Are there advantages to using cash? Do most of us even carry cash anymore? With cryptocurrency, online shopping, debit and credit cards, Apple and Google pay, PayPal, and other money transfer apps, do we really even need cash anymore?
Technology is nice, but what happens when it doesn’t work? Have you ever tried to order food at a restaurant just to be told that their point-of-sales (POS) system is down? Have you ever tried to use a money transfer app to send or receive money just to run into verification obstacles, long wait times, or extra fees?
For these reasons and more, cash will have a special place in our hearts (even if it isn’t always in our wallets) for a long time. It’s reliable, it’s convenient, and it’s a 3,000 year tradition.
Is the ATM Business Dying?
As long as people need cash, they will need ATM machines. Although cash payments decline as electronic payment methods increase and improve, there is currently more cash in circulation than ever.
Cash is traditional. It’s familiar. Comfortable. So for a long time yet, there will be people who prefer cash. Could you even imagine what would happen if cash was taken out of circulation? Many people would protest that choice being taken away from them. So we don’t see that happening in our lifetime.
Even so, ATM machines are versatile. They have already evolved to facilitate the cryptocurrency craze. So there’s no reason to believe that the ATM business would be dying anytime soon.
Furthermore, federal law prohibits businesses from going cashless. While state mandates might vary, it’s generally accepted that cash is the most widely accessible form of payment in addition to the other advantages of using cash.
The Payment Choice Act
The Payment Choice Act (2021-2022) refers to the bill that states that retail businesses do have to accept cash payments. It also prohibits them from charging cash-paying customers more. The goal is to prevent discrimination and keep consumerism fair.
Without the ability to pay with cash, low-income and other unbanked individuals would be unfairly excluded from locations that would prefer not to accept cash payments. However, as you will see, in most cases, cash payments actually benefit retail businesses. The advantages of using cash on top of the federal law further solidify the role of cash in our society.
5 Advantages of Using Cash
1. Quick
In many cases, cash payments are quicker than electronic ones. Cash payments don’t decline. The POS system doesn’t have to communicate with your bank to release the funds. And when that POS system goes down, you’d better believe you’ll be wishing you had some cash on you.
Cash is also often more convenient than electronic payment methods. You don’t have to worry about accidentally overdrawing your account and accruing exorbitant bank fees when you pay with cash.
And if someone needs to pay you for something, cash payments are immediate. You don’t have to download a new app, figure out how to be “added” as someone’s contact, fight with authentication procedures, worry about payments being sent to the wrong person, be restricted by sending limits, wait days for the money to hit your account, or pay any transfer fees.
With cash, once it hits your hands, it’s yours.
2. Tangible
Cash is tangible, an old-fashioned favorite. Bills can be broken into smaller bills and even coins. Many of us learned to count using bills and coins, and many children still do. Physical money is an important educational tool for children when it comes to counting and budgeting.
Cash is a useful budgeting tool as evidenced by the envelope method touted by financial guru Dave Ramsey. By physically dedicating a set amount of cash to various categories of your spending habits, it’s much easier to be frugal and disciplined with your money—once it’s gone, it’s gone.
Don’t payments hurt just a little bit more when you can see and feel the money leaving your side? Electronic stashes are often out of sight and out of mind (and sometimes out of control if you aren’t careful with your credit cards…). Some people also feel safer having tangible money in their possession where they can keep an eye on it and protect it.
3. Private
Cash payments are private. They are difficult to track, and, excepting disposable paper receipts, they leave no paper trail. Sketchy business practices aside, this privacy also serves as a security measure.
No one can electronically hack into your wallet or safe. Your financial information can’t be compromised in a data breach if you use cash payments at most stores and avoid online shopping. And if you minimize the number of debit and credit cards you carry, you in turn minimize your risk of identity theft.
4. Universal
Cash is also the most widely accessible payment method. Everyone has access to cash. And it’s a good thing, too.
About 6% of Americans are unbanked, with no bank account, and another 16% are underbanked, meaning they only have a checking account and maybe a savings account. There are many reasons why someone might be unbanked or underbanked.
First, low-income individuals might not make enough money to warrant a bank account. This is especially true when bank accounts charge monthly service fees or impose minimum balance requirements. And what about the homeless man at the intersection? Does he take debit or credit?
Other people might be distrustful of banks, especially under the threat of national and economic crises. Covid-19, for example, caused more cash to be in circulation than ever. Others still might just not want to deal with bank regulations and restrictions.
Minors are also unbanked. We pay our children for doing extra chores. We use cash to pay our neighbor to mow our lawn. Our kids receive cash in their birthday cards. They keep it safe in a piggy bank. These are traditions that are still going strong.
5. Necessary
Finally, cash is necessary for cash-only businesses. Many small businesses are cash-only to save money on credit card processing fees and to make bookkeeping simpler.
The cannabis industry is also often cash-only by necessity. Although legal in many states, whether medicinal or recreational, marijuana is still illegal on a federal level. Therefore, few banks will work with cannabis businesses due to the threat of breaking money laundering laws.
Even if cannabis businesses find banks willing to work with them, it can be quite expensive for them to maintain those accounts. This is because it costs the banks more to service them due to anti-money laundering software, external auditors, and legal counsel.
Cash tipping is also common in many industries like beauty salons, bars, and restaurants. Many businesses, like Starbucks, only accept cash tips if they aren’t able to apply them to a debit or credit charge. You will see little bowls or buckets on the counters of places like these where customers can leave a cash tip. Businesses that are able to apply a tip to a debit or credit charge will sometimes still place a cash tip receptacle in customer view because the visual reminder (Dare we say peer pressure?) encourages more tips.
Other times, customers want to make sure that their servers receive the full amount of a cash tip whereas electronic tips are subject to tip sharing and other deductions. And how else do you tip your concierge when you travel? The entertainment at your local bar? Your favorite street performer?
Cash is King
As you can see, cash plays a very important role in our society. There are many advantages of using cash. No other payment option is as secure, convenient, reliable, or universal. That’s good news for the ATM industry. As far as we are concerned, cash is here to stay, and so is the ATM industry. Ready to start your own ATM business? Where there is a need for cash, there is an opportunity for you to make some passive income. Get started today!