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Is Ca$h Really No Longer King? What Happens Next? [1]

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Date: 2022-10-09

C Notes, As They Are Often Called.

On a recent visit to Target Field to see my Minnesota Twins limp to the end of a disappointing season, I got a bit of a surprise. Not a single vendor accepted cash. As one of those people who clings to their cash like Gollum does with The One Ring, it took me aback a bit.

When I did pull out my $$, the cashier sighed and politely but firmly repeated what I’m sure she has had to say all season to people like me: “We no longer accept cash sir. If you have a card we can take that. Otherwise there are kiosks in the stadium that an convert cash to card for one time use.”

Fortunately I had my debit card on me — I never carry my credit cards w/me unless I know I’ll need them — so I was able to enjoy the over-priced beer and hot dog.

As was written about in today’s Star Tribune, this is not anything new for many venues:

Many airlines stopped accepting cash years ago at check-in counters and on flights. In the pandemic, sports stadiums, amusement parks and restaurants moved to cashless transactions as a way to limit contact, make do with fewer workers and to be more efficient. The share of payments made with cash went from 26% in 2019 to 19% in 2020, according to an annual consumer survey by the Federal Reserve.

I’ll admit it. I’m one of those folks who try to use cash as much as possible. Groceries, bar tab, fast food, even minor purchases of needed household items all get paid with George, Abe, Alexander, Andrew, or Benjamin.

I do get it though, and see it first hand working p.t. in the food delivery service. The bulk of our customers use a card. If I was to hazard a %, I’d say it’s upwards of 80%. Because of that there are many in the delivery business who don’t even get their tips and/or mileage paid out at the end of their shift. For some it’s added to their paycheque. For others, it comes in the form of card.

As the Strib article noted also:

As more businesses go cashless, some consumer advocates are concerned that people who don't use credit cards, smartphones or even banks will be shut out. An estimated 5.4% of Americans didn't have a checking or savings account in 2019.

Which brings me to a small but fascinating book I read a couple years ago.

In his work, The Curse of Cash economist Kenneth Rogoff basically said — get rid of cash altogether. Why? Well for one, criminal enterprises:

Even as people in advanced economies are using less paper money, there is more cash in circulation–a record $1.4tn in US dollars alone, or $4,200 for every American, mostly in $100 bills. And the US is hardly exceptional. So what is all that cash being used for? The answer is simple: a large part is feeding tax evasion, corruption, terrorism, the drug trade, human trafficking, and the rest of a massive global underground economy.

You can watch a great and approachable interview with Rogoff from the Council on Foreign Relations here:

Back to my Target Field predicament. I fortunately had a debit card. As does nearly 90% of Americans, which dwarfs how many have actual credit cards.

But as we all know, both business owner and consumer alike, those cards are not free. Not even close.

At almost a trillion dollars outstanding, credit cards are the largest consumer lending product by number of users – over 175 million consumers have at least one credit card – and one of the largest sources of consumer debt.1 From 2018 to 2020, the CFPB estimates that Americans paid roughly $120 billion per year in credit card interest and fees.2 That works out to about $1,000 per year for every American household. During the pandemic, credit card debt started to decline as many households reduced their borrowing and paid down more. But, as the economy has improved, credit card debt is on the rise again.

I get it, the issue of swipe fees can be complicated.

“Swipe fees are a hidden tax on almost everything Americans buy, regardless of whether they pay with cards or cash,” Kantor said. But consumer use of credit and debit cards actually saves merchants money, according to Jeff Tassey, chair of the Electronic Payments Coalition. “Electronic payments are four times cheaper for merchants to process than cash,” said Tassey. “According to big-box retailer’s own consultants, credit and debit card payments will save them over $7.5 billion on back-to-school shopping this year.”

So here’s what Rogoff basically said about the whole situation:

Eliminate cash altogether (or make the largest bill available a $20).

Allow anyone to have a bank account with no limitations — no minimum balance, no obnoxious fees, nothing to prevent that % of the population who doesn’t have access to an account from getting one.

Make access to people’s $$ via electronic means free. Yup, free. If we are going to go wholly cashless, make it so everyone can enjoy that reality.

And the likelihood of the above happening? Not good right now considering the stranglehold the financial industry has on our government.

So the next time I head to Target Field, I’ll leave most of the cash at home. What’s the point, right?

Oh, and I skipped crypto because I’m don’t feel well versed enough on it to comment. Rogoff does. Get and read his book, you’ll be intrigued. I sure was.

[Full disclosure — I’m not a banker, cpa, stock trader, or anything similar. I’m just a guy trying to muddle through life with as few bumps as possible, esp. when it comes to $$ :) ]

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