Give Me Credit Cards: Are You Ready for a Cashless Society?
You’ve most likely heard the saying, “Cash is king.” Well, the reign of cash appears to be slipping away in the United States.
In a recent survey by Gallup, 62 percent of American adults said they expect the United States to become a cashless society during their lives, opting to make purchases with credit cards, debit cards or other forms of electronic payment.
“In the long term, Americans largely predict that cash will become a relic,” Gallup says.
But with data breaches and cyber-thieves continuing to wreak havoc, some Americans may never give up cash, Gallup says.
Overall, just 24 percent of the adults surveyed by Gallup said they make all or most of their purchases with cash, down from 36 percent five years ago.
In the Gallup survey, generational differences regarding cash are especially noteworthy. Those that are aged 18-24 reported they typically have an average of $27 in their pocket when they’re away from home, compared with an average of nearly $62 for those aged 30-49.
“Younger American customers’ lower likelihood to use cash and greater comfort with not having it on hand suggest that the economy will have to adapt,” Gallup says. “This has significant implications for the credit card, banking, and e-commerce industries as well as the local stores and businesses in every U.S. town and city.”
Cashless Vending Machines
Of course, cashless payment options are popping up everywhere in the United States. For instance, A&A Vending Services says it’s aiming to equip all of its vending machines with the capability to accept credit cards, debit cards, and mobile wallet payments, along with old-fashioned cash and coins. Currently, A&A is upgrading 1,200 of its machines with cashless technology, the company says.
“More and more of our customers are looking to make contactless purchases from our machines, so we realized that transitioning to cashless wasn’t something we could put off any longer,” says Les Perry, owner of A&A Vending Services.
Sweden on the Cutting Edge
If people in the United States want a glimpse of what a cashless society will look like, they can take a look at Sweden. Some forecasters anticipate Sweden will be the world’s first no-cash society.
In a study published three years ago, Niklas Arvidsson, a professor at Sweden’s Royal Institute of Technology, predicted that Sweden could become a cashless society by 2030. Now, Arvidsson expects Sweden to be practically cash-free within five years, according to The Guardian newspaper.
Today in Sweden, only about 20 percent of in-store purchases are made with cash, and about 900 of the country’s 1,600 bank branches no longer have or accept cash, The Guardian reported.
Plastic, Not Paper
The move away from cash is reflected in Swedes’ heavy use of plastic. Arvidsson told The Guardian that four of every five purchases in Sweden are done electronically. In 2015, Swedes racked up an average of 207 payments with debit cards, not counting cash withdrawals, according to Swedish news website The Local, citing data from payment technology giant Visa.
A mobile app called Swish also has chipped away at the prevalence of cash in Sweden. As described by The Guardian, the app, backed by several Swedish banks, lets someone with a smartphone instantly shift money from one bank account to another. Swish accounts for about nine million transactions each month, The Guardian reported.
“Swish has pretty much killed cash for most people, as far as person-to-person payments are concerned,” Arvidsson told The Guardian.
Aside from Sweden, countries that are the most ready to move away from cash are Finland, Singapore, the United States, the United Kingdom, Hong Kong, and Norway, according to a January 2016 report from banking giant Citigroup and Imperial College London.
Digital money “is now part of the fabric of the modern world,” the report says. In 2014, more than 360 billion non-cash transactions were recorded around the world, according to the report.
But for now, cash remains king across the globe, Citigroup and Imperial College London say.
“Despite the emergence of a wealth of new digital payment methods and solutions, significant sections of the world’s population still rely on paper money for their day-to-day transactions,” the report says.
‘Attachment to Cash’
What’s holding us back from ditching cash altogether? A devotion to paper money that’s influenced by socioeconomic, cultural, financial, and political factors, the report says.
“The whole idea of my wealth or my income being represented by essentially something I can’t feel or see or count physically is a completely unusual phenomenon for many people,” Bhaskar Chakravorti, senior associate dean of Tufts University’s international affairs school, is quoted as saying in the Citigroup/Imperial College report. “There is an attachment to cash which is a combination of emotional, behavioral, and rational all three are in play. The mix of the three really depends on the geography and the context.”