Cash is No Longer King
by Jon Newman
How much cash is currently in your wallet?
Do you even know without having to look?
My guess is most people won’t have more than a few bucks on them if asked. Why would they? Between credit and debit cards, Venmo, and Apple Pay, spending money has never been easier or more convenient.
This is also true for businesses.
Today, it’s becoming less common for businesses not to accept credit cards. While the idea of a cash transaction is enticing for some, it’s simply not practical, especially since technology has made purchasing incredibly user-friendly for consumers. According to a U.S. bank survey, 47 percent of shoppers preferred digital transactions over cash, and roughly 50 percent of survey respondents admitted to not even carrying cash most of the time; if they did, nearly half kept less than twenty dollars on hand.
Just a few years ago, it was reported that personal credit cards were the most common payment method in the United States, with debit cards following close behind. Popular mobile payment company Square did their own research on the boom of credit card purchases and found that 35 percent of customers stated if a business did not accept credit card payments, they would simply find an alternative business that did.
Looking to make a big sale? Forget asking a customer to pay in cash.
With all the perks of using a credit card, such as cashback and reward points, it’s going to be rather difficult to land a large cash-only sale. In fact, studies suggest consumers spend much more when paying with a credit card versus cash.
Lastly, allowing consumers to purchase with a credit card gives them a strong sense of security. Unauthorized transactions can be disputed and investigated, whereas losing cash is simply just that, a loss. There is no way to track, report, and most often, redeem a fraudulent transaction made with cash. Allowing those to conduct business with a credit card alleviates any potential issues.
Oh, and did I mention credit cards make people happier?
Yes, it’s true. A study conducted by MIT found that consumers are mostly willing to pay double the amount when using a credit card. The notion that using a credit card is “borrowed money” has a tremendous impact on a person’s mood of the purchase since they don’t have to technically pay back the cost right away. It’s less psychologically ruling to pay for a product, especially a costly one, with a credit card than see the dollars diminish all at once from a checking or savings account.
Bottom line, despite what once was, cash is a thing of the past. A once-ruler of the masses, cash has lost its royal crown, and with all the wonderful perks credit cards have to offer, it’s no surprise to see a new king on top.