Is the US Moving Toward a Cashless Society? (2024)

Chances are that, even today, you know of at least one or two businesses that are still cash only. They are few and far between, but they exist: that small, locally-owned food stand, the specialty grocery store that’s family-owned, the street vendor that sells fruit, or ice cream, or a single specialty. As we collectively become more cashless, however, it’s getting more difficult for those small business owners to operate with cash only while staying competitive.

It might be said that the US is headed toward a cashless society. Some small businesses have even put up signs saying that they no longer accept cash, another factor that’s driving this change. Cash payments can take longer, limit potential sales, and open up businesses to the possibility of an audit. Grocery stores and larger retail stores have more self-checkout registers, and although those registers can take cash, customers typically use them for card-based transactions. Many community financial institutions (CFIs) are in the same boat, trying to embrace tech and digital payments, while still acknowledging that not all Americans are ready to bid goodbye to cash just yet.

Cards or cash?

As mobile payment apps continue to gain popularity, the trend is certainly away from cash. In August, Gallup found that 60% of people said they make just a few or no purchases with cash, double the number from 5Ys ago. Just 13% said that they make all or most of their purchases with cash — a number that has been slashed in half from the reported 28% 5Ys ago.

A closer look at the numbers reveals demographic differences between those who use cash more often and those who don’t. A little over a fifth of people who live in households with annual incomes of less than $40K make most or all of their purchases in cash. In households with annual incomes between $40K and $100K, 14% make most or all their purchases in cash. Just 5% of those with incomes of more than $100K favor cash for their transactions.

All told, 73% of higher-income consumers used cash sparingly, yet only 49% of lower-income Americans followed the same trend. About 34% of American households have annual incomes over $100K, so about half of the 66% majority use cash more often than not. Millions of people do still prefer cash, though the number of people who trend toward cash transactions is gradually decreasing.

People like having cash as an option.

Even those who handle most of their spending via card transactions report that they like the option of making some purchases with cash. A majority (56%) prefer to have cash with them when they leave home, a number that has increased by 2% since 2016.

“People aren’t entirely comfortable getting rid of cash as a payment option. There are still some situations or circ*mstances they encounter, or can think of, in which they would like the flexibility of paying with cash,” says Gallup senior editor Jeff Jones. Very few people actually want to see the US become a cashless society and prefer having options, to the point where 62% of people are totally against it, according to Civic Source.

Banks need to straddle the cash and digital worlds.

Financial institutions would undoubtedly benefit from a cashless society. They could continue earning transaction fees and could do away with ATMs and their constant need for service.
But that’s probably not the world that’s coming — not anytime soon, anyway. To continue serving their customers and competing with fintechs, CFIs will need advanced digital capabilities and a willingness to accommodate those who prefer cash transactions.

To support customers who go cashless, this might mean partnering with fintechs or other firms to increase technical capabilities for digital financial transactions, or industry-specific software for business customers. To aid customers who prefer cash, CFIs should continue to provide amenities like drive-thru branch support for cash transactions and 24-hour ATM service.

Though a cashless society may eventually come, it isn’t in a huge hurry. The most important step for CFIs right now is to cater to all of the transaction types that their customer demographics prefer in order to provide well-rounded services that address the needs of all customers in the meantime.

Is the US Moving Toward a Cashless Society? (2024)


Is America becoming a cashless society? ›

The concept of a cashless society has been around for decades. But with 80% of payments in the US being made digitally in 2022, and four in ten of us ditching change altogether, research suggests that the transition from physical currency could take place sooner than we once thought.

Are we moving towards a cashless society? ›

The US is moving toward cashless payments, with a substantial increase in the use of mobile wallet apps and contactless cards. A report from the Federal Reserve Bank of San Francisco found that payments made using cash accounted for just 18% of all US payments in 2022.

Is cashless society good or bad? ›

People with low income or debt tend to find cash easier to manage too. Another potential disadvantage concerns security. Although abandoning cash helps to reduce theft and fraud, for many consumers, data and cybersecurity issues are a worry — with justification.

Why shouldn t the US go cashless? ›

A cashless society would rely on a complex network of digital systems, which would be vulnerable to cyberattacks. If these systems were hacked, it could have a devastating impact on the economy. Privacy is the third challenge raised. Cash can be exchanged anonymously, leaving no digital trail.

Is cash going away in the United States? ›

Nope. We might use less cash, but our society still has a long way to go before it's totally and completely cashless. And just because some stores didn't want to accept dollar bills for a while (and maybe still don't), that doesn't mean a cashless society is here to stay.

How long before we are a cashless society? ›

The first truly cashless society could be a reality by 2023, according to a new report from global consultancy A.T. Kearney. In just five years, we could be living in the very first truly cashless society.

Which banks are going cashless? ›

Commonwealth Bank, ANZ, NAB and Westpac all confirmed on Friday that there are no current plans to go cashless. This comes after Macquarie Bank announced it would phase out cash and cheque services across all its banking and wealth management products from January to November 2024.

Who would suffer in a cashless society? ›

Poor people who rely on cash to ensure that they budget properly. Anyone in an abusive relationship who may lose financial independence without access to cash. People with physical or mental health problems who find using digital services difficult.

Who suffers in a cashless society? ›

On the impacts of a cashless society, I think other witnesses have clearly said this in a very effective way: We know that those who suffer most in a cashless society are immigrant communities, senior citizens, unbanked and/or unhoused persons, and others who are likely to depend on cash.

Is China cashless? ›

As of June 2023, about 943 million people in mainland China used mobile payments, bolstering the country's status as the world's largest cashless society.

Should we get rid of cash? ›

For instance, using cash instead of credit or debit cards may help keep some people from overspending, because you can see how little is left in your wallet after every purchase. In short, getting rid of cash would impose hardships on society's most vulnerable people and could jeopardize our privacy.

What would happen if cash was abolished? ›

In addition to simply eliminating the costs and hassles of managing currency, going cashless may also reduce certain types of crime. The downsides of going cashless include less privacy, greater exposure to hacking, technological dependency, magnifying economic inequality, and more.

Which country is almost cashless? ›

Norways is the most cashless country, with only around 2% of payments being made by cash, and 100% of the population having a bank account.

Why are people afraid of cashless? ›

Data security - many people are concerned that their financial information may be compromised in the digital environment. Concerns about hacking, identity theft and other cybercrime. Lack of physical control - often managing money in cash gives people a tangible sense of control.

Why is everywhere going cashless? ›

Higher Transaction Speed: Digital payments allow businesses to track payments and complete transactions faster compared to cash. Global Benefits of a cashless society: A cashless society enables easier money transfer and business transactions worldwide, particularly for those lacking well-developed ATM networks.

What country is going to a cashless society? ›

With a date set in 2023 to go completely cashless, Sweden is arguably the closest country to achieve this. It is currently not uncommon to see signs that say “No Cash Accepted” in various shops in Sweden.

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