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A majority of Americans—62%—believe credit and debit cards and other electronic payments will replace cash in their lifetimes, finds a recent Gallup Inc. poll. But that doesn’t mean cash will disappear any time soon, experts say.
Of the more than 1,000 consumers surveyed, only 11% said it is very unlikely and 25% said it is unlikely a cashless society would form in their lifetimes. That leaves 30% saying it is very likely and 32% saying likely.
Younger consumers may already be on the way. They tend to be less inclined to have cash on them. Of those 18 to 29 years old, 56% say they are comfortable not having cash on them. The percentages decline as age increases: 30 to 49 years old, 42%; 50 to 64, 39%; and 65 and older, 32%. The overall figure is 42%.
When consumers do have cash on them, younger ones tend to carry less, with 18-to-29-year-olds having an average of $27.25 in their wallets. For 30-to-49-year-old consumers, the average is $61.73, followed by $48.04 for 50-to-64-year-olds, and $52.30 for those 65 and older.
While many consumers foresee a cashless society, the probability of that happening is slim, experts say.
“Cash usage will certainly decrease in our lifetime, but it won’t go away, and there are a few reasons why,” Andy Schmidt, executive advisor at CEB Inc., an Arlington, Va.-based consulting firm, says in an email to Digital Transactions News. “First, there’s an endpoint problem. You have to have the person, business, or entity you want to pay be willing and able to receive a cashless payment, something that is entirely at their discretion.
“Second, there are plenty of legitimate reasons why people want to pay in cash, including discounts, anonymity, and simplicity (think birthday present), and these reasons aren’t likely to go away any time soon. And finally, while we’ve seen fantastic advances in being able to pay for things like parking and transit with a card or a mobile device, these options presume that both parties have two very important things: battery life/electricity, and a network connection. And when they don’t, they revert to what always works: cash.”
Another aspect is that U.S. commerce is highly fragmented, says Dan Littman, policy advisor at the Federal Reserve Bank of Cleveland. With hundreds of large retailers and millions of smaller ones, combined with hundreds of payment options, and a payment system rife with players, U.S. commerce is exponentially more complex than many others.
Some nations, like Sweden and Denmark, have cash usage rates at approximately 20%, compared with the U.S. rate of approximately 40%, Littman says. But, these are smaller markets with fewer merchants, banks, and consumers. “More homogenous commerce makes a difference,” Littman says. Even in those smaller markets, while cash use is declining, at some time it may get to a point of a diminishing rate of decline, he notes. In the U.S., Littman doesn’t see cash use going to zero, “probably any time in the next 20 years.”
