Cash is no longer coin of the realm
Experts expect more businesses will increase digital footprints
Cash is clearly no longer king.
With the rise of digital wallets and tap-and-pay debit cards, you don’t need dollars and cents to catch a ride in an Uber, or to nab a meal at some fast-casual restaurant.
So will the new decade mark the dawn of a cashless society?
Not likely, experts say. But the list of spaces where cash is completely unnecessary probably will grow.
“Those opportunities where you can opt not to use cash I think will increase,” says Shelle Santana, a marketing professor at Harvard who has studied the cashless trend. “The question is whether there will be an increase in where you are prevented from using cash. ... That’s the interesting dynamic to watch in 2020.”
Fewer Americans are using cash for even the smallest purchases. While consumers used cash for 46% of purchases of less than $20 in 2015, they used dollars to pay for just 37% of similarly priced items this year, according to the payment systems company Square.
Even the kettle-toting Salvation Army workers, busily sounding a bell during the holiday season, now accept digital donations. Passersby can use their smartphones to scan smart chips or QR codes on the red kettle signs and give a digital contribution instead of scrounging for change. It’s the Salvation Army’s first national cashless initiative.
Faster without cash
Retailers who’ve cut out hard currency say that they’re able to speed up transactions while reducing the risk of theft and the costs of securing and toting large amounts of cash to the bank.
But there also has been pushback on the cashless trend as some lawmakers and activists argue that it excludes those who are underbanked or who don’t have a bank account or credit card at all. Several cities and states have passed or are considering laws that require businesses to accept dollars and cents.
In March, New Jersey began prohibiting most busi
“The question is whether there will be an increase in where you are prevented from using cash . ... That’s the interesting dynamic to watch in 2020.”
Shelle Santana a marketing professor at Harvard
nesses from going cashless. San Francisco passed a similar measure in May. And New York City may vote on its own version of such legislation in the new year.
“A cashless business model is discriminatory by design,” says New York City Councilman Ritchie Torres, who is the sponsor of the pending bill.
“My legislation ensures that all New Yorkers, regardless of their ability to access credit or debit cards, can purchase goods and services at all food and retail establishments.”
Among U.S. households, 6.5% did not have bank accounts in 2017, according to the FDIC, and 18.7% had accounts but also used financial services outside of insured institutions.
Communities of color are particularly affected. Among African American households, 16.9% were unbanked in 2017, the most recent year data was available, and 14% of Latino households did not have a bank account, according to the FDIC.
Amazon offers cash options
But it’s not just people without credit and debit cards who may balk at being told they can’t use cash. In an era when data breaches occur at institutions such as credit rating agency Equifax, some consumers worry that cashless payments can intrude on their privacy.
Amazon, a company that in many ways defines the digital economy, has taken steps to better accommodate shoppers who prefer to pay with bills. In September, Amazon PayCode became available in the U.S., enabling shoppers to make a purchase online then head to Western Union to pay for it with cash.
The company also has expanded Amazon Cash, a service it began in 2017, that allows shoppers to go to convenience stores and other locations to add $5 to $500 in cash to a balance that can be tapped to make online purchases.
Even with those services, the U.S. is quite a way off from becoming a society as in Sweden where roughly 80% of purchases are done using a card or other cashless exchange, says Santana.