Is Cash Obsolete?

The popularity of debit cards has substantially reduced the need for cash. And credit cards are still being used, albeit at a somewhat reduced rate since the recession started. Credit cards are still the most common means of payment for online transactions. Along with Paypal. Smart phones are starting to be used for payments, and applications to enable this are becoming more common. And prepaid cards are gaining ground as well, because of fears over identity theft and other fraud.

All of these means of payment have substantially reduced the need for cash. And yet, cash remains in widespread use. Why?

For one thing, there are still transactions that require cash. A tip for a bellhop. Or payment to a neighborhood kid for mowing your lawn. Small transactions often call for cash. And one irony - means of payment like debit cards are often touted because they are convenient. However, cash is actually more convenient for smaller transactions, provided you draw some out of the bank and keep it on your person. All you have to do is pull it out of your pocket and hand it over and get your change. No entering of numbers into a machine and waiting for a response. And cash is free, while most other means cost a fee - small but a fee that can add up. Many older folk like their cash and will keep using it. Also using cash doesn't leave a trail, while other means do. So cash is popular with drug dealers and the like.

All of this means that the role of cash is diminishing. But is it disappearing? Not for a very long time to come. Maybe not in our lifetime. Here's a good article on the subject.