Cash in the Future

August 4, 2016

United States

Bob Allexon

Glory Global


We have all heard that cash as a payment method is in decline and will be overtaken by other payment systems in the near future.  In fact a recent Gallup survey reported that 62% of all Americans expect the U.S. to become a cashless society in their lifetimes.  This is despite the fact that 54% of Americans still like to have cash in their wallets “at all times."i 

The rapid emergence of alternative payment methods continues, while well-publicized data breaches elevate concerns over electronic payment methods.  Against this backdrop, cash remains popular.  According to the Federal Reserve’s Cash Product Office study data, 40% of retail transactions are paid in cash.  Of course, the % of cash transactions varies widely by retailer.  A convenience store or QSR will conduct more cash transactions than a furniture retailer for instance.ii

Cash Has Staying Power…Why? 

Cash is a secure payment method for merchants and P2P transactions.  In fact one prominent industry blogger wrote, “There’s no question today that many of us think that cash might be making a comeback.  Cash offers us security unlike any other payment method.”iii   Provided the currency is genuine, there is no risk in accepting cash and no delays in settling the transaction.

Cash is not only a secure payment method, it is private.  The truth is that cash payments are preferred by many consumers including the un-banked and under-banked.  Others simply prefer to avoid the ‘audit trail’ inherent in most electronic payment methods or any potential service fees, such as may be charged by the bank.  It is also preferred by small merchants who similarly can avoid the service fees charged for debit or credit transactions.

Cash is convenient, especially for smaller transactions. The Fed’s April 2014 report states “Cash plays a dominant role for small-value transactions, is the leading payment instrument for many types of purchases, and stands as the key alternative when other options are not available.” Making the point that cash is very much also a contingency payment method.  Such is the case in crisis or disaster recovery situations.

While we all expect a continued decline in the number of cash transactions over time, total extinction is unlikely in the foreseeable future.   Until other payment methodologies satisfactorily address the security, privacy, and convenience issues, cash will remain a viable payment option.   In short and until further notice, cash is here to stay!

Robert Allexon is an Independent Business Analyst and Consultant. His career spans five decades in technology-based durable goods sales and marketing and he is an expert in cash automation.

i) Most Americans foresee death of cash in their lifetimes, July 29, 2016.
ii) Cash Continues to Play a Key Role in Consumer Spending: Evidence from the Diary of Consumer Payment Choice,  Federal Reserve Cash Product Office, Barbara Bennett, Douglas Conover, Shaun O’Brien, and Ross Advincula, April 2014
iii) Screening Near You: Cash will Fly, Richard Buckle, ATM Marketplace, September 19, 2014.

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