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IS CASH ABOUT TO DISAPPEAR?

IS CASH ABOUT TO DISAPPEAR?

IS CASH ABOUT TO DISAPPEAR?

Is cash about to go the way of VCRs, pay phones and black and white televisions? Society is changing rapidly, and a growing chorus of economists is singing about a cashless society. With an ever-increasing selection of electronic payment methods, cash may become obsolete sooner, rather than later. It may surprise you to know that more than half of U.S. adults now report they do not use cash in their typical weekly transactions:

As is often the case with so many aspects of society, electronic payment technology is far more advanced than our willingness to adapt to it. With the available technology our society could operate fully cashless, but many people are not quite there yet. One stumbling block is the estimated 11 percent of Americans who do not use the Internet or smartphones. Add to that the small percentage of Americans – mostly poor people – who do not have an association with a bank, and it appears there are citizens who rely on cash.

Still, for over a decade the U.S. Federal Reserve has been keeping an eye on emerging payment and cash transfer technology use among U.S. citizens. According to the Fed, there is currently about $1.7 trillion in cash in circulation in this country. But at what cost? Due to the rising prices of metals, the cost of producing pennies and nickels has exceeded their worth since 2006, resulting in financial losses to the Mint, according to the U.S. Government Accountability Office. Cost of production is up, and demand is down. The Fed also reports that the demand for lower denominations of cash, such as the $20 bill, is continually decreasing. That seems to signal that more people are jumping on the electronic bandwagon.

Much like what we have seen with the retail industry and the newspaper business, certain enterprises can become obsolescent quickly. If a cashless society becomes a reality, it is likely to affect the labor force in large numbers. Overall, far fewer human beings are needed to accommodate digital payments than are needed to handle cash. Institutions such as banks, credit unions, casinos, and a host of other businesses that handle large quantities of cash will certainly reduce their staffs. Self-checkouts in retail stores are just one example of the decrease in need for human cashiers.

Meanwhile, consumer apps like Zelle have associated themselves with banks nationwide, enabling consumers to transfer money between one another just using an app on their phones. If two people each have bank accounts, they can use this app to send or receiving money from each other in seconds. No cash required. Couple that with regular online banking sites, and cash and checks could become as obsolete as the $2 bill. Widely-used apps like Paypal make it quick and easy to make purchases without a trip to the ATM.

Meanwhile, a number of U.S. businesses no longer accept cash in exchange for their products or services? Why? Because they are not legally required to do so. Even though U.S. bills feature the words, “This note is legal tender for all debts, public and private,” there’s no federal law that says businesses have to accept cash, according to the Federal Reserve’s website.

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