Why Cash Matters
Feb 9, 2022
New technologies are changing the way we pay, and cash remains the most attractive option for many. Because cash safeguards personal independence and freedom. Because cash ensures stable currency systems. Because cash is the most secure payment method. Because cash is resilient in times of crisis. Because cash offers privacy in a world of rising fraud and personal data collection. Because cash means tangibility and immediate comprehensibility in a world of bewildering virtual and digital signposts. Banknotes and coins reflect a nation's identity and its magic moments, presenting its most significant people, landmarks and values to the world. In short: cash matters!
Cash guarantees personal freedom and independence
Only cash can be used without any intermediary
Cash is the only payment method that functions independently of the issuer without third party involvement. As Canadian economist Pierre Lemieux says: “It is an intriguing fact that the availability of government currency provides protection against government intrusion itself.” Actually, against any intrusion by any third party.
Cash is the most democratic way to pay
Cash is available to everyone, without exception
Cash is the only form of payment with no threshold to its use, no matter where or when the payment is being made. No bank account, good credit rating, internet access etc. is needed when paying cash.
Cash ensures financial and social inclusivity
Cash is a lifeline for many people in their daily lives
People use cash for a variety of reasons. Many depend on cash. Among them are the 1.6 billion unbanked or underbanked people worldwide who use cash to meet their daily needs.
Cash is a public good
Cash is a public good.
Cash is non-excludable (usable by all with no restrictions) because its function as a means of payment, of transfer of value, works without compensation. It is also non-rivalrous since its use by one person does not preclude its use by another: everyone can use cash at the same time.
Cash safeguards freedom of choice
Consumers must have the right to choose how to pay for goods and services
Only with cash is freedom of choice guaranteed in an increasingly diverse payments landscape that is dominated by private profit-driven players
Cash is free of charge
Once in circulation, paying cash is free of charge for consumers
Cash is deployed not to make a profit on its usage but to support and sustain transfers free of charge. There may be costs associated with cash, but cash itself is a means of value transfer that settles at par no more and no less. All other means of payment are subject to market economy conditions, i.e. they must generate a profit for their issuers.
Cash is universal
Cash is universally used, in all countries, by all peoples
Cash is designed to be intuitive and easy to understand. Everyday transactions require only a basic level of numeracy and can even be conducted between people who lack a common language.
Cash protects privacy and personal data
Only cash provides protection against surveillance
Cash is an important pillar when it comes to preventing governments and businesses from monitoring every transaction, logging both the flow of goods and people’s daily movements. In some cases, non-cash payments are registered and used to profile and “score” citizens in order to control them.
Cash keeps the payment landscape competitive
Cash ensures competition among the various means of payment
The existence of cash –a public good that can be used free of charge– forces non-cash providers to keep their fees low. Consumers can always switch to cash if they do not want to incur any fees fwhen paying
Cash is secure
Cash is the most secure method of payment
With a story stretching back hundreds of years and interwoven with nearly every culture on earth, cash is also a distinctly modern product, benefitting from sophisticated, cutting-edge technologies that deter counterfeiters and ensure genuine banknotes and coins are easily recognisable. Counterfeits are at record lows around the world, with counterfeit euros at just 17 per million notes in circulation as of 2020, and Australian dollars even lower at 15 counterfeits per million notes as of 2019.
Cash protects citizens’ sovereignty
Only with cash are citizens in full control of their money
Without cash, consumers would be at the mercy of commercial banks and payment providers. Negative interest rates on deposits for example, as proposed by US economist Kenneth Rogoff, can only be successfully implemented once cash has been abolished. With cash as an option, people can simply withdraw their money and store it elsewhere. Without cash, this option would be removed along with the power balance it creates between citizens and the commercial banking sector.
Cash is resilient
Cash is the payment method of choice in any crisis
Cash appears on disaster preparation lists worldwide, including America’s Federal Emergency Management Agency disaster supply kits. When infrastructure fails —leaving people without access to electricity or an internet connection— banknotes and coins can still be used, whereas cashless options become unavailable. The pandemic saw record cash withdrawals in countries including America, Australia, Canada, Japan and the UK, serving as a reminder that the certainty of cash is particularly valued in uncertain times. When over a million people were displaced by heavy flooding across central China in 2021, many were unable to pay for essentials. Unsurprisingly, cash featured on the list of 20 survival necessities drawn up to prepare people for future disasters.
Cash is popular
Cash continues to be popular worldwide
According to the Worldpay Global Payments Report, as of 2021, cash remains the top payment choice in Latin America, and in countries such as India, Japan and The Philippines. It accounts for more than half of all transactions in the Middle East and Africa, and is used for nearly 28% of point-of-sale payments across Europe, proving especially popular in Austria, France, Germany, Italy, Spain and Poland.
Cash helps control finances
The physical nature of cash makes it a valuable budgeting aid
The time-honoured tradition of dividing money into different pots or envelopes —covering essentials such as rent, food and daily travel expenses— makes it easy for people to control their finances. With poverty and debt rising worldwide, budgeting is more relevant than ever and cash can help.
Cash teaches financial basics
Cash is a tangible embodiment of value, easy to count and clearly numbered
In its guidance on teaching good money habits, many experts (and even Forbes) recommend parents let children watch them making cash purchases from a young age, and suggests paying pocket money in cash, encouraging children to spend some, save some and give some away.
Cash fosters national identity
The exchange of cash in shops and marketplaces is part of histories and cultures worldwide
Banknotes and coins are a nation’s calling card. Their motifs depict a people’s magic moments and reflect its identity. People therefore value banknotes and coins beyond their monetary worth as little pieces of art.
Cash is fast and effective
Cash payments are effective immediately
There is no time offset between paying and receiving money when using cash. Making payments in banknotes and coins, business partners do not need to know or trust each other. It is the ideal means of settlement for all immediate payments in an unfamiliar context.
Cash keeps growing
Cash is a growth product
In terms of both the product itself, and the infrastructure surrounding it, cash is an increasing market. Cash in circulation grows by 2–3% every year, with more than 75% of all person-to-person payments worldwide made in cash.
Cash is legal tender
Cash is legal tender in almost all countries across the globe
‘Legal tender’ refers to a government-approved form of currency that is deployed by central banks. Because of this status as legal tender, mandatory acceptance of cash in retail is being discussed in many countries, for example in the U.S., where a bill defending the right to pay cash has bipartisan support.
Cash is safe
Cash is safe to use
Medical experts as well as many central banks around the world confirmed that cash is a medically safe means of payment. Additionally, The United States Centers for Disease Control and Prevention has made it clear, as has the WHO, that in case of Covid-19 the risk posed by surfaces is very low and the primary way of infection is through aerosols.
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