Cash – Here to Stay

Saturday I heard a talk show host, rather unsuccessfully, trying to defend his position that a society where there was no cash, only credit cards would be used. I find the idea that this could happen interesting, but I really doubt it would ever happen for the following reasons:

1. Peer transactions. Yesterday I bought a couple bikes off some friends. Unless they had a credit card reader in their house, this transaction would have been much more difficult in a cashless society. How would kids pay for things? Can you imagine a 10 year old with a credit card?

2. Anonymity. People are skeptical of how much the government (or any organization) knows about them. There will always be a legal way to purchase things anonymously– at least there should always be a legal way.

3. Responsibility. Too many people dissociate real money with plastic. Cash is the only way many people actually realize they’re spending their money. Without cash, the amount of consumer debt would probably skyrocket (if that’s possible from how high it is already).

4. Tradition. All other reasons aside, I don’t ever see the day when people outgrow the natural desire to have cold hard cash. It makes you feel like what you worked for is real. It’s what people have done since the end of bartering and old habits die hard.

While technology has taken an obvious foothold in many areas of life and lots things are changing, don’t count on the day that cash will disappear for good.

3 replies on “Cash – Here to Stay”

Regarding your first statement about Peer Transactions: You can use services like PayPal and probably Google ‘Wallet’ or whatever they are calling it. I can use my PayPal account to accept credit-card transactions! I can complete transactions using my mobile phone and a wap gateway to Paypal, or the regualar www based PayPal, depending on which mobile phone I am using… Heck, I don’t even need my phone… I could use any WAP/WWW capable handset…

To actually make something like this useful we need as many people using free email to also use PayPal or Google ‘Wallet’ as digital wallets.

Your ten year old now has a mobile phone, it probably won’t be long until they have a credit card..

While I can’t argue for the 100% elimination of physical currency, for me the benefits of going cash-less have far outweighed the benefits of using cash.

Here are some of them:

-There’s nothing to lose if you’re not carrying it.
-In the event of loss, theft, or misuse there are certain protections you get with credit and debit cards.
-Using credit (and some debit) cards can provide rewards not obtained by using cash (frequent-flier or points cards….American Express ‘paid’ me over $300 this year for using my card last year, and I don’t carry a balance or pay any fees.)
-You can use a credit card in most any country without having to worry about that country’s currency (sure, there are fees. But there are fees to exchanging and trading physical currency as well.)
-Your transactions are automatically recorded (good for record keeping, bad for privacy) so you can track purchases and ‘remember’ where the heck your cash went.
-You can defer actual payments by 10-30 days using credit cards, or (not recommended) carry a balance if needed.
-You can’t run an open tab at a bar with cash.

So, while I’ll admit there are some disadvantages, they can be mitigated. Going cash-less happens to work very well for me.

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