From cash to cashless

7 January 2019 10:42

From cash to cashless

Methods of payment have changed over the years. From bartering via cash to electronic payment. In a digital world, will cash disappear? Read new blog post by Tor Walin Andreassen.

In a perfect world it can, but in real life there will always be some cash. In this blogpost I discuss current US-consumer trends with regard to electronic payment – a trend pushed forward by young consumers.

Next time I am dining out with Millennials (i.e. my kids) I will pay attention when the check arrives. I can see two scenarios: a) all of us reach for our credit cards and leave it to the waiter to split the bill equally or b) one picks up the bill and the rest pick up their smartphones and launch an app to transfer their share to the payee. As the keen eye will notice: there is no cash in this picture!

In a resent scenario I had lunch alone between meetings. When paying (with cash) I asked the waiter: what is your observation regarding cash payment? His polite answer was: No offence sir, but I think it is an age issue!

His response is in line with new data from Pew Research that shows that  Americans in general are paying with cash significantly less often. The numbers aren't overwhelming yet, but the change is happening, and it's driven by younger consumers.

Today, nearly 3 in 10 Americans make no purchases using cash during a normal week, according to the survey of over 10,500 U.S. adults. That's up from 24% when the same study was last conducted in 2015. In addition, the percentage of people who said they make all or nearly all their purchases with cash fell from 24% in 2015 to 18% in 2018.

"Adults with an annual household income of $75,000 or more are more than twice as likely as those earning less than $30,000 a year to say they do not make any purchases using cash in a typical week (41% vs. 18%)," wrote Pew's Andrew Perrin. "Conversely, lower-income Americans are about four times as likely as higher-income Americans to say they make all or almost all of their purchases using cash (29% vs. 7%)"

Age also plays a major factor. More Americans under 50 (34%) typically use no cash than those over 50 (23%).

In addition, the number of people who make sure they always have cash on hand has fallen from 60% in 2015 to 53% in 2018. "Americans under the age of 50 are more likely than those ages 50 and older to say they don't really worry much about having cash on hand: 52% of 18- to 49-year-olds say this, compared with 38% of those 50 and older," wrote Perrin.

In Sweden, none of the High Street banks around Stockholm's spotless Odenplan square handle cash any more. You can only pay for your coffee and cinnamon bun by card or with your smartphone at the local branch of the country's largest cafe chain. And there's no chance of using coins or notes if you want to hop on one of the shiny blue busses whizzing past.

Yet for Swedes there's nothing unusual about how cashless this inner-city neighborhood has become in recent years.  The vast majority of Sweden’s nation's banks have long stopped allowing customers to withdraw or pay in cash over-the-counter.

Bottom line: the cashless society (or close to it), driven by the young, is inevitable. But we need to make arrangements for citizens who for various reasons prefer cash. Option is always better than no-option.

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