Is Cash Becoming an Endangered Species?

There is a covert war going on in Washington D.C.

You see, many restaurants and vendors have stopped taking cash.

There are signs on bus stops asking commuters what they think about buses doing away with cash. WMATA, the city’s bus operator, is exploring the option of no longer accepting cash.

Yet some are fighting the trend.

The Cashless Retailers Prohibition Act 2018, a bill under review, is looking to make it illegal for businesses to not accept cash or charge different prices for different payment methods.

As council member David Grosso wrote on the bill:

“By denying patrons the ability to use cash as a form of payment, businesses are effectively telling lower-income and young patrons that they are not welcome,” Grosso said. “Practices like this further stratify our diverse city when we should be working to foster greater inclusion.”

One in ten residents in the District of Columbia has no bank. An additional one in four are underbanked and therefore may not have access to a debit or credit card.  

“Through this bill, we can ensure that all D.C. residents and visitors can continue to patronize the businesses they choose while avoiding the potential embarrassment of being denied service simply because they lack a credit card,” Grosso said.

The truth is that consumers are increasingly embracing plastic.

I mean, I get it. It’s easy.

With plastic you only need to tap and go.

No need to go to the ATM, have the hassle of carrying coins, or risk losing money.

Battle of the Titans: Who wins when bitcoin and gold head-to-head…and how can you profit? Find out more here.

For businesses, there are even more perks.

Payments are quicker, there is no need to handle cash or go to the bank every day, and there is less risk of getting robbed.

Yet DC may have already lost the fight. Because, you see, this is a global war.

The graph below shows the worldwide non-cash transactions in billions by regions. As you can see, cashless payments are expected to keep growing with the developing world boosting that growth.

Chart displaying the growth of cashless payments

Source: World Payments Report 2018

[Click to open in a new window]

In Australia, according to a Reserve Bank of Australia (RBA) survey, in 2016 over half of payments were made with card, and only 37% in cash, down from 69% in 2007.

Some traditional cash takers like the not-for-profit The Big Issue magazine and even some Melbourne buskers, are starting to accept cards to ensure they don’t miss out. 

In fact, RBA’s governor Philip Lowe recently addressed the cash disappearance trend in a speech.

As he said, we may have reached a turning point.

For some decades, people have been speculating that we might one day go cashless – that we would no longer be using banknotes for regular payments and that almost all payments would be electronic. So far, this speculation has been exactly that – speculation. But it looks like a turning point has been reached. It is now easier than it has been to conceive of a world in which banknotes are used for relatively few payments; that cash becomes a niche payment instrument.’

While governor Lowe doesn’t expect cash to disappear anytime soon, he sees the shift as a ‘positive development that should promote our collective welfare’.


The greater use of electronic payments can bring efficiency benefits, with lower costs and more functionality and choice for users.’

To be honest, we have our doubts on this one.

Getting rid of cash gives us less choices

It leaves older and marginalized people exposed. It leaves us at the mercy of having a bank account or having a smartphone to make transactions.

But it also makes us more vulnerable.

Sweden, the world’s most cashless country, is also having doubts.

Cash transactions in Sweden have fallen to a low of 1% of GDP and the country is looking to become a cashless society by 2025.

Yet Swedes are starting to realise that going cashless means they are reliant on electricity and the internet working.

Any war, natural disaster or cyber-attack could leave them exposed when money is only in electronic form.

But we see an added danger. If there was any financial turmoil, it might leave you exposed to the loss of liquidity that could come with it.

We are moving fast towards a cashless society. As we look for more convenience, physical money is becoming an endangered species.

Moving to the digital realm gives banks and governments more control over your finances.

You see, digital money is easier to manipulate. And it can be easily restricted if there was financial turmoil. It is easier to impose negative interest rates on charges or bail ins.

Giving up cash means having less choice and less liquidity if there is a financial breakdown.


Selva Freigedo,
Editor, Markets & Money

Selva Freigedo is an analyst with a background in financial economics. Born and raised in Argentina, she has also lived in Brazil, the US and Spain. She has seen economic troubles firsthand, from economic booms to collapses and the ravaging effects of hyperinflation, high unemployment, deposit freezes and debt default. Selva now writes from her vantage point here in Australia. She is lead Editor at the daily e-letter Markets & Money. And every week, she goes through each report and research note produced by our global network of trusted advisors to find the best investment opportunities for you in Australia and overseas. She packages these opportunities for you in Global Investor.

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