In 1964 the Federal Reserve Bank published a paper predicting the demise of the check and it took over 40 years for that to become reality. With myriad payment options available to consumers, is the demise of cash not far behind?
I just passed the 100th day of carrying no cash with me. As a frequent traveler and road warrior I wanted to see what it was like to survive relying entirely on the few cards that I carry, along with my iPhone with Apple Pay.
Cash transactions still account for about 32% of all transactions in the US and is the most frequently used single payment type. In general, cash is used for small-value transactions, like a latte at Starbucks, and is still the payment medium of choice for the “underbanked” segments of our society, many who do not have access to alternative methods of payment.
Yet, the leading significance of cash is that it is anonymous. Many feel comfort in knowing that there is no data mining, no big data segmenting or tracking of their personal purchases. In surveys over the past 30 years the reasons for using cash have remained the same until just recently when one new factor made it onto the list of why cash is preferred: it can’t be hacked. Apparently, the constant news of the latest data breaches has caused some to distrust not only online accounts but also swiping a card at a local retailer.
In the past five years, as online and mobile capabilities have grown and increased in adoption, the total percentage of Americans not using cash has only changed by two points from 10 to 12 percent. That means almost 90% are still using cash in some form.
Now back to my experiment. For 100 days, I have not carried a single dollar of cash with me. I used to be obsessed with traveling with enough cash to account for any emergency that may come up so I always carried at least $100 with me. Without it I thought that I would be insecure or feel vulnerable on the road, but I wasn’t. I used a card for airport purchases, the airlines don’t accept cash in the air anymore, and I use Uber or Lyft to get around. I use my iPhone Apple Pay at Starbucks and other retailers, including my local grocery store.
Though I found it easy to travel without cash, there were a few times that I found myself reaching into my empty pocket. There were the couple of occasions where I had to hit up a coworker or my wife for a few bucks to tip the valet parking attendant. I also couldn’t fulfill my fantasy of winning the $300 million lottery on a whim when I didn’t have the $2 cash needed to buy the lucky ticket. Lastly, I also missed the occasional opportunity to pay it forward by handing a person in need a couple of bucks.
Banks recognize the ongoing value that customers put in accessing cash and the most progressive have moved to meet the needs of their most tech savvy customers by updating ATMs with bio-metric authorizations or one-time pins available on a phone app, removing the need to rely on carrying a card. This experiment taught me that while going cashless is not only possible but relatively comfortable, there’s still something to be said for the convenience of cash in certain situations. So, when I’m out today I will stop by the ATM and put a few bucks into my pocket. Who knows, maybe I will get that lucky lottery ticket—or, more likely, I will smile when I hand that person in need a couple of dollars.
I am even more accessible than the other modals.