Why We Use More Cash Than Ever

Andy Serwer with Max Zahn Sat, January 8, 2022
Last week, I returned from a two-week trip to Europe where I didn’t spend any money at all. Or at least not any cash.  To be clear, I visited Finland, Sweden and Denmark without using any paper money (or coins). I never used any euros or krona or krone. And not only that, I never saw anyone spending money, period. Meaning I didn’t see anyone fumbling around in their pockets for bills, or heaven forbid change. (Not even that drunk guy at the 7-Eleven in Copenhagen.) Everyone used cards and phones.

It really hit me, and so I decided to explore this notion of an increasingly cash-free world. Will money completely disappear? If so, how far along are we? And how is COVID-19 and the rise of crypto shaping this shift? Now I understand the concept of a cashless society isn’t especially new and that cash is hardly dead. Having said that, there are some decidedly new elements here.

First consider how our thinking about money and cash has changed over recent history. I remember neighbors paying me cash to shovel snow as a kid. After that I remember getting a paycheck in 1974 from my first job as a dishwasher at the Sir Walter Raleigh Inn Steakhouse in Bethesda, Maryland. Then there was the changeover from checks to direct deposit at Fortune Magazine sometime in the 1980s.

In short, I haven't been in cash since I was a kid. And of course today I pay the young guy in Maine who cuts my grass — and sells me eggs — by Venmo (PYPL). To be sure, in some instances, cash is still king, (some places in NYC still accept only cash). Some people can’t afford or don’t want bank accounts. Some merchants bridle at credit card fees. And bad guys prefer cash. But the trend is going the other way.

A man changes a dollar bill with the bus driver's assistant, who is holding a wad of Bolivar banknotes, at a bus stop outside the Antimano metro station in Caracas, Venezuela March 9, 2021. Picture taken March 9, 2021. REUTERS/Leonardo Fernandez Viloria

So is cash really dead? It depends on what you mean by “it's dead,” says Kenneth Rogoff, a professor of economics at Harvard and the author of "The Curse of Cash." “It’s certainly less and less used at the corner grocery. Cash used to dominate small transactions and that's increasingly not true. Debit cards, especially— and smartphones, credit cards — are pushing cash increasingly out of small transactions.”

It also appears the decline of cash is accelerating. This from a JP Morgan report in October titled "Payments are eating the world." (Yes, the Andreessen trope again.) “In 2010, the fastest way to move money on the same day from New York to London was to catch a flight from JFK to Heathrow and deliver it yourself. Now, you can initiate a secure, real-time payment that’s sent and received into your account in seconds at virtually no cost and in any currency."

To continue reading, please go to the original article here:

https://finance.yahoo.com/news/why-we-use-more-cash-than-ever-102008744.html