The long-awaited death of cash may finally be coming

E-commerce and mobile money may in the coming years take a bite out of cash's strength in the payments world. But it won't be easy.

Erin Carson Former Senior Writer
Erin Carson covered internet culture, online dating and the weird ways tech and science are changing your life.
Expertise Erin has been a tech reporter for almost 10 years. Her reporting has taken her from the Johnson Space Center to San Diego Comic-Con's famous Hall H. Credentials
  • She has a master's degree in journalism from Syracuse University.
Ben Fox Rubin Former senior reporter
Ben Fox Rubin was a senior reporter for CNET News in Manhattan, reporting on Amazon, e-commerce and mobile payments. He previously worked as a reporter for The Wall Street Journal and got his start at newspapers in New York, Connecticut and Massachusetts.
Erin Carson
Ben Fox Rubin
5 min read
2017 Bonnaroo Arts And Music Festival - Day 4

The Bonnaroo Arts And Music Festival in Manchester, Tennessee, went fully cashless last year.

Jeff Kravitz via Getty Images

This story is part of "Follow the Money," a look at how digital cash is changing the way we save, shop and work.

Bob Anstett just wanted a soda.

He was on a work trip in St. Augustine, Florida, late last month, and one morning thought he'd pop into a nearby Dunkin Donuts. While standing in line, he noticed a sign on the cash register -- cash or nonchip cards only.

So he put the bottle back in the fridge and walked over to a nearby gas station that would accept his payment.

Anstett, 52, from Fort Lauderdale, hasn't used cash for about three years. He doesn't even carry an emergency $20 in his wallet.

That's because he and his wife wanted to keep better track of their finances. Using financial management service Mint, Anstett knows that in 2017, the couple made 1,414 transactions, including 609 for food and dining.

No transaction is too small for a credit or debit card.

"[My accountants] laugh at me," he says. "They'll be like 'Here you went to the grocery store and spent a $1.50?' and I'm like, 'Yeah, I just had to buy a soda.'"

Anstett may be a little ahead of his time, particularly in the US, but perhaps not for long.

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The idea that cash would eventually be killed off by cards, mobile payments and e-commerce has been kicking around for decades. But even with all of the new gadgets, apps and services that aim to wean us off bills and coins, roughly 85 percent of the world's retail transactions still rely on cash. Just 5 percent of Americans surveyed last year by US Bank said they never use cash, putting folks like Anstett in a tiny minority.

We're still living in a cash world, but that may change as younger generations migrate toward digital money. Overall, 49 percent of US millennials have tried mobile payments, versus just 32 percent of baby boomers, US Bank reported. The lure of instant gratification in the smartphone era may become the tipping point as more people finally go cashless.

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The World Bank says digital money -- which lets people buy, pay and transfer money from even simple feature phones -- can have an even bigger impact on the developing world, encouraging more savings and entrepreneurship. For all those reasons, noncash transactions are rising at a rate of 11 percent yearly, helped along by electronic and mobile payments, according to a report last year from Capgemini and BNP Paribas.

Still, there are plenty of reasons why cash remains so hard to dethrone. It's simple, time-tested, doesn't run out of batteries like your phone and can be the only available currency in a natural disaster when there's no power.

"For the past 20 years people have been predicting the death of cash, but I think that's been overdone," says Bill Ready, PayPal's chief operating officer, who helped launch five financial tech startups. "Cash in general will likely die a very slow death."

The cash-free promise

One clue that the cash-free lifestyle is on the rise, especially for young people, is the move by some music festivals to go cashless.

Consider the Bonnaroo Music and Arts Festival, which takes place every summer and swells the population of Manchester, Tennessee, by about 65,000. Who knows how many wallets have been lost in the Bonnaroo mud over the years?

Last year, the festival tied cards and cash to the RFID wristbands it had already been using for about a decade.

Jeff Cuellar, vice president of strategic partnerships for AC Entertainment, says -- based on how festival-goers have taken to cashless payments -- he can imagine more people embracing the idea.

"You've got your fans who are in high school, and they don't know anything different," Cuellar says. "They're helping to push the rest of us forward."

Death to cash?

Minting and printing money is an expensive proposition, which is one reason countries like Sweden, Norway and Nigeria are actively working to remove cash from circulation. Boosters of that change tout the benefits of reducing fraud, easier budgeting and the ability to quickly pay for stuff from anywhere in the world.

Some companies are doing a good job of persuading people to pay electronically. China's tech giants Alibaba and Tencent have convinced people to use mobile payments at a rate of trillions of dollars a year.

A 2017 study from trading site Forex Bonuses listed Canada as the No. 1 cashless country. Canadians average more than two credit cards each. And in Sweden, which came in at No. 2, only 20 percent of transactions use cash, according to Swedish bank Riksbank.

Mobile payments adoption in the US has been a lot slower. So far, most Americans, especially older generations, don't see a need to switch away from cash and cards. That's why mobile payments today make up only 1 percent of in-store transactions in the country, according to 451 Research.

Pros and cons

IDC analyst James Wester says there are both pros and cons for consumers and businesses that cling to cash.

On the pro side: There's no need to download an app and share your information -- and cash is almost always an accepted form of payment. Also, merchants get to avoid transaction fees.

Graphic by Aaron Robinson/CNET

The cons? Cash needs to be stored and protected, and when it's spent, you've got to go get more. And the bigger the transaction, the less convenient cash becomes. Think of buying a brand new car and busting out rolls of bills.

"As long as there are transaction types that people want to keep private, that people do not want to necessarily have as part of a bank statement, cash will continue," Wester says -- though the cryptocurrency bitcoin offers the same privacy benefits.

And even if you've made the jump, that doesn't mean every hot dog stand and corner market  agrees with your no-cash mindset.

Even Anstett had to borrow cash from a friend at the end of last year when they went to use a parking lot at a Miami Dolphins game that only accepted cash.

Occasionally he's aware that his decision prevents him from giving to worthwhile causes outside his grocery story. He tells them, "Sorry, I don't have cash" and keeps going.

But that hurdle is beginning to fall, too. The last time Anstett said that to a table of Girl Scouts, a girl of about 7 or 8 informed him they take Visa and Mastercard.

"I'm like, 'Seriously? You've got a sale!" 

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