In today’s hustle and bustle world of life, people are on the go and busy with the daily tasks of work and leisure. The purchases and transactions of daily life can range anywhere from a simple Amazon order from home, to betting on the weekends NFL odds, to paying the mortgage.
But is the way those transactions happen quickly taking a turn in a different direction?
With new forms of payment that deviate from the daily norms of the past several decades, should one be worried that cash is on the verge of disappearing from society?
History of Cash, Debit, and Credit
The history of cash or genuinely physical money dates back almost as far back as human existence itself. Though it has gone through many changes over the eras of human history, its basis has always stayed true.
Today, it does not have the same backing as physical money that once contained precious metals such as gold and silver, but it has value.
Credit has also been a concept since the inception of currency or cash, dating back at least as far as the Ancient Mesopotamian Civilization. But the inception of actual credit cards in the hands of consumers did not start until the 1950s.
This would make the extension of buying power very popular and more readily available to daily consumers.
The advent of the debit card would come about in the mid-1970s, allowing people access to their liquid assets without it being necessary to carry physical cash with them. This allowed people to feel more secure about carrying money without borrowing on credit with credit cards. It became just as convenient to carry a debit card as it was to bring cash.
Today’s Payment Methods
Today, cash, credit, and debit are all still very viable and popular, but new payment methods are increasing in popularity. Person-to-person money transfer platforms such as PayPal, Venmo, and CashApp have become very popular and are stretching into new markets with new capabilities.
Also, touchless payment methods such as Apple Pay and other banks using touchless chips have become very popular. All of these newer payment methods have become more popular over the last few years, especially during the COVID-19 pandemic.
But how have they impacted the use of cash?
Studies have shown that since 2019, consumers use their debit cards about 28 percent of the time, their credit cards 27 percent of the time, and cash 19% of the time.
That leaves other forms of payment like checks, Venmo, or PayPal to make up the remaining 26 percent of transactions.
The Impact On Cash
Just between 2019 and 2020, the use of cash fell seven percent. Some of that can be attributed to the COVID-19 pandemic, which started in the first quarter of 2020, but similar trends were being noticed before that as well.
Cash usage declined the greatest among younger consumers between the ages of 18 and 35. However, cash usage was down across the board in all age categories.
In today’s fast-paced world, consumers opt to use more convenient and fast payment methods that don’t require them to go to the bank. This saves them the time and hassle of withdrawing cash from the bank or an ATM. It is a matter of time and efficiency.
With more and more businesses, especially small businesses, accepting different forms of payment like Venmo and CashApp, other forms of payment will continue to take a back seat. As cash is out of sight and out of mind, it will continue to dwindle in use due to convenience.
So When Will Cash Disappear?
The good news is, cash is still a long way from completely disappearing from consumer use. Credit and debit cards could have easily replaced cash, and consumers have been using them for 70+ and 50+ years, respectively. So it would be hard to fathom that just 10-20 years of these new payment types existing would spell the end of cash.
So don’t hit the panic button yet, but continue to keep your eye on the turning tide of cash use in the future.