6 Reasons Why U.S Is Losing The War On Cash

The idea of a cashless society has become a highly controversial and debated concept, especially over the last 5 years.  Here in the U.S, there is growing concern that a cashless society is on the horizon; especially because other countries are now trying to incorporate this idea into their own societies.  The potential for the U.S to one day implement such an idea is gaining traction as we are seeing more and more people using less and less cash.  In 2016, over 90% of consumer payments were made via cashless modes in Belgium, France, and Canada, and over 80% in the United Kingdom, Sweden, Australia, Netherlands, and the United States(1).

It appears that cashless societies could be the real future of many countries, including the U.S.  Here are six reasons why I think The U.S is losing the war on cash.


1.Cash Is Expensive

It’s not something a whole lot of people probably think about, including myself, but there is a price for using cash.  According to a 2013 study done by Tufts University, Americans spend $200 billion per year to use cash.  According to the study, out of network and foreign ATM fees amounted to $8 billion annually; thefts to businesses and individuals were $40 and $500 million annually; and check-cashing services cost consumers $200 million in annual fees(2).  Other costly expenses include inspecting, moving, storing, and guarding money.

Currency also costs the U.S. Government $660 million each year to print new notes.  There is also $260 million lost to counterfeiting each year(7).


2. Payment Methods Are Changing

The emergence of smartphones has added yet another way in which people can pay at the register.  In 2015, approximately 2 billion people owned smartphones worldwide, and that number is expected to reach 2.16 billion by 2016; a 12% increase(3).  Smartphones have a built in chip that allows them, with just a wave of the hand, to be picked up by scanners(9).  In addition, payment apps such as Apple Pay, Google Pay, Android Pay, Samsung Pay, and PayPal smartphone owners to complete a purchase without the need of physical currency.


3. Banks and Credit Card Companies Make Large Profits from Credit/Debit Cards

When people use cash, credit card companies/big banks don’t make anything.  Enormous profits in the billions are made off of debit and credit cards every year.  It is not surprising, then, that these corporations are one the biggest proponents for a cashless society.  Overdraft and ATM fees make-up most of their profits.  In 2015, America’s biggest three banks made over $5.1 billion in overdraft fees alone(4).

Prepaid credit cards are another alternative to cash that is gaining popularity in the U.S..  According to a 2014 survey done by Mercator Advisory Group, 56 percent of U.S adults had bought a prepaid cash card in the previous year(5)  This percentage was up 53 percent from a 2013 survey, and up 47 percent from 2012.  Part of the reason for the increase in popularity is that prepaid credit cards are not linked to a bank account, allowing consumers’ transactions to remain private.


4. Crime Reduction

One of the most compelling, and potentially beneficial reasons for having a near cashless society is that it would help deter criminal activities. The sale of illegal drugs on the street is nearly untraceable in a cash society.  It is well known by law enforcement agencies that large notes, such as the U.S $100 bill, facilitates racketeering, extortion, money laundering, drug and human trafficking, and terrorism.  Large notes allow for large sums of money to be transported anonymously, making it easy for criminals to transfer large sums.  One-million dollars in $100 bills weighs just 20 pounds, and can fit into a small briefcase(6).


5. Increased Tax Revenue

The push for less reliance, and eventual elimination of cash, is being made by several governments around the world. Potential benefits that many of these governments hope to foresee is an influx in tax revenues, generated from both reductions in tax evasion and illegal immigration.  Tax evasion costs the U.S Government approximately $500 billion dollars a year in revenue(5).  A completely cashless America would ensure documentation and accountability for every business transaction.  Illegal immigration also causes many financial problems.  Illegal immigration costs U.S. tax payers $113 billion a year(8).  By decreasing the hiring ability of illegal immigrants, it could help lower illegal immigration altogether.


6. Negative Interest Rates

One final reasoning for the United States eventually becoming a cashless society is probably the most interesting and controversial.  Banks would like to be in a position where they can implement negative interest rates. Having a cashless society would force people to keep their money in the bank, and allow banks to drive interest rates as low as they want.  This would be particularly beneficial to banks during a severe recession.  The positive aspect of negative interest rates is that it would stimulate consumption and investment by encouraging borrowing.



It is hard to determine whether or not a leap toward a cashless, or near cashless society will ever actually happen here in the United States.  However, there are many reasons to believe that it is very possible.  With the advent of new technology and people already using less and less cash in their daily lives, it seems that policy makers may one day have the ability to do away with cash altogether.



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9 thoughts on “6 Reasons Why U.S Is Losing The War On Cash

  1. Although I hate spending cash and prefer a card, I would fear being completely cashless. I feel as if that can be dangerous in the sense that things get deleted or if someone gets account information then they have everything and then you’re left with nothing.

  2. I prefer cash.
    I like to be able to physically see my money.
    Credit cards are the reason people get into debts by being provided with “fake” money.

  3. One day retail members will be able to check people out anywhere within the store. This could limit time waiting in line. Using cash creates opportunity for employee as well as customer theft, but also allows for mental math mistakes of cashiers.

  4. Using online credits as the main monetary policy could definitely eliminate the amount of time and money spent on printing cash. I could even see a large reduction in the amount of germs and bacteria that is spread if we convert to completely cashless. The only worry I see would be the possibility of hackers that could potentially inflate the whole system. Very informative read!

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