In today’s current environment, people are paying more by card than ever before. But despite the convenience, they also represent an ever-present risk of falling into a debt cycle that may last a lifetime.
So, what is better to use cash or plastic for ? Our experts outline their thoughts on the matter below.
Cash: should we still be using it?
Many individuals consider carrying cash to be old school, a habit that is slowly dying, thanks to the development of plastic and digital alternatives. In today’s world, it is all about quick transactions and ease.
While there are several advantages to using a debit or credit card, sticking to cold hard cash for your everyday transactions may actually be more beneficial to your wallet.
Quite simply, if you pay for products using the paper banknotes and loose change that are in your wallet at the time of purchase, you know what you can and can not afford. Therefore, by paying for things with cash, you’re controlling your spending much more effectively than you would if you were to pay for products with a credit or debit card. Using either a debit or credit card means you stop thinking about how much you are spending and when to stop and exposes you to overdraft fees. When using cash you can avoid overdraft costs and paying interest.
Studies have also proven that choosing cash over credit can be beneficial, as those who use a credit card spend more than those who do not.
So by avoiding credit cards, you decrease your chance of falling into debt since you can only spend the money you have on hand.
A shift in trend?
However, despite these obvious benefits to using cash, there is a shift towards a cashless society, which is being driven by the powers that be such as financial corporations and governments.
Despite this push, no society has gone completely cashless as it stands. But what would a cashless society look like...
The Advantages of a Cashless Society
Those who have the technological capacity to benefit from a cashless world will almost certainly find it more convenient. They will have:
Automatic paper trails
Ability to make international transactions quicker and easier
Immediate access to their assets
Lower crime rates, both financially and personally - a study by American and German researchers found that crime in Missouri dropped by 9.8% as the state replaced cash welfare benefits with Electronic Benefit Transfer (EBT) cards, whilst illegal activities will be harder to carry out as they typically use cash to make the transaction.
More control on tax levels
How would it work?
All payments would be made electronically and you would authorize a transfer from one bank account to another, whether it is a business or an individual. Credit and debit cards are among the most widely used cash substitutes today, with most people having access to one if not both, but they alone may not be sufficient to sustain a cashless world. Instead, mobile devices may become the dominant method of payment.
What would it look like?
Several countries are already making efforts to abolish cash, with consumer and political pressure driving the initiative. For example, in Sweden, if you enter stores, it is not unusual to see signs that say "No Cash Accepted." According to the European Payments Council, cash transactions amounted to about 1% of Sweden's GDP in 2019, and cash withdrawals have been gradually falling by around 10% each year.
While most consumers are pleased with the situation, some who struggle to keep up with technological advances continue to rely on cash, and by creating a cashless society you would be marginalizing some parts of that society.
Although it looks like this shift may take place a few years into the future, at DNA Payments we are constantly keeping an eye on trends and innovations that will change the payments industry. To hear more about us and how we can help, contact us today, and always remember “if cash is king, fintech is kingslayer”.
We want to let you know about the planned maintenance and update of DNA Payments transactional system software.
We specifically choose a time of the day with the smallest amount of transaction activity for our software updates.