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.

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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.