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Cash Myths

Sarah Crandall & Maria Terry

03 Jun 2020 - 00:00:00

Is cash going away? 3 reason why this classic payment method is here to stay.  

With electronic payment methods on the rise, there are so many questions surrounding cash these days. Is cash going away? Is cash clean? Are electronic payment methods easier to use? While rumors on the state of cash continue to circulate, we’re here to settle the noise and dispel myths on where it’s going next. If you work with cash on a regular basis, consider the following key reasons why cash is here to stay for the future.

Cash is a clean and safe-to-use payment method.

The ongoing pandemic is forcing us to rethink various aspects of our daily lives that we otherwise took for granted prior to COVID-19. Now more than ever, people around the world are concerned with the cleanliness of everyday objects around them, including cash used to make everyday purchases.

Despite growing concerns surrounding the cleanliness of payment methods, research shows that fears of cash being unclean are mostly unfounded. In a recent study conducted by LendEDU, various payment instruments were tested and scored on a germ scale with a simple scoring measure: objects with a higher score are marked as less sanitary than those with a lower score. In this particular study, the most contaminated credit and debit cards held nearly twice the amount of germs (score 1,206) compared to the average germ score of even the dirtiest bills and coins (score 633). 

In the midst of growing concerns surrounding the current pandemic, it is also important to note that in recent studies, COVID-19 was found to live on plastic for up to seven days, whereas paper products were show to only sustain the virus for up to four days or less. According to a recent clarification by the World Health Organization, COVID-19 is not shown to spread on bank notes, and by simply washing your hands thoroughly after touching currency, you can help to prevent the spread of the virus in your business and in your home.

Unbanked consumers rely on cash to participate in the global economy.

As the primary payment method used around the world, cash is arguably the most egalitarian payment method that exists today. While debates surrounding cashless retail continue to grow, it’s important to remember that a large percentage of the population continues to use cash as their primary payment method for purchasing products and services. It’s estimated that approximately 1.7 billion people globally do not have a bank account.

Even in developed parts of the world like the United States, the unbanked population is substantial, meaning many use cash to participate in the economy. According to the 2017 FDIC National Survey of Unbanked and Underbanked Household, 66% of unbanked households in the United States, households in which no one has a checking or savings account, paid their bills using cash. While there are many contributing factors to consider surrounding the circumstances of unbanked households in the U.S., this percentage of the population is a critical consideration for the importance of future cash use as the primary payment method of low income households.

Legislation is even stepping in to protect this portion of the population with two bills recently introduced to Congress aiming to prevent retailers from going cashless. By citing equal retail opportunities for all and freedom of payment choice, the Payment Choice Act and the Cash Always Should Be Honored (CASH) Act seek to protect the freedoms of U.S. populations who turn to cash as their primary payment method for everyday purchases.

Debt-conscious, young adults are more cautious about credit cards.

According to the experts of the Center for Generational Kinetics, millennial budgeting habits are significantly shaped by memories of the Great Recession of 2008, with layoffs, decreased salaries, and lack of financial stability in mind. Even younger millenials and the addition of young adults in Generation Z, who entered the job market as the economy was rebounding, now face another major economic influence brought on by COVID-19 that will continue to alter their views on handling finances.

With student loan costs rising and personal debt more top-of-mind for young adults, many millennials and young adults of Gen Z are budgeting with less reliance on credit cards. Constantly in search of value and experience, this generation of cautious spenders budgets with the potential for debt in mind and may look to cash as an alternative. 

Cash and credit offer value to consumers and businesses alike.

Whether we choose cash or credit, it’s important to note that preferred payment methods for future purchases will continue to vary by circumstance. No matter which new payment methods appear on the global financial landscape, cash is a classic that is here to stay.

Learn more about cash myths impacting business by checking out 3 Myths About Cash Management