Cash was king how long until it's gone?
How much cash do you have in your wallet? How often do use cash as opposed to your bank card or credit card?
Recent statistics on cash payments are
pretty eye opening. A Barron’s report predicts that in the next 30 years
cash will be used in only 10 percent of transactions. According to a McKinsey
report, in 2012 cash will account for an estimated 29% of U.S. retail payments,
down from 36% a decade ago.
My interpretation of these statistics is that most likely, slowly but surely, cash is becoming more and more obsolete. Large card networks like MasterCard are not wasting anytime starting conversations to get people thinking about a world operating solely on electronic payments.
My interpretation of these statistics is that most likely, slowly but surely, cash is becoming more and more obsolete. Large card networks like MasterCard are not wasting anytime starting conversations to get people thinking about a world operating solely on electronic payments.
“For certain businesses, they prefer
cash because they don’t necessarily have to report it,” Chakravorti pointed out
during the broadcast. “I don’t want to cast a shadow on small or medium
businesses, but there are many that have a different record on the books
relative to what they take in at the cash register.”
Perhaps, this is why the majority of
the world’s transactions are still being conducted in cash despite all the
technological advances in electronic payments. “Eighty-five percent of the
world’s transactions are still being conducted in cash and checks,” said Ed
Brandt, EVP, Managing Director, Government Services and Solutions at MasterCard
in a recent press release about the Payment Forum.
All of this debate raises
interesting questions not about whether or not cash will become obsolete but
rather which force will make it happen if it does? If it were to happen, would
it be a natural process, directed by consumers ? Would it be directed by
credit card networks continuing to encourage merchants in that direction? Or
perhaps maybe the government will have a hand it in as a means to eliminate tax
evasion?
Conveniently, the issue of
government involvement was discussed at the MasterCard forum, where examples of
government/private sector partnerships designed to eliminate cash were given.
One great example of this phenomenon is the South African Government’s
partnership with MasterCard to deliver government benefits to recipients on
debit cards. This project has a goal to target 10 million citizens by March
2013. The U.S., currently distributing nearly 85 percent of its federal benefit
payments electronically, has a goal to reach 100 percent by March 2013 as well.
Despite all of the hype around the
extinction of cash there are many that just aren’t willing to let it go just
yet. “Part of this is a left brain thing and part of this is a right brain
thing,” Chakravorti told WGBH. “There’s a sense of security — if I hold half
cash in my wallet, I feel secure in certain ways.”
Following WGBH’s written transcript
of their Future of Cash discussion, in the comments section of their website a
reader chimed in saying, “Cash doesn't need a secure system, or user vigilance.
It is self-accounting, unhackable, and intuitive in its use. I know no digital
credit system with any of these virtues.”
What do you think? Do you feel your
money is more secure in electronic form? Leave us a comment!
