Advertisement
Technology

America Lurches Toward a Cashless Future

Electronic payments are increasing, but a cashless economy has drawbacks.

Joseph Bailey, an associate research professor at the Robert H. Smith School of Business at the University of Maryland, discusses the pros and cons of a cashless society.

According to a recent Pew Research Center survey, nearly 30% of Americans say they make no cash purchases during a typical week. How does the use of electronic payments in the U.S. compare with other countries? The U.S. is moving quickly toward more cashless transactions, but it still lags some European countries, such as Sweden, Denmark and Norway. Sweden has reached a tipping point at which only about 2% of transactions are conducted in cash. In part, that’s because the Swedes are technologically savvy, they have a relatively small market, and the government encourages electronic payments of its currency. Chinese cities are also embracing the cashless life, with a mobile-phone system that uses encrypted codes for transactions. In India, some 255 million people are making everyday purchases using the Paytm virtual wallet system, backed by China’s Alibaba.

Advertisement - Article continues below

Will the U.S. catch up with the other countries? If you want a picture of how we’ll handle money in the future, look at how college students manage their money. And then just imagine a world in which they are the majority, and not the rest of us who grew up in a world where we carried around wallets with paper money and maybe coins in our pockets.

What are the trade-offs for consumers as we move toward more cashless transactions? Consumers give up anonymity when they don’t use cash. For example, let’s say you go grocery shopping and your payment shows whether you got a discount for using a reusable bag or paid for a plastic store bag. Marketing could be tailored to you, based on how you’re perceived to feel about the environment. Or if you use electronic payments to buy a lot of fruits and vegetables, you could be pitched a gym membership because a marketer thinks you’re getting fit. Some consumers may not be comfortable with this type of marketing because they think it’s an invasion of privacy.

Are there any other drawbacks to a cashless society? Cashless businesses could hurt low-income consumers who mostly use cash. In addition, we eventually could see a surcharge for using cash. Theft could also become a bigger problem. You may be less likely to be pickpocketed because you’re not carrying cash, but you might face a greater financial threat from a remote hacker or data thief who manages to hack into your smartphone.

Advertisement
Advertisement

Most Popular

8 Things You Must Know About Retiring to the Carolinas
retirement

8 Things You Must Know About Retiring to the Carolinas

From the mountains to the beaches, North Carolina and South Carolina offer retirees plenty of incentives.
August 14, 2020
What Trump's Payroll Tax Cut Will Mean for You
Tax Breaks

What Trump's Payroll Tax Cut Will Mean for You

President Trump issued an executive order to suspend the collection of Social Security payroll taxes. How much could it save you?
August 13, 2020
7 Surprisingly Valuable Assets for a Happy Retirement
happy retirement

7 Surprisingly Valuable Assets for a Happy Retirement

If you want a long and fulfilling retirement, you need more than money. Here are the most valuable retirement assets to have (besides money), and how …
August 3, 2020

Recommended

Tax-Free Weekend Dates, States and Savings for Back-to-School Shopping
Tax Breaks

Tax-Free Weekend Dates, States and Savings for Back-to-School Shopping

Sales tax holidays are a great way to save money on clothes, shoes, backpacks, school supplies, and other back-to-school necessities.
August 4, 2020
Sales Tax Holidays in 2020
Tax Breaks

Sales Tax Holidays in 2020

Sixteen states are having sales tax holidays this year. If you plan your shopping around these tax-free periods, you can save big on back-to-school cl…
August 4, 2020
The Finances of Homeschooling Your Kids: What It Costs, Tax Breaks, More
spending

The Finances of Homeschooling Your Kids: What It Costs, Tax Breaks, More

If you're contemplating homeschooling for the 2020-2021 school year and beyond, consider these 10 things -- from surprising homeschooling costs to pot…
July 30, 2020
Good News: COVID-19’s Social Distancing Seems to Cure FOMO
spending

Good News: COVID-19’s Social Distancing Seems to Cure FOMO

Fear of missing out can put you in debt, but social distancing means no one’s missing out on anything these days. Financially, that’s great news, espe…
July 29, 2020