It’s Getting Harder, and More Expensive, to Pay in Cash

In many parts of the world, paying in cash has been in decline for years now, certainly since the pandemic, and while some older people still cling to the habit, younger generations increasingly use their smartphones or watches, rarely visiting an ATM.

One of the countries where cash payments are increasingly unwelcome is the United States: the advent of reverse ATMs, machines where you insert cash and are given a debit card with the equivalent in funds is prompting more and more establishments to stop accepting cash, saying this speeds up transactions, involves fewer visits to the bank and reduces the likelihood of robbery.

But there’s a catch: many of these reverse ATMs charge commissions, ranging from one to six dollars. If you want to have a beer or a hot dog at the Yankee Stadium, for example, you will find that the bars there do not accept cash payments, and staff will direct you to a reverse ATM.

Consumers who don’t have a bank account or who simply prefer to do their shopping with greenbacks thus increasingly find themselves paying more, (link without paywall here). Federal legislation intended to protect users and force establishments to accept government tender has yet to be passed by Congress, leading to only a few states, such as Colorado and Rhode Island, passing laws that prohibit cashless stores.

But this measure does not seem to be the solution either, given that for many establishments, it is a very convenient option with many advantages. The idea is to try to find a balance between the right to pay in cash and reducing the logistical complications of cashless options for many establishments. And in that sense, the reverse ATM idea has some merit… as long as, logically, it doesn’t cost you money. But in a market already accustomed to paying to withdraw your own money at a non-bank ATM because of the need to fund the infrastructure, paying to swipe a card to pay the way you’re forced to almost seems normal.

Cash payments are the third most popular option in the United States, behind cards and smartphones: in 2023, they accounted for just 16% of transactions, a 2% decline on the previous year, reflecting a steady downward trend. Nevertheless, there is a significant number of consumers who refuse to throw in the towel on cash payments, typically citing privacy, and not all of whom are older people. Even among people who mainly use electronic payment, 60% say they continue to make some payments in cash, either for discretion, to keep better control of their spending or because they find it more suitable for, say, tipping.

And while it is still possible to pay bills or invoices in cash, this has increasingly been outsourced by companies, and involves a commission. This makes life more complicated for anyone who is outside the banking system for whatever reason, be it extreme poverty, irregular immigration status, etc.

One way or another, everything indicates that in developed countries, fewer and fewer people will pay in cash, although doing so will probably not be banned. That is, of course, until other cryptographically-based alternatives become popular…

(En español, aquí)

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This post was previously published on MEDIUM.COM.

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