Is the US Moving Toward a Cashless Society? (2024)

Chances are that, even today, you know of at least one or two businesses that are still cash only. They are few and far between, but they exist: that small, locally-owned food stand, the specialty grocery store that’s family-owned, the street vendor that sells fruit, or ice cream, or a single specialty. As we collectively become more cashless, however, it’s getting more difficult for those small business owners to operate with cash only while staying competitive.

It might be said that the US is headed toward a cashless society. Some small businesses have even put up signs saying that they no longer accept cash, another factor that’s driving this change. Cash payments can take longer, limit potential sales, and open up businesses to the possibility of an audit. Grocery stores and larger retail stores have more self-checkout registers, and although those registers can take cash, customers typically use them for card-based transactions. Many community financial institutions (CFIs) are in the same boat, trying to embrace tech and digital payments, while still acknowledging that not all Americans are ready to bid goodbye to cash just yet.

Cards or cash?

As mobile payment apps continue to gain popularity, the trend is certainly away from cash. In August, Gallup found that 60% of people said they make just a few or no purchases with cash, double the number from 5Ys ago. Just 13% said that they make all or most of their purchases with cash — a number that has been slashed in half from the reported 28% 5Ys ago.

A closer look at the numbers reveals demographic differences between those who use cash more often and those who don’t. A little over a fifth of people who live in households with annual incomes of less than $40K make most or all of their purchases in cash. In households with annual incomes between $40K and $100K, 14% make most or all their purchases in cash. Just 5% of those with incomes of more than $100K favor cash for their transactions.

All told, 73% of higher-income consumers used cash sparingly, yet only 49% of lower-income Americans followed the same trend. About 34% of American households have annual incomes over $100K, so about half of the 66% majority use cash more often than not. Millions of people do still prefer cash, though the number of people who trend toward cash transactions is gradually decreasing.

People like having cash as an option.

Even those who handle most of their spending via card transactions report that they like the option of making some purchases with cash. A majority (56%) prefer to have cash with them when they leave home, a number that has increased by 2% since 2016.

“People aren’t entirely comfortable getting rid of cash as a payment option. There are still some situations or circumstances they encounter, or can think of, in which they would like the flexibility of paying with cash,” says Gallup senior editor Jeff Jones. Very few people actually want to see the US become a cashless society and prefer having options, to the point where 62% of people are totally against it, according to Civic Source.

Banks need to straddle the cash and digital worlds.

Financial institutions would undoubtedly benefit from a cashless society. They could continue earning transaction fees and could do away with ATMs and their constant need for service.
But that’s probably not the world that’s coming — not anytime soon, anyway. To continue serving their customers and competing with fintechs, CFIs will need advanced digital capabilities and a willingness to accommodate those who prefer cash transactions.

To support customers who go cashless, this might mean partnering with fintechs or other firms to increase technical capabilities for digital financial transactions, or industry-specific software for business customers. To aid customers who prefer cash, CFIs should continue to provide amenities like drive-thru branch support for cash transactions and 24-hour ATM service.

Though a cashless society may eventually come, it isn’t in a huge hurry. The most important step for CFIs right now is to cater to all of the transaction types that their customer demographics prefer in order to provide well-rounded services that address the needs of all customers in the meantime.

Is the US Moving Toward a Cashless Society? (2024)

FAQs

Is the US moving toward a cashless society? ›

The US is moving toward cashless payments, with a substantial increase in the use of mobile wallet apps and contactless cards. A report from the Federal Reserve Bank of San Francisco found that payments made using cash accounted for just 18% of all US payments in 2022.

Do you think cashless society is attainable? ›

The paper suggests that a near-cashless society is achievable in certain countries, particularly in the Nordics, but a fully cashless society would require addressing technical and legal obstacles.

Why we will never go cashless? ›

In an economy with cash and cashless working together, when the latter is unavailable, people can continue to make essential purchases using cash. A cashless society would rely on a complex network of digital systems, which would be vulnerable to cyberattacks.

Is the move toward a cashless economy good or bad? ›

On one hand, transitioning to a cashless system can reduce crime rates, streamline financial transactions, and simplify international payments. On the other hand, it raises concerns about privacy, cybersecurity risks, technological dependency, economic inequality, and the potential for increased overspending.

How long until cashless society? ›

Physical currency isn't becoming obsolete any time soon, so it's important to weigh up your options before deciding to go fully cashless in 2024. Ensuring you can accept some cashless payments though, is essential to keeping with today's trends and customer expectations.

Why shouldn t the US go cashless? ›

The Drawbacks of a Cashless Society

Without cash, we would be forced to leave a record of everything we buy. While this may not bother some, there are many who worry that governments and/or corporations could use our purchasing histories as a way to track us, monitor us, and even intimidate us.

What country has gone cashless? ›

The shift towards a cashless society has been gaining ground for some time now. Sweden, the first European country to introduce banknotes in 1661, became the world's first cashless society on 24 March 2023. Finland and the UK are top–ranked to become cashless societies as well.

Should we get rid of cash? ›

For instance, using cash instead of credit or debit cards may help keep some people from overspending, because you can see how little is left in your wallet after every purchase. In short, getting rid of cash would impose hardships on society's most vulnerable people and could jeopardize our privacy.

Is cashless economy success or failure? ›

This study found that forming a cashless society is a solution to efforts to grow the economy and speed of transactions in society. Another benefit is preventing corruption, levies, and fraud where electronic payments made on record have suppressed crime.

Is China a cashless society? ›

China is one of the top countries for using cashless payment systems, but penetration is not 100%,” says Sara Hsu, an associate professor at the University of Tennessee, specialising in supply chain management. “Elderly Chinese still often prefer to pay with cash and some struggle with using mobile payments.”

Why are people angry about cashless? ›

People with low income or debt tend to find cash easier to manage too. Another potential disadvantage concerns security. Although abandoning cash helps to reduce theft and fraud, for many consumers, data and cybersecurity issues are a worry — with justification.

Why are people afraid of cashless? ›

Data security - many people are concerned that their financial information may be compromised in the digital environment. Concerns about hacking, identity theft and other cybercrime. Lack of physical control - often managing money in cash gives people a tangible sense of control.

Which banks are not going cashless? ›

All of the Big Four banks - Commonwealth Bank, Westpac, ANZ and NAB - have ruled out going cashless.

Do banks carry cash anymore? ›

Demand for cash has dropped by more than 50 percent over the past decade as a growing number of people rely on debit cards or a mobile phone application, Swish, which enables real-time payments between individuals. More than half of all bank branches no longer handle cash.

What can the bank offer you instead of carrying cash? ›

Prepaid cards

An easy way to pay for goods and services without carrying cash. No need to have a good credit history or open a bank account to get prepaid cards. Built-in spending control because you can only spend what's loaded on the card. In some cases, access to cash from ATMs.

Is the Fed going to digital currency? ›

WASHINGTON, March 7 (Reuters) - Federal Reserve Chairman Jerome Powell significantly downplayed the possibility of the central bank issuing its own digital currency, and said if it ever came to pass, the government would play a limited role.

Which country is going cashless? ›

Norways is the most cashless country, with only around 2% of payments being made by cash, and 100% of the population having a bank account.

Will digital currency replace cash? ›

Central bank digital currencies (CBDC) can replace physical money, especially in economies where cash deployment is costly, Managing Director of the International Monetary Fund Kristalina Georgieva said during a Wednesday speech.

Who would suffer in a cashless society? ›

Poor people who rely on cash to ensure that they budget properly. Anyone in an abusive relationship who may lose financial independence without access to cash. People with physical or mental health problems who find using digital services difficult.

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