Spending

Could America Become Cash-Free?

If you want to buy a beer at Flatstick pub in Seattle, don't whip out a $10 bill to pay—you'll walk away thirsty. Flatstick, a hot new mini-chain in the Pacific Northwest, doesn’t take cash. Neither does Bluestone Lane, a coffee chain with locations in New York, Philly and D.C. Patrons there have to pay with plastic or an app called LevelUp. Want to grab a Sweetgreen salad for lunch with cash? No can-do at many locations.

Cashless commerce is popping up around the country, particularly in restaurants catering to a younger crowd, which is likely to leave home without any greenbacks, or even a wallet, and instead choose to live life with a smartphone and a few credit or debit cards attached.

Businesses who’ve gone cashless rave about the results. Flatstick owner Sam Largent told me plastic-only reduces error rates during times of complex accounting, such as calculating tips when shifts change.

Cash sure seems to be on the ropes. The dollar value of cash transactions sank 7 percent from 2010 to 2015, according to The Nilson Report, while credit and debit card payments rose nearly 50 percent. Meanwhile, ATMs, which had their 50th birthday last year, are disappearing around the block and around the world, signaling the decline of the “cash run.”

Of course, cash-free environments aren’t brand new. Airlines went cashless a long time ago (for meals and other on-board purchases), as did parking lots and other unmanned spots. And with the meteoric rise of friend-to-friend payment apps like Venmo, Zelle and Splitwise, we’re no longer throwing $20 bills on the table after a meal (or handing over cash or checks to roommates for the gas bill).

So you’re saying cash is over?

Not exactly. The Federal Reserve said in 2016 that 35 percent of U.S. transactions were still made in cash. And the amount of cash—literally, legal tender notes—being used around the world continues to rise. Plus, there are still plenty of obstacles to going cashless.

For starters, the FDIC estimates that 7 percent of the U.S. population is still unbanked. In other words, they live an all-cash life, so would be entirely shut out in a cashless society. Some also like the anonymity that comes with paying cash. Others use cash for budgeting reasons (when you’re out of cash, you stop spending).

Still, on a global scale, eliminating cash offers some intriguing possibilities. Merely the elimination of large denominations, which the EU has done, makes life much harder for large-enterprise criminals, like drug dealers. It’s far more conspicuous to carry around large piles of small bills. If all financial transactions were electronic, hiding crime would become much more difficult. There’s also the convenience factor of pulling out plastic (or your phone) instead of counting bills.

What does this all mean for law-abiding citizens like me?

Forces will undoubtedly continue nudging us toward a cashless life, which comes with plenty of benefits. Just remember that cashless spending is frictionless—it’s just a swipe of a card or a wave of your phone. So, if you’re already prone to overspending, get creative about curbing those tendencies and making sure your savings goals are on track.

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