48% say America will be out of cash by 2023
One in five Americans thinks their payments will be completely cash-free in their lifetime, according to a new study from GATE (Global Acceptance Transaction Engine) conducted with third-party research firm YouGov.
With Apple Pay, Google Pay, Venmo, Square, credit cards, Bitcoin and many other options to pay digitally, a cashless society can seem imminent. More surprising is that 48% or roughly half of those people think it would happen in the next five years.
Respondents felt going cashless could improve their lives for the following reasons:
- Travel: 33% said it would make travel easier because you would not have to worry about losing cash, converting money, theft, etc.
- Convenience: 32% said they’ll never have to worry about having enough cash on hand again.
- Efficiency: 29% said it will improve the speed and ease of the payment process.
- Budgeting: 27% said it will make it easier to manage their money.
Considering an estimated 24% of U.S. citizens make all their purchases using cash, going cashless in five years is an aggressive forecast.
However, there are plenty of examples of a cashless-reality happening across the world in countries. For example, in Sweden and Japan, some businesses are preparing to be cash-free—even some street performershave gone cashless.
The Pros of Using Cash
Noted behavioral economist and Duke professor, Dan Ariely, has talked about the “the pain of paying” when people buy things with cash and the immediate loss you feel as a result. Cash carries more emotional weight for the buyer because it is immediate.
With credit cards, the impact can happen further down the road without the emotional loss which could see you end up spending more as a result. In other words, you may end up spending more if cash goes the way of the dodo.
The Cons of Using Cash
The study noted that 20% of Americans are frustrated by places that only take cash. And 18% are expecting the number of cashless transactions they make to increase over the next 12 months.
If you pay for things using cash, especially larger purchases such as a home, car or boat, your cash purchase won’t be reflected on your credit report. That may be a good or bad thing depending on your situation.
If you pay off your debts on time, paying for things in all cash won’t help improve your credit scores. Many people use credit cards to help build their credit history by paying their bill on time or to use the rewards from credit cards to accumulate points for other purchases (or a combination of the two).
Are We There Yet?
Despite the pros and cons of switching to a cashless society, the GATE study found that 43% of Americans don’t think going cashless is secure enough. Perhaps a more practical reason for hesitating is that 38% of Americans are worried they will lose their device, or the battery will die when needed, and those fears may be enough to keep cash on hand.
“Our society is headed in a completely cashless, even cardless, direction,” Richard Foster, CEO, and co-founder of GATE said in a press release. “Our research uncovered many of the limitations consumers are currently facing as they attempt to go completely cashless,” including limits on how connected eWallet providers, merchants, and other payment service providers are to each other.
There are operational challenges to address, “and the onus is on these e-Wallets and payment providers to overcome them and deliver a smooth, cashless transaction between merchant and consumer,” Foster says.
Once these security and convenience issues are addressed in the mind of consumers, we will likely see a faster mainstream adoption of digital payments. While credit reports do not indicate when cash is used, new alternative credit data could start to help improve your credit score, if taken into account.