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Cash or No Cash?

November 09, 2016

Being stationed overseas provides exposure to a different financial attitude. We are stationed in Germany where, even today, one of the corps’ values is “to save.” An old German saying “Nur Bares ist Wahres” --- only cash is true --- underlines another German virtue – paying with cash. Even though the use of debit and credit cards, as well as smart phones, is becoming more popular, according to an article from the newspaper “Die Welt – Beim Bezahlen sind die Deutschen Fundamentalisten” published March 19, 2015, in 2014 over 50% of German transactions were done in cash.

Over the last few years, bank CEOs and other prestigious business men have predicted that cash will sooner or later be a payment instrument of the past. So, is a world without cash a horror scenario or the future?

The Pros of a Cashless Society:

  • Less Economic Burden: For the economy coin money and banknotes are very expensive, not only to print but to keep available (i.e. at ATMS, cash registers, etc). Cash travels several thousand kilometers/miles per year in cash transports.
  • More Sanitary: For some, cash is unsanitary, especially paper bills. Therefore, paying with cards or through other electronic means is a cleaner alternative.
  • Less Physical Crime: A cashless society could potentially lead to a reduction in criminal activity, since no coin money or bills would be available for robberies at the register of a gas station or with the cab driver. Alternatively, online crime would probably increase. However, money is often easier to retrieve with no cash transactions (i.e. credit card payment disputes). In a cashless society money laundering would be a business of the past.
  • More Convenient Travel: With no foreign bills and coins to exchange, traveling and spending in foreign countries would be more convenient. No longer would you return home with surplus coins or bills that you did not exchange because the amount was too small to justify an exchange fee.

The Cons of a Cashless Society:

  • Loss of Independence & Anonymity: Paying with cash allows you to remain anonymous. You do not leave a data trail as you would with other forms of payment (i.e. a credit card). That said, this information is often collected and used by companies to target you as a potential client, and not always in a positive way.
  • What about the unbanked? Anyone can use cash. You do not need to sign a contractual obligation. It is not tied to your financial health or credit score if you have it in your pocket you may spend it.
  • Higher Potential to Overspend. An advantage of cash is that only what is in your wallet can be spent. Cash allows you an on the spot tracking opportunity and control over your money situation.
  • Technical Inconveniences: How often have you seen the signs at stores or gas stations that credit or credit cards transactions cannot be processed at this time? If you have cash, no problem. At the millennium, everyone was worried about black outs, computer crashes, data dumps. With cash, technical inconvenience is not an issue.
  • Fees: Credit cards cost organizations additional fees, and these fees are particularly relevant for small business owners.

Nobody knows what the future will bring, electronic devices, availability and the search for convenience are on the rise. For consumer’s cash has two big advantages: independence and freedom.

As with all things, there are two sides to a coin. We will have to wait and see which side it will land on and what the future of cash will bring.

Guest Contributor: Doris Koepp, AFC®


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