Will Digital Money Kill Cash?

We see more non-cash transactions than ever, is it the end of paper money?


Digital currency has had significant press coverage over the past two years. We have seen Bitcoin being portrayed first in the media as a shady way for people to buy drugs, then as a viable investment for people, then to an unstable roller coaster currency.

In much the same way, we have seen that digital payments have become fraud risks, useless gimmicks and now increasingly popular methods of paying for goods and services.

This begs the obvious question, is there a place for cash?

I frequently find that when I am walking down the street and somebody asks me for spare change, that I genuinely have none to give them. My pockets no longer jingle when I walk and my wallet is considerably lighter than it has ever been. It has nothing to do with a lack of money, but instead has been caused by the ability to pay for almost anything through digital payments.

Traditionally, cash payments have been the domain of small payments, whilst cards and cheques have been used for higher values. For instance, it would seem strange and suspicious today if you were to pay for a car with cash alone.

It is this market that many of the big players in the digital payments market have been aiming at, simply because this is the largest payment market at the moment. There are many more purchases under $10 than over, making it more profitable than targeting the larger transactions and also making it simpler for users.

However, despite the increased use of contactless payments, online money transfers and mobile payments, we have seen an increase in the amount of cash in circulation throughout the world, meaning that although mobile payments have increased, they have not killed cash. Why is this the case though?

Put simply, it is easier to monitor your basic outflows and payments through cash, you have a certain amount in your wallet, then you have less until you are at the end and need to get more. With mobile and digital payments this is not the case, unless you are writing down or methodically recording every transaction, it is difficult to know how much you are paying altogether.

In fact, studies have shown that the largest adopters of the new payment techniques have also been those who have increased their use of cash, the young in society.

This is a strange set of circumstances, but shows that rather than mobile payments replacing cash, it seems to be creating a landscape where young people are equally happy using hard cash or digital payments.

There clearly is still a place for cash, but we have seen that despite more being in circulation, the number of transactions that see no cash changing hands far outweighs the number that do. Even the most basic stats show this, with over $5 trillion of e-commerce activity in 2014, which by it’s very nature cannot use cash as a payment type.

So although the number of payments through digital means has increased, there is certainly a demand for cash to be used in transactions throughout the world. Whether this number increases or decreases in the next few years is a moot point, because regardless of how much use it is likely to get, there will always be a demand for it. 


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