Statistics indicate that almost half of Americans walk around with less than $20 in their pocket. With so many ways to pay, including mobile payment systems, credit cards, debit cards and store-branded payments, is the retail industry on the verge of becoming cashless?
The fact is that cash will become less and less important but will never go away completely. If it does, how will the tooth fairy pay, right? Certainly, the rise of mobile and electronic payments means faster, more convenient and more efficient purchases in most instances. New technologies and improved security are making it easier and safer. So it follows that the retail industry, and consumers in general, find great value in not having to worry about or handle cash.
The Federal Reserve estimates that there will be $616.9 billion in cashless transactions in 2016. That is up from $60 billion in 2010. And the retail industry leads the way.
Cashless adoption varies by country. In Sweden, about 59 percent of all consumer transactions are cashless. The number is only 33 percent in Germany. The percent of cash transactions in the U.S. retail industry varies by study. One study showed that up to 40 percent of all transactions are cash. But because the average cash transaction value is much lower than other types, the percentage total of those transactions is only 14 percent. The U.S. retail industry cash transactions are predicted to fall another 30 percent in the next 10 years.
Surprisingly, current worldwide statistics show that cash is still used in 80 percent of all transactions. A cashless society would have many advantages for the retail industry here in the United States. It would save employee time and payroll costs by eliminating cash registers and trips to the bank as well as armored car costs. It would also streamline accounting and improve retailers’ ability to track consumer habits to increase sales.
What many don’t know, however, is that governments and central banks around the world have a different motive to eliminate cash transactions. The so-called “war on cash” is on. Their reasoning: having a paper trail for all transactions would decrease crime, money laundering and tax evasion. Former U.S. Treasury Secretary Larry Summers has even called for the scrapping of the U.S. $100 bill, the most widely used currency in the world.
But most individuals believe the choice to use cash is a personal one, and consumers should be increasingly wary of the government’s true rationale.
Yes, the retail industry would find many advantages in a cashless society. Crimes like tax evasion and money laundering would be reduced. But we would still have to deal with credit card fraud, cyber-crime and data hacking. And, probably most important, how would the tooth fairy pay?