Why Cash is Essential to the American Dream
Mar 22, 2023
While cash remains irreplaceable for more than one in ten Americans, its overall use is on a downward trend. US political website The Hill recently examined the pros and cons of cashless options, making the case for cash in supporting equality and privacy.
While 58 percent of Americans continue to use cash—and 14 percent use it for nearly all purchases—two fifths of people say they used no physical money in 2022, according to a Pew Research survey. 58 percent of people also try to ensure they always have cash on hand versus 42 percent who say they don’t worry about whether or not they have cash with them.
Writing for The Hill, Daniel de Visé points out that cashless transactions enable tracking and monetisation of a person’s spending habits, with serious implications not only for privacy but also for personal security.
When you pay cash, I give you money, you give me a good, end of story. If you’re using your credit card for all of your transactions, then data is being collected about an enormous range of your activities, including medical conditions, political donations, sexual activities, how much liquor you buy, hoe many cigarettes you buy.
Taking the example of card payments, both customers and businesses fund them in a variety of ways. Most directly, credit card companies charge transaction fees of between one to three percent of purchase price, and ‘shops generally pass that cost on to the consumer.’ Building these fees into a business’s price structure thus penalises those who do not use card payments, who are often already poorer individuals.
Less directly, payment via information seriously compromises a person’s privacy, and if the extensive legal use of personal data is not a concern, people are also left open to fraudulent use of their data in the case of leaks from the multiple companies handling it.
Illustrating ‘the vulnerability of consumer data’, a Washington Post columnist paid for two bananas at a large retailer using a credit card.
You might think my 29-cent swipe at Target would be just between me and my bank. Heavens, no. My banana generated data that’s probably worth more than the banana itself. It ended up with marketers, Target, Amazon, Google and hedge funds, to name a few.
While many states and cities are defending the right to pay cash with legislation—it has been illegal for New York businesses to refuse cash payments for over two years, for example—across much of America, it is up to individual businesses whether or not they offer full payment choice.
In addition to support privacy and personal choice, the option to pay cash is also essential for those who lack access to a bank account, or otherwise struggle to access and effectively use cashless options.
Cash remains our strongest tool to promote financial inclusion while preserving privacy and security, and new digital tools should emulate it, not replace it.