Moving towards a cashless world

One trends I’ve been tracking through FTTE is the transition of our economy from analog to digital.  Today I want to draw your attention to one particular dimension of that historical change: the shift away from cash and towards digital exchanges.

The Pew Research team is, as ever, our friend here, having just released a new report on the topic.  Let me pull forth some highlights from a futures perspective.

In the United States people are gradually spending less with cash, and more with credit, as least when measured by how we buy stuff on a typical week:

In the period Pew tracked we don’t see a major change, but an incremental one.  If the trend continues, we will eventually see the majority of purchases being done digitally.

Pew then slices the data by demographics and class.  

Class: the wealthier you are, the less likely you are to use cash.  The poorer, the more likely:

Race: black Americans are much more likely to use cash than Hispanics or white people.

Blacks are more likely than whites or Hispanics to rely on cash: 34% use cash for all or almost all of their purchases, compared with 15% of whites and 17% of Hispanics.

Age: as one might suspect, older folks are more likely to purchase items with cash than younger people.  “34% of adults under the age of 50 make no purchases in a typical week using cash, compared with 23% of those ages 50 and older.”  On a related note,

Americans under the age of 50 are more likely than those ages 50 and older to say they don’t really worry much about having cash on hand: 52% of 18- to 49-year-olds say this, compared with 38% of those 50 and older.

So while the trend pushes towards less use of cash, certain groups stand out for their persistent use of it: the poor, the black, the old.  How will these tensions be resolved?

I would love to see the data sliced in other directions, namely in terms of geography (betting rural is more pro-cash) and education (guessing more education means more credit).  I’d like to see other races added to the mix, notably Asian-Americans.

What does this mean for education?

The most direct implication is for financial literacy teaching, when students are traditional age or just need the content.  Such classes will have to adjust to a new world, mostly credit, with marginalized use of cash.

At the same time we face teaching a society more divided that ever, with social roles hardening.  This has all kinds of implications for student recruitment, teaching practice, the role of academics as public intellectuals, and so on.

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10 Responses to Moving towards a cashless world

  1. Phil Katz says:

    Personally, I refuse to patronize restaurants or other physical storefronts that refuse to take cash. In addition to the discrimination against un-banked or under-banked people in the community, I don’t really feel like giving even more “free” information about my whereabouts and spending habits to the credit card company (or Google, or the owners of SweetGreen, etc.). Plus, I find a lot of the discourse about “we don’t take cash because it’s inefficient, or too dirty, or because we only attract people who use credit cards/debits cards/Apple Pay/Venmo, etc.” to be depressingly elitist.

    • Bryan Alexander says:

      Good points, Phil. There’s definitely a social gap across the use of credit.

      Perhaps control is behind the drive to move away from cash.

  2. Anthony E Ortolani says:

    I rarely carry or use cash. I have not had a check book in four years. I pay my bills online. I use Zelle or Apple Pay frequently. For a business, cash has always been an issue of theft. I am much more effective at managing and balancing my budget with the banking tools available specifically being able to directly sync my bank account to quick books. With two sons in university, I have better visibility into their finances. Moreover, it is easier to teach them proper budgeting and money management. I find myself surprised when an establishment is not set up for digital transactions. Notwithstanding, I still have a soft spot for the cash only mom and pop restaurant because the food is usually fantastic.

  3. Ton Zijlstra says:

    As to stores refusing cash, isn’t that a violation of the law? Legal tender means it must be accepted as payment?

    The Dutch central bank published a note saying that 39% of transactions in the past 6 months were cash. Down from 60% in 2014. It warned that a very high level of electronic transactions leads to vulnerability and less resilience (against power outage, hacks, fraud etc.). The Swedish central bank indicated that just 1% of transactions is still in cash.
    The Dutch central bank said cashless is highly problematic for elderly, the visually impaired and less literate people.

    • Bryan Alexander says:

      Good question about the legal issues, Ton. I don’t know.

      Sweden’s been making an effort to move away from cash.

      On the Dutch central bank’s statement: that complements the Pew findings well, at least in terms of age.

  4. One clarification I’d like to make is that not all cashless is credit. I use my bank card a lot, but it’s a debit card. I’d like to see the data sliced that way, to show what percent is truly credit versus debit, which is more akin to digital cash and less intertwined in credit score schemes.

  5. Alan Levine says:

    I remember on my first trip to Iceland in 2000 how surprising it was to see people regularly use debit cards for small purchases at places like convenience stores. They were way ahead.

    Call me old school; I pay bills directly from my account, and use the card a lot, but I always feel better with some cash in the wallet. I also keep a $20 or more in the vehicle. Why? Back in 2012 when I was living/working in Virginia, there was this huge T-storm that knocked out power regionally, and I had to drive to Baltimore to catch a flight the next day. Most gas stations were out of commission, and I was short on fuel. When I got to one that did have power to pump, they could not accept any card payments, cash only. I filled mine with cash in my wallet; but was moved by a young mom with a sad looking kid who had no cash. I reached in my truck and gave her a $20; she took my mailing address and later sent a check.

    I’m all for the digital life, but I want a little backup.

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