Interactive Directory

Is Cash Really Doomed?

Ever since mankind started to band together to form societies and communities, there has been some form of currency used to purchase goods and services. Perhaps it wasn’t cash – it might have even been trading or bartering, before currencies existed. The idea remains the same, though – there has to be some sort of mechanism by which people can make purchases.

Obviously, today, cash is the form by which buy anything and everything – or it? If you had asked me this question maybe 3 or 5 years ago, I would probably have said yes straightaway. You need cash to make the most basic of purchases, even in the most advanced of cities. Today, however, it seems that cash might be on the way out.

Earlier this week, Emma Lou Montgomery published an article on MSN UK regarding the “fact” that cash is doomed. She wrote:

Figures from MasterCard show debit and credit card transactions are increasingly becoming our preferred method of payment. Eight out of 10 people surveyed said debit cards were more convenient than cash, while two out of three said they feel more secure using their debit cards.

If that’s the case, notes and coins could very well be redundant in the not-too-distant future as the new cashless payment systems take hold. We’ve already got Oyster cards on the London tube network and now some retailers in London accept so-called “contactless” payments for purchases under £10. To pay for goods, you simply touch your card on a reader and the sum is debited from your card.

What she has written just might be true – especially in industrialized countries. Think back to several years ago. Even if you had a credit card or two, the chances are that you only used them for major purchases. Maybe a plane ticket, a hotel room, a new stereo system and the like. Today, with various options available, you can get to use various types of cards to make your purchases instead of having to dig into your pockets for coins or bills.

What are the implications of this trend? It depends on what card you are using. For credit cards, I fear that debt may mount due to less control on actual spending. As you may very well know, using a credit card once too often may quickly put you in debt. On the other hand, if you use those prepaid cards, you might be more controlled with regard to spending. Prepaid cards are very similar to cash in a way – you can’t make any purchases unless the account actually is topped up with a certain amount of money. If you haven’t got the money, then you cannot spend. I like this second principle better, to be honest. It is more convenient than cash – you do not have to carry it around nor do you have to wait for minutes till the cashier figures out how much your change is and then doles it out to you. As of now, however, one disadvantage of using some prepaid cards is the fact that banks or financial institutions issuing these cards may charge hefty monthly or yearly membership fees. More so, some cards charge a fee to use them. So for example, you’d have to pay an extra pound each time you make a purchase. It may not seem much but a pound adds up, especially if you make several purchases in a day.

Maybe cash is on its way to extinction – who knows for sure?