cut or being out of range of a mobile or wireless signal can all mean electronic wealth is locked away.

Cash is a complete payment system that is always ready to use. You don’t need extra equipment, certainly not a global network, to make any payment you wish.

Cash is also anonymous. We may not always want a record of what we have bought or how much we have spent to be available to others.

Plus of course, there is the psychological quality to holding cash that digital currencies can’t quite match. People store up cash for emergencies, to keep a safety net, and to ensure that whatever happens, their wad of cash will be there for them.

Physical money has been with us in one form or another for thousands of years. It looks as though most of us will continue using it for a while yet.

Whether your money is traditional or electronic, you may want some help to make the most of it. The Continuum Cash Calculator could be a good place to start.

Whether your money is traditional or electronic, you may want some help to make the most of it. The Continuum Cash Calculator could be a good place to start.

The value of investments can fall as well as rise and you may get back less than you invested.

Sources:

blog.bluepay.com – How Soon Until Wallets And Cash Are A Thing Of The Past?

weforum.org – Cash will soon be a thing of the past. Won’t it? – 23 May 2016

bbc.com – The truth about the death of cash – 24th July 2015