By Jon Norris
A cashless society has been a talking point for futurists for years, but for one reason or another, has never quite been within our grasp. Now, like the electric car and clean energy, it’s finally happening – and it’s about time.
The arguments for ditching notes and coins are numerous, and quite convincing. In the US, a study by Tufts University concluded that the cost of using cash amounts to around $200 billion per year – about $637 per person.
This is primarily the costs associated with collecting, sorting and transporting all that money, but also includes trivial expenses like ATM fees. Incidentally, the study also found that the average American wastes five and a half hours per year withdrawing cash from ATMs; just one of the many inconvenient aspects of hard currency.
While coins last decades, or even centuries, paper currency is much less durable. A dollar bill has an average lifespan of six years, and the US Federal Reserve shreds somewhere in the region of 7,000 tons of defunct banknotes each year.
Physical currency is grossly unhealthy too. Researchers in Ohio spot-checked cash used in a supermarket and found 87 percent contained harmful bacteria. Only 6 percent of the bills were deemed “relatively clean.”
Cash is expensive, inconvenient, wasteful and unhealthy – it’s time to call it quits with physical currencies.
The first attempts to replace cash with something more convenient was the credit coin – a small metal disc used to tie receipts to a customer’s credit account in department stores and hotels. Their modern successor – the credit card – has been the most successful in dethroning the banknote.
According to Visa, in 2012 card payments accounted for 32.8 percent of worldwide consumer spending, while cash accounted for 38.3 percent (cheques and other payment methods made up the remainder).
When you consider that the entire card payment industry, including American Express, Visa and Mastercard (companies with combined assets of over $200 billion), has not managed to eclipse cash payments in 60 years of existence, it seems that cashless solutions that want to have a permanent impact have a mountain to climb.
There are also wider societal issues involved with the end of cash. Paper money is used more frequently by low-income groups and independent businesses – street traders, panhandlers and one-man bands — those who cannot get a bank account or absorb card processing fees.
The working classes incur much higher costs from the move to cashlessness than those with higher incomes – one in twelve US households deal only in cash primarily because they cannot afford banking fees.
That’s not to say it’s impossible – Stockholm’s homeless population recently began accepting card payments…