I remember about twenty years ago, when my finance professor told us that cash was eventually going to become an strange concept that no one was going to understand, I thought he was crazy. His lecture that day, was about this ridiculous concept that bills and coins would no longer be needed to pay for anything and that every transaction was going to be digital. I remember how all of us laughed out loud about this Sci-Fi idea. Well, time has proved him right.
Think about it. How much cash do you carry in your wallet? We often hear people say things like: “I prefer not to have lots of money with me” or “I use my credit card for everything”. Moreover, our cell phone has become our digital cash resource. Yes, times have changed. Twenty years ago, when you went out without money, you felt insecure. Today that works in the opposite way. The more cash you carry, the more insecure you feel.
Nowadays, most of us prefer to pay, even the smallest amounts with a credit or a debit card. According to a survey by CreditCards.com, in which they asked around one thousand respondents how do they pay for a small purchase of five dollars, two out of three said they preferred plastic. One third felt more attracted by plastic than by cash! And our devices are coming forward as an option.
There are factors like age and education that play a role in whether they choose plastic or cash. Those in the group between eighteen and twenty nine age, the millennials are the ones who will prefer to pay even small amounts of money, like purchasing a bagel or a coffee, with credit or debit cards. Also, this group prefers to pay with debit rather than credit cards by a ratio three to one. Clearly, the screens on our smart phones are an extraordinary option.
On the other hand, as age increases, so does the preference for cash. In the group of people in the fifties and older, almost eight out of ten would pay cash for their coffees and bagels, or for amount of five dollars or less. This group is formed by populace that have managed a budget and household finances using cash or writing checks. Here comes an astonishing data: according to a Federal Reserve report from late last year, the number of checks paid decreased to 18.3 billion in 2012, less than half the number of checks paid in 2003. Wow!
If in 2012 things were turning upside down, today things are not looking nice for bills and coins. Of those surveyed, college attendees and college degree holders were less inclined to use cash for small purchases than those with only high school education. A funny fact is that people without children are more likely to use cash than those with children, and those who live in rural areas are more into cash than city dwellers for these small transactions.
Why are plastic and screens gaining territory over cash? Because people like comfort. With all the technological advances in banking, transactions are quicker, safer and more convenient. Moreover, almost every credit card in the world is offering rewards and encouraging reward chasing. It is an easy way to keep track of expenses, balances are available instantly online and it is a more efficient way to control personal and corporate finances than those tedious and complicated manual records.
Debit and credit cards are a quick and easy method to pay and control, and they are comfortable as well. Most transactions can be completed online from home, with a personal computer or a mobile device. It is impossible to pay in cash while sitting on your couch watching television, or while eating a sandwich in your lunch break.
In the United States there are so many people using plastic for purchases fewer than five dollars, because they find it less difficult than using bills and coins. In the word, the popularity of credit and debit cards is not as widespread as in the United States. It depends on the banking degree each nation has, but the tendency is to follow that example.
More and more people all over the world are loving the advantages of digital banking. I remember when the salary was paid in cash, with notes and nickels in a brown envelope. Cashiers had to count the money carefully and employees had to stand on line in order to receive their salary. Now almost everyone receives their payments in a bank account. The one in which many have engaged the automatic payment for their electricity, water, telephone and cable bills. Young people are using more plastic than cash, parents prefer to give them their allowances that way than giving them money. It has proved to be a better way to know what they are doing with their money. It is safer and it represents more comfort. Yet, even in these days, the issue of security is on the table.
But still, in most countries, the most popular mean to pay is still cash. Nevertheless, you can see how many payments in coffee shops are made with cards and more and more with electronic devices. Each time you see how the popularity of digital banking is coming forward. The younger and more educated you are, the more appeals you will feel with plastic transactions. Maybe, watching carefully at this tendency we can conclude that sooner or later, cash may be an old fashion concept.