Should We Get Rid Of Cash? (2024)

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Should We Get Rid Of Cash?

January 8, 2024

Illustration by Eddie Guy

Two generations ago, the main way to buy anything at stores and restaurants was to reach into your pocket and count out a bunch of bills and coins. By the 1960s, many Americans began carrying less cash as paying by credit card became widespread. And in recent years, new technology has brought on an explosion of ways to exchange money virtually. With so many digital payment options now available—from Apple Pay to Zelle—more and more people are simply leaving their wallets at home.

An executive at a digital payment company and an economist at a Washington, D.C., think tank face off about whether we’re ready to phase out paper money.

In recent years, people and businesses all around the world have been relying less on cash. Increasingly, many people prefer the safety, security, and convenience of making payments from their phones, tablets, and computers,or using contact-free devices in stores. And I believe this trend is here to stay.

The pandemic sped up this shift as people avoided handling cash out of health concerns and sent money electronically instead. As online shopping becomes more common, companies like PayPal are working to make digital payments easier and more accessible. Once the habit of paying digitally becomes established, people are likely to continue doing it, even after health-related fears fade.

Within two months of the pandemic’s start, the number of people using digital payments began rising at a rapid rate worldwide. In a 2022 Pew Research Center survey,41 percent of respondents said they didn’t use cash for any purchases in a typical week—up from 29 percent in 2018. But that trend away from cash transactions was already happening before the pandemic, and it will likely continue.

Digital financial services are increasingly making cash unnecessary.

Digital financial services are helping to solve some of the hassles of paper money, like losing your wallet or waiting in line to get cash at an ATM. No longer limited to cash transactions, with a few taps we can split the cost of a pizza with Venmo or buy goods from merchants abroad. This supports small businesses and strengthens local communities everywhere.

Even in less-developed parts of the world that have traditionally had economies more centered around cash transactions, almost everyone has a cellphone these days. And that phone can enable people to access payment apps that increasingly make cash unnecessary.

While some uses for cash remain, I expect to see more people opting for digital payments to shop in safe, affordable, and convenient ways.

—FRANZ PAASCHE

Senior Vice President/Chief Corporate Affairs Officer, PayPal

Even as much of commerce and money moves into the digital age, paper money remains essential to millions of Americans for reasons of both privacy and inclusion.

Most digital payments require a link to a bank account. Nearly 6 million households in the U.S., including many young people and undocumented immigrants, have no bank account at all that would give them a free debit or credit card. Many more, including elderly individuals, have bank accounts but aren’t digitally savvy enough to feel comfortable with digital payments. So far, there is no reliable replacement for cash that would allow these often poor, vulnerable people without bank accounts to buy things.

Cash payments are free, compared with cards that charge merchants a fee to accept them. When cash payments aren’t possible—such as for Amazon purchases or Netflix subscriptions—people without bank accounts have to buy prepaid debit cards that charge fees when they are purchased as well as fees to keep the card active. Those fees add up and place an additional burden on people who are already struggling.

Cash remainsessential to millionsof Americans who don’t have bank accounts.

Plus, digital payment systems are linked to your identity. Eliminating cash would mean giving up some of our financial privacy, as the government and data-hungry companies could more easily snoop on our daily lives. Sometimes, for legitimate reasons, people want to pay for things without a record of their names, account numbers, and other personal information being created—and they should be able to do so.

There are other important benefits to cash too. For instance, using cash instead of credit or debit cards may help keep some people from overspending, because you can see how little is left in your wallet after every purchase.

In short, getting rid of cash would impose hardships on society’s most vulnerable people and could jeopardize our privacy. That’s why we still need it.

—MARTIN CHORZEMPA

Senior FellowPeterson Institute for International Economics

41%

PERCENTAGEof Americans who said in 2022that they used cash for none of
their purchases in a typical week,compared to 24 percent in 2015.

^{Source: Pew Research Center}

45%

PERCENTAGEof 18- to 49-year-olds who saythey always try to have cash on hand, compared to 71 percentof Americans 50 and older.

