What's the Outlook for Cash?

We're often asked about the importance of cash: what's the outlook for cash and is it going away? 

Certain groups—like early technology adopters or the top quartile income earners—will tell you that cash will go away. These perceptions are reinforced by the card companies and electronic payment companies who spend hundreds of millions of dollars each year pushing the message that the days of cash are numbered to move you into products that they charge merchants a hefty fee for.

The reality is, despite all of the marketing efforts and vested interests, cash today remains the number one payment method for consumers in the United States, Canada, and beyond.  Very recently there has been pressure for contactless-only payments during the COVID-19 crisis, while most non-essential businesses are closed.  This is pushing some grocery, gas and convenience stores to discourage cash and other payment methods in favor of contact-less tap payments.  We do not believe this will have a lasting negative impact on cash use and, in fact, we expect the usual recessionary pattern of more cash use in line with tighter consumer budgets, lower discretionary spending and reduced access to credit cards to provide stability and possibly a slight boost to cash as the crisis subsides.

Why Is Cash the Number One Payment Method?

First, people are familiar with it—they like cash. It is our legal tender. People know and trust cash, so they continue to use it.  It is not hackable. Also, unlike digital payments, its battery can't die. People can still use cash when there are electrical outages or natural disasters.

Second, merchants like it. Cash is fast, cheap and easy to manage for them, so they keep accepting it. Cards and electronic payment terminals charge significant fees to the merchant, which ultimately gets passed on to the consumer. Cash avoids these third-party fees.

Third, cash is all about financial management and inclusion. Unless you're in the top tier of earners, you're likely watching your household budget closely. Cash is a simple, proven way to stay in the black and avoid impulse spending that can get you in trouble.  When times are tough, more and more people manage their budgets by paying with cash. Cash is also accessible to everyone. Whether you have a bank account or not, you can be part of the economy and meet your needs as a consumer.

Lastly, privacy is a fundamental right that many people still value.  While the rise of smart phones has encouraged many to exchange their privacy for application features, only cash protects your privacy in purchasing.  Those that don’t want to provide data on their every transaction can rely on cash as a safe, convenient and private payment method.  As more supposedly secure databases are hacked, we expect to see a trend back to consumer interest in protecting their personal information and that is supported best by cash.  

Does Cash Transmit COVID-19?

The Covid-19 pandemic has fanned public concerns that the coronavirus could be transmitted by cash.

Recently, the Bank of International Settlements, published the results of their research1 which concludes clearly:

  • Scientific evidence suggests that the probability of transmission via banknotes is low when compared with other frequently-touched objects, such as credit card terminals or PIN pads.

In addition, recent studies from LendEDU2 and CreditCards.com3 indicate that plastic cards are equally if not more contaminated. In these studies, the average payment card was found to have a germ score of 285 while cash had a significantly lower average germ score of only 160.

Is Cash Going Away?

The short answer is no. The most recent evidence of this was the surge in demand for cash at the onset of the recent COVID-19 crisis where most banks had to add cash to their distributions networks to satisfy customer demand.   It's a good reminder of the importance customers place on cash access and why it is crucial for banks to continue to distribute cash to their consumers where and when they want it.

There shouldn't be an issue of trying to exclude cash or prevent consumers from getting hold of hard currency. The choice is the consumer's, and banks need to respect a consumer's right to choose their method of payment. To continue to offer convenient cash access, Banks must drive down their cost of cash distribution, and that's where Perativ can help.

Accessible, Affordable Cash with Perativ

At Perativ, we make cash accessible and affordable.

We ensure cash distribution points remain open and accessible for consumers, and we make cash distribution affordable for banks so they can continue distributing cash to their customers. As a cash management software for banks, we're committed to servicing the number one payment method demanded by consumers, in a way that is cost-effective for banks.

Perativ can help you keep cash accessible and affordable. Talk to us today.                  Call 1-833-PERATIV (1-833-737-2848.


1 BIS Bulletin No. 3 – Covid-19, cash and the future of payments: https://www.bis.org/publ/bisbull03.pdf

2 LendEDU:  https://lendedu.com/blog/dirty-money-credit-cards/

3 CreditCards.com:  https://www.creditcards.com/credit-card-news/credit-card-germ-study.php

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