For years, predictions have been made that cash is on the way out, and that we are inevitably moving toward a cashless society. It's true that cashless payment methods have been on the rise, and new technologies like chips in key chains and mobile payments promise to keep changing our disbursement habits. But cash is still firmly ensconced for most, if not all, consumers. Its appeal has stood the test of time, especially if you consider the first coins in human history were minted thousands of years ago. Carrying these minted bits of metal around in our pockets, purses, or in the nooks and crannies of our cars is still a completely normal phenomenon, and paper or polymer money is only a small refinement of the idea compared to electronic payment systems. Cash, and the need for cash management, aren't going to disappear any time soon, and here are a few of the reasons why.
For small transactions, cash is still one of the easiest ways to pay and get going. A Bank of Canada survey of consumer payment methods shows that for transactions under $25, cash is still the most common payment method. Even people who regularly use credit or debit cards may tend to use cash for small purchases. This could partly be a matter of perception, rather than real convenience, as card transactions are generally fast and simple as well. But for individuals who don't make a point of tracking small purchases, using cash means they don't need to reconcile these transactions on their bank or credit statements later.
On the other end of the scale, some people find that using cash is a huge benefit when it comes to tracking their spending. When using a card, they find it much easier to spend more than they realize. If you only spend cash, it's really easy to tell when all of your spending money is gone. In a period of economic decline, using cash is one way to keep an eye on dollars and cents.
Cash transactions offer a kind of security and privacy that electronic payment systems can't match. The security of your personal financial information, whether on your own computer or on a corporate system, is only as good as the safeguards and policies surrounding it. And it's in the interest of banks and businesses to track your spending, because it gives them valuable data they can use for marketing and product planning. On the other hand, nobody is going to hack into your wallet, and a cash purchase is untraceable if it isn't accompanied by a store loyalty card or any other piece of personally identifying information.
Personal and Service Payments
Finally, people prefer to give cash or cheques as gifts over sending money by electronic means, and it's still common to pay small businesses by cash or cheque, especially tradespeople. If a babysitter, plumber, or wedding photographer doesn't accept credit or debit cards, cash and cheques are your only options.
It's possible that changes in payment technology and consumer habits will keep shifting transactions away from cash. But the security, privacy, convenience, and simple familiarity of cash make it unlikely that we will abandon it completely any time soon.