^{Source: Pew Research Center}

$60 billion

TOTAL VALUEof payments processed by Venmoin the third quarter of 2021,
up from $1.3 billion duringthe first quarter of 2015.

^{Source: Statista}

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FAQs

Why should we get rid of cash? ›

Key Takeaways. Cash can play a role in criminal activities such as money laundering and tax evasion. Using digital money prevents the transfer of physical money, and all transactions are handled using computers and the internet.

Get More Info ›

Should we get rid of cash upfront? ›

(Chorzempa argues against phasing out cash. He says that cash is necessary for the 6 million Americans who don't have a bank account or are not digitally savvy. He also notes that many digital transactions have added fees and can put your privacy at risk, and that using cash keeps people from overspending.)

Keep Reading ›

Should we get rid of paper money cons? ›

In addition to simply eliminating the costs and hassles of managing currency, going cashless may also reduce certain types of crime. The downsides of going cashless include less privacy, greater exposure to hacking, technological dependency, magnifying economic inequality, and more.

Learn More Now ›

Is it a good idea to keep cash? ›

It's a good idea to keep enough cash at home to cover two months' worth of basic necessities, some experts recommend. A locked, waterproof and fireproof safe can help protect your cash and other valuables from fire, flood or theft.

Find Out More ›

What happens if we go cashless? ›

When people are handling less cash, bank robberies, burglaries and corruption drop. Because cash is essentially untraceable, it's a useful tool for criminals, where digital currency is less easy to exploit, and can be shut down quickly if it falls into the wrong hands.

Explore More ›

Will America go cashless? ›

Similar rates have been recorded across other Scandinavian nations, while Hong Kong predicts cash will account for only 1.6% of point-of-sale (POS) transactions by 2024. But despite this global shift away from tangible currency, the US isn't likely to transition officially any time soon.

Read The Full Story ›

Will cash ever go away? ›

We have been issuing banknotes for over 300 years and make sure the banknotes we all use are of high quality. While the future demand for cash is uncertain, it is unlikely that cash will die out any time soon.

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Is the world going cashless? ›

As consumers continue to embrace the legacy of the pandemic and a surge in finance technologies, cash payments are expected to continue to decline in the coming years. The shift towards a cashless society has been gaining ground for some time now.

Keep Reading ›

Which country is cashless? ›

Norways is the most cashless country, with only around 2% of payments being made by cash, and 100% of the population having a bank account.

Tell Me More ›

Is $1000 a month enough to live on after bills? ›

But it is possible to live well even on a small amount of money. Surviving on $1,000 a month requires careful budgeting, prioritizing essential expenses, and finding ways to save money. Cutting down on housing costs by sharing living spaces or finding affordable options is crucial.

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How much cash can you keep at home legally in the US? ›

There is no restriction to how much of that you can possess or carry. There is however, a legal limit as $10,000 in cash when flying internationally.

Keep Reading ›

How much cash is safe to keep? ›

Most financial experts suggest you need a cash stash equal to six months of expenses: If you need $5,000 to survive every month, save $30,000. Personal finance guru Suze Orman advises an eight-month emergency fund because that's about how long it takes the average person to find a job.

Know More ›

Why are we moving away from cash? ›

However, the direction of the shift is clear: more people are moving away from cash, driven by convenience, speed, and the evolving capabilities of digital technology. Governments and financial institutions are exploring how to facilitate this transition while considering the needs of all citizens.

Get More Info Here ›

Why should we be a cashless society? ›

The Benefits of a Cashless Society

They don't have to deposit as much cash every day and can more easily balance their books, since electronic-transfer-based sales can immediately and seamlessly enter computer systems. If you're not carrying hundreds of dollars in cash, you're less of a target for robbery.

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Why you should not hold cash? ›

Lower returns: Since cash is largely a risk-free asset, investors don't get the “risk premium” that other investments, like mutual funds or GICs, may come with. Inflation risk: While cash has no capital risk, inflation can erode its purchasing power – meaning you wouldn't be able to buy as much with it in the future.

Read The Full Story ›

What if cash was discontinued? ›

Explanation: If cash is totally discontinued, the society or the region will become digitized, which means transactions are made online.

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