The trend towards cashless payment throughout the American economy has accelerated rapidly in recent years, with some restaurants and stores in large cities no longer accepting cash.
A 2022 Pew Research Center survey found that 41% of Americans did not use cash for any of their purchases in a typical week. Cashless-only checkout lines are also appearing in stores, and it seems that everywhere we go nowadays, we are asked to pay by swiping, tapping, scanning or through an app. Some jurisdictions have recently enacted laws and ordinances prohibiting businesses from refusing cash payments. The move towards a cashless society is often seen as a step toward modernity, but these changes come with big costs, both economic and social.
The move away from cash is a stark reversal from when it was often a preferred method of payment not that long ago. In my experience, there has been a division between urban and rural areas, and big businesses and small businesses in the move toward cashlessness. Cash is still welcomed in the country, but digital payments seem expected in cities. It is quite humorous to watch the brief confusion of cashiers when they turn the card machine toward me and I instead hand them a bill. At small businesses, they are often pleasantly surprised, and sometimes deduct a cash discount from the price.
Requiring cashless payments negatively affects those without credit or debit cards, who are often society’s elderly citizens and the economically disadvantaged. It also essentially forces customers to enter into a contract with a third-party to make purchases, and the amount of personal information which can be gleaned from an exhaustive paper trail of a consumer’s purchases poses strong risks for personal security and privacy.
The move away from cash also creates added costs for small businesses, who face fees of an average of 1.5% to 3.5% per purchase for processing card payments. For a store owner whose income relies on customers making frequent small-dollar purchases, credit card processing fees can easily destroy the profit from a purchase unless the added expense is passed on to customers in the price of the product. Hence, many small businesses list two prices or offer cash discounts.
Customers sometimes complain that large retailers and franchises do not have separate prices for cash and cards like small businesses do, but large businesses already calculate the cost of credit card processing fees when determining their prices, so even those who pay with cash are absorbing the costs of the proliferation of credit cards and digital payments across society.
There is also strong data that cash payments are more conducive to fiscal restraint and responsibility. Research has shown that having to physically count out and hand over dollar bills and coins makes purchasers more cognizant of how much they are spending. That is to be desired when nationwide credit card debt has now risen to more than $1 trillion dollars for the first time ever, according to a recent report from the Federal Reserve Bank of New York.
A cashless society is often portrayed as a more convenient society, but cash was one of the most convenient ways of doing business in the history of economics. Exchange an item and currency, and the transaction is done. No need to keep track of balances that need to be paid later. It is also difficult to imagine how simple sales, like those at garage sales, would take place if society completely abandoned dollar bills. For sales between strangers, there is no need to worry about bounced payments when cash is used.
What is perhaps most undesirable about the continued push toward a cashless society for an old-fashioned stick-in-the-mud conservative such as myself is that it is unnecessary. There is nothing wrong with credit cards, debit cards and paying through apps nowadays, but handing over cold, hard cash has worked completely fine for hundreds of years, and there is no need to make everyone stop using a tried-and-true method of conducting commerce.