Those who stand in line in the supermarkets have probably seen signs posted asking to pay in exact change “due to the national coin shortage”. The effects of the coronavirus pandemic have made the realization that fewer coins circulating, stimulus spending bringing about more money printing, and safety concerns leading to contactless payment preferences have now brought the elephant into the room. Is the US going to join several European countries in becoming cashless?
The move away from cash has had mixed reactions. For some, not carrying cash makes them feel safer, and moving to a cashless society wouldn’t be much of an adjustment for them. For example, those who fear carrying cash may leave them vulnerable to getting mugged or robbed may choose to stick to plastic and digital formats. Some businesses have even chosen to reject cash payments to avoid robbery, but also because some business bank accounts have limits on cash deposits. Plus apps like Cashapp and other mobile banks have made it easier than ever to go digital. But the pushback against going cashless also has a lot of momentum.
For one, while 25% of Americans being unbanked may be a minority, it is a significant minority. Homeless and low income disadvantaged people often need cash to buy things, and going cashless could hurt them a lot. But even for regular moderate income middle class families, many of them value cash as it is often used as a budgeting mechanism to teach children about saving. Plus cash affords privacy that doesn’t come with electronic transactions or bank transfers. And while there may be a push by some businesses to go cashless, others have actually taken the opposite approach where the only payments they’ll accept are in cash. There is no federal mandate for businesses to accept cash, but some local governments have issued ordinances requiring the acceptance of cash.
While some may argue that going cashless may keep your money safe from physical robberies, digital banking and payments are also vulnerable to cyberattacks and identity theft. Plus with mobile devices being increasingly used for banking and electronic transactions, accidentally losing one could put your financial accounts at risk. All that to say safety and security isn’t going to be completely addressed even with reliable digital currency.
Those who are concerned about a move away from cash may not have to hit the panic button just yet. It may take getting the pandemic under control to see a return of the normal circulation of cash, but with a lot of work to be done in order to perfect a digital dollar, it’s not likely to become the norm for a while. Local leaders and activists will not want it to go into effect unless there is a mechanism to ensure economically disadvantaged people are not left behind. Plus privacy and civil liberties advocates are likely to fight any efforts to make digital currency the only method to pay. Plus even digital currency is still likely to have the same risks of inflation and volatility as cash.