Will cash ever go extinct? What are the odds the government will say, in ten years time, that they won’t print money anymore?
Over the past 30 years or so it seems as though cash has gradually become less significant in our lives. Prior to 30 years ago, virtually every small transaction I can remember seeing or taking part in involved cash. (Larger purchases were sometimes made with a cheque.) Then the debit card came along and handled a lot of smaller transactions. It, along with credit cards and their tap-to-pay convenience, have done a lot to erode the role of cash in our daily lives.
These days I know a lot of people who carry only credit cards or, in some cases, don’t even have physical cards as they prefer to use virtual cards on their phone or smart watch. It seems increasingly that cash isn’t as significant in our society. At least in daily life.
However, there are times and places where cash is still the primary form of payment. Whenever I attend a farmer’s market or, often times when, taking a taxi the sole accepted in-person payment method is cash. These small transactions, done in high-speed or less formal environments, often rely on cash.
I also find that it’s not uncommon for shops and vendors to have trouble with their payment machines. Around once a month I’ll be out with my partner or friends and we’ll go to purchase a snack or coffee and discover the store’s card processor is off-line. This necessitates us using cash.
A few venues I’ve been to with cover charges require attendees pay with cash only. It tends to leave some people in the line-up scrambling to find the nearest ATM or a friend who does carry cash.
Let’s not forget that last year Rogers Internet service went off-line and, as a result, it took down most digital payment processors in Canada, bringing many businesses to their knees and preventing consumers from using cards to pay for items. It cost businesses across the country millions of dollars because they were unable to process debit transactions and people who didn’t carry cash were unable to pay for services.
My opinion is, while cash is taking a smaller and smaller role in purchases, physical money is still highly valuable in some situations. The Bank Of Canada has pointed out that cash is still even used frequently. In a report from 2020 the Bank Of Canada shared the following observations:
It is likely that use of bank notes for transaction purposes will continue to decline in Canada, as payment technology improves and consumers become increasingly comfortable with online commerce and contactless, “tap and go,” technology. In 2017, only 33 per cent of transactions at the point of sale (or 15 per cent by value) were completed using cash. This was down from about 54 per cent in 2009. In our 2019 Cash Alternative Survey, 9 per cent of respondents said they do not use cash while another 6 per cent planned to stop using cash within five years (Huynh, Nicholls and Nicholson forthcoming).
The 33% figure for cash transactions is lower than it was just three years prior. It’s also much lower than it would have been twenty years ago. However, even if the rate of cash decline remains steady, it’s likely to take another twenty to thirty years before people have largely done away with cash transactions.
In short, cash is fading, but it’s fading slowly. It’s only been fairly recently (2012) the Canadian penny was phased out of circulation and our society doesn’t seem to be in a hurry to rush other coins, like the noble nickel, out the door. The phasing out of cash will likely continue to happen gradually, but I think cash will persist in being used, at least for emergency situations and during power outages, for a few more decades and quite possibly longer.
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