Dispelling the cashless myth – A seasonal tale

15 December 2016

United Kingdom

Paul Race


Dispelling The Cashless Myth

It’s the holiday season, a time to expand your imagination and, if you’re a child, a time to believe in the magic that accompanies this time of year.  In keeping with tradition many of us in the UK will be taking children to the theatre to watch one of our very British pantomimes.  Here they will encounter villains and heroes (usually a woman dressed as a man) and wicked step sisters (usually men dressed as women).  At some stage they will sit transfixed as the hero ‘flies’ across the stage.  At least that’s the theory.  My own experience is a little different.  Many years ago I took my five year old nephew to a production of Peter Pan.  He sat in silence until the scene where the hero asks ‘So children do you think I can fly?’  At which point he stood and shouted (in a loud voice that haunts me to this day) ‘Of course you can you’ve got a rope sticking out of your back!’

Christmas is also traditionally a quiet news period, when journalists everywhere produce ‘filler’ articles that review the year’s events or even forecast the future in stories that may seem at odds with the evidence.  Doubtless some of these will again quote the inevitability of a coming ‘cashless society’.  Let’s not let the facts get in the way, because people in the States, for example, are not behaving as if that’s going to happen any time soon.

Let’s look at some of the facts in the recently published paper on ‘The State of Cash’, produced by the Cash Product Office at The Federal Reserve System.  In the opening sentence it states that ‘as the payments landscape evolves cash remains a unique, resilient and heavily used consumer payment instrument’.  Its key findings are as follows:

• Cash continues to be the most heavily used consumer payment instrument
• Cash is widely used in a variety of circumstances
• Cash dominates small value transactions
• The average value of cash holdings has grown.

That’s not to say that other payment types aren’t evolving (online and remote payments have increased), but in the US 32 percent of consumer transactions still involve cash and cash is the preferred payment instrument in six of the nine defined merchant categories (including food and personal care supplies, auto and vehicle related and entertainment and transportation).  Cash is still used for more than a half of transactions under $25 and it’s interesting to note that most in-store transactions are in this value range.  As for who uses it – the survey concludes that ‘nearly everyone uses cash’, with an average of 15 transactions a month..

And so in the spirit of pantomime, the audience always knows something the performers don’t – ‘Look kids it’s a cashless society’ – ‘Oh no it isn’t!’

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