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Tech Savvy: Cash, cards and crypto: The changing face of money

With plastic and digital options for payment, is physical currency on its way out? Photo illustration / Metro Newspaper Service 1 / 2
A customer uses a smartphone to make a payment on a Square device in San Francisco. Bloomberg photo by David Paul Morris2 / 2

So I'm at a local automotive repair shop to replace a broken down tranny and as I'm going through the particulars of an installment plan to pay for it, it hits me: I've only written out a handful of checks in my life, which is something of an odd experience if you need to write a series of checks for the plan to work.

No, I've never balanced a checkbook. With direct deposit, cashing checks is going by the wayside. Even if I did use checks, it's increasingly difficult to find businesses that would accept them. Checks—much like old-fashioned promissory notes, pay stubs, paper receipts and other forms of printed monetary transfer—are gradually becoming a thing of the past, replaced by their half-digital, half-plastic children and fully digital grandchildren.

On the other hand, straight cash is also seeing a decline. I often find myself frustrated when a vending machine or parking meter doesn't feature a card reader, as the vast, vast majority of my purchases don't involve so much as a nickel. I have to make my usual pilgrimage to the nearest ATM anytime I visit the laundromat and there are days, if not weeks, I can go without touching a debit or credit card, let alone a wad of George Washingtons.

So—in the age of PayPal, Bitcoin and Amazon Prime—are we on the cusp of a post-cash world where physical currency is obsolete and commerce takes place in some vast e-economy where human livelihoods, desires and joys are reduced to binary code? Eh, not so fast.

For the record, I think the better discussion to have is whether our growing reliance on cards are indicative of a shift away from cash, or if it's just part of the evolution of bank accounts and related activities.

When we type in our credit card information into a site for an online purchase, aren't mobile payments just using a credit or checking account in a slightly different way? And isn't there something more trustworthy, more secure and more grounded in reality about physical money? I mean, who wouldn't lean on old-fashioned Abe Lincolns and Ben Franklins if they're universally accepted and don't depend on a data/internet stream to function?

Physical money still retains a unique gravitas—particularly for Americans, who are essentially the trustees of the world's most widely traded and stable currency. About 85% of the world's retail transactions still use old-fashioned cash, and for 95% of Americans cash remains a common form of payment, according to a 2017 survey by U.S. Bank. Even for tech-saturated millennials, cash remains a trusted, widely cherished form of currency.

Still, it's important to remember that money as we know it is continually changing and reinventing itself—doubly so for old-fashioned physical cash. The U.S. dollar has been, effectively, off the gold standard for close to a century. In many ways, despite its physical dimensions, paper money is just as symbolic and inherently worthless as surging cryptocurrencies like Bitcoin. So, then, what's to say we won't take that leap altogether? What's stopping us?

If history is any indication, technological innovation—just like all forms of progress or regression—rarely moves in a straight line. Despite the advent of e-books and music streaming apps, printed books still dominate the publishing industry and vinyl records—seemingly lost relics unearthed from the garbage heap—are a robust industry in and of themselves.

So, should we kiss our pennies and $20 bills goodbye? If I had to put money down, I'd say not in the immediate future and—what, with people's affinity for real, tangible things—it's not inconceivable that physical money will last, in some form, as long as commerce exists.

Cashless stores?

Proponents of cashless stores tout various benefits. Electronic payments save employees the time it takes to collect, store and transport cash. Theft is less likely. Customers typically move faster through checkout lines because they don't need to count out their cash and wait for change.

Some argue that technology, having helped usher in cashless payments, can provide a solution. Companies like Square Inc. and PayPal Holdings Inc. offer payment services that don't require a bank account; they're gaining some traction with the working poor and could eventually provide an alternative to banning cashless stores outright.

The vast majority of U.S. retailers and restaurants currently accept cash. And those that don't often cater to wealthier customers. The best-known example is Amazon Go, a chain of cashierless convenience stores that carry upscale fare like artisanal cheeses and locally made chocolates. Amazon.com Inc. operates only 10 Go stores in three cities, but eventually could open as many as 3,000, according to people familiar with the matter.

The fear is that if cashless shopping catches on, more and more retailers will follow suit. Many local restaurants are no longer accepting hard currency because handling cash can add as much as 10% to overhead costs, says Richard Crone, chief executive officer of payments expert Crone Consulting LLC. In five years, he says, a third of all retail will be cashless, up from about 17% today. About 10% of brick-and-mortar stores will be cashless, up from less than 1% today, he says.

Almost half of Chinese already use mobile phones for cashless payments, according to eMarketer. The Indian government is promoting digital payments in an effort to stamp out endemic corruption, and local payment services such as Paytm have been signing up millions of people.

In Sweden, often described as the most cashless society on earth, just 25% of Swedes paid in cash at least once a week in 2017.

-- Bloomberg

Gabriel Lagarde

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