There used to be a time when cash ruled the roost. When a healthy wallet was packed with a selection of bills: some ones and fives and a few twenties, and if things were really going well a nice crisp $100. These days, you’ll be hard-pressed to find more than a couple bucks crumpled up in the bottom of a purse. In fact, only 10% of adults say they always have cash on hand, and 73% say they either never or rarely carry currency.1 Why? Cash is being replaced by virtual alternatives. As technological advancements surge ahead and we’re exposed to an increasingly Jetson-esque world (robots, drones, driverless cars), is it fair to consider that cash may no longer be king?
Apple’s CEO, Tim Cook, certainly thinks so. In the wake of the Apple Pay release, a groundbreaking mobile payment system, he said, “Your kids will not know what money is.”2 A bold claim, certainly, but take a look around. Why carry cash when there are so many convenient alternatives? Instead of catching a cab, hail an Uber or Lyft with your mobile phone. No cash necessary. Coin-fed parking meters are increasingly being replaced by card-reading devices. Owe a friend or family member some money? Turn to PayPal, Google Wallet, or one of the many convenient virtual peer-to-peer payment services available. Peer-to-peer transfers are predicted to grow from $15 billion in 2014 to $271 billion in 2019.3 Just in the last decade, we’ve seen the development of an entirely new form of virtual currency, Bitcoin. The hassle of carrying around cash is just no longer worth it. It’s been replaced by the convenience of downloading an app to our mobile devices.
Younger generations are embracing the virtual trend with open arms. Forty percent of Millennials said they would stop using cash if their credit or debit card could replace all forms of cash transactions.4 It’s not just a matter of convenience either, but a practical decision. Digital spending is easier to track than cash. Apps and programs like Mint and You Need a Budget allow individuals to monitor spending habits and quickly detect fraud. Cash is also easily lost or destroyed. You can accidentally leave money in your jeans during a load of laundry, or unknowingly drop a few bills when making a purchase. Virtual dollars, on the other hand, are always readily available, trackable and relatively safe.
Gen Edgers are even more ready for the full transition to virtual currency. A study found that they are two times more likely to use mobile devices to make a payment than the general population.5 They are, after all, the generation that has had the least physical interaction with paper currency. Even toy-makers are taking note. Hasbro recently released a cashless version of its iconic game, Monopoly featuring a small ATM that tracks players’ credit and available funds. A game that has relied on cash for over a century has made the switch to virtual. How long before life imitates art?
While virtual currency usage is clearly on the upswing, it may be a while yet before cash is officially dethroned. There are very real problems to be addressed with the usage of virtual money, including the tendency to overspend, vulnerability to hackers and technology malfunctions. For some, these concerns are enough to keep cash alive and well. For the younger generations, however, the demise of paper money is within reach, and possibly very soon, “Benjamin” will be nothing more than a name.
1 Kadlec, D. Time. (2015, May 29). This Is Why Cash Will Never Be King Again.
2 Hyde, D. (2015, November 11). Apple boss: Next generation of children ‘will not know what money is’.
3 eMarketer. (2016, March 9). For Millennials, cash is still king.
4 Heggestuen, J. (2015, October 26). Ahead of the curve: The digital disruption of retail banking.
5 The Paypers. (2016, February 26). US: Generation Z choosing mobile payments over cash.
This information is prepared by an unrelated independent third party, BridgeWorks, and is provided for informational purposes only. Ivy Distributors, Inc., believes the information has been obtained from sources considered to be reliable, but does not guarantee the accuracy of the information provided.
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