Today, we have more payment options that ever before. You can choose to pay with cheque, credit card, debit card, or cash in stores. You can send money online via PayPal, Google Wallet or Interac e-transfers. You can even pay with cryptocurrencies like BitCoin. You can pay at select establishments through an app on your smartphone. The number of payment options we have today is constantly increasing, particularly due to technological advancements.
And due to these tech innovations and generations that are becoming more and more reliant on technology, people have been predicting the extinction of cash for years now.
But guess what? Today, cash is still king. Surprised? You shouldn’t be.
Cash Transactions Dominate for Small Bills
For transactions under $50, people still prefer to pay with cash. This means that cash dominates at gas stations, retail stores, convenient stores, and restaurants, where low-value transactions are common. Cash is also the leading method of payment for specific purchases such as gifts and person-to-person transactions, food and personal care supplies, entertainment, transportation, medical, educational, and personal services, and government and non-profit expenditures. It’s also the second most used method of payment for all other expenses other than housing.
For smaller transactions of a lower value, cash remains the most convenient method of payment today.
The Unbanked, Underbanked, and those with Terrible Credit
Many of the digital payment methods today depend on you to have a bank to use them—like credit cards, debit cards, PayPal and Interac e-transfers. But millions of households are unbanked or underbanked, having no bank accounts or only having a checking account or savings account and nothing else. For these people who don’t take advantage of banks or digital payments, cash will never die since it’s the only method of payment they use.
And for people with bad credit or young persons with no credit at all, getting a credit card can be difficult. Paying with cash isn’t.
One of the most popular budgeting tools used by budget-conscious consumers is the all-cash diet. Paying with cash is popular among those who want to closely control their spending. It’s very easy to rack up charges on your credit card without thinking, but if you take out only $40 in cash, then you have no more than that sum to spend. In addition, people are more psychologically connected to cash than they are to numbers in a bank account, so they’re more careful about spending it.
Cash is accepted everywhere. The cost of electronic payment methods, including credit card fees and debit fees, often make it too expensive for small businesses to accept these payment methods. Many business owners aren’t technologically advanced enough to start accepting payments through mobile wallets, either. But they all take cash. You can go into a store with cash and not worry if your method of payment will be accepted or not.
It seems like there’s always a new data breach in the news, from Target and Home Depot to TJX and Ebay.
No matter how much protection stores use, identity theft is still a concern among shoppers. Their sensitive information like names and credit card numbers can be stolen in a blink of an eye, leading to serious headaches. Consumers who use cash as their method of payment, though, don’t have to worry about identity theft.
Despite what you might have heard, cash isn’t going anywhere and any talk about a cashless society is just that—talk. Expect to continue to use and accept cash for the foreseeable future. There is simply no other convenient, universal, and safe method of payment on the market to take its place.