Pros and Cons of a Cashless Society

Cashless payments are becoming more and more prevalent in the modern world. Whether it’s a debit card, credit card, or mobile payments, we can see a clear trend in which cash becomes less necessary. According to the FDIC, cash represented just 30% of all payments in 2017. Furthermore, 68.7% of U.S. households had a credit card in 2017 vs. 63.8% in 2015. A “less-cash” society is emerging, but an entirely cashless society is unlikely any time soon. 70% of Americans still report using cash weekly. But 50%, 60%, or 70% cashless is certainly conceivable, and we are already there in several markets around the country.

Despite this, it’s worth taking a look at the pros and cons of an entirely cashless society.


Savings for the government

Going cashless means that the government doesn’t have to spend money on issuing the bills and coins. The 2019 currency operating budget is $955.8 million and the multi-cycle capital budget is $3.2 million. That would be a big cut in governmental spending, which can result in lower taxes, or better social safety net.

Paper trails

Hiding income and avoiding taxes is still a prevalent issue in society. Once cash is gone, it’s going to be much harder (near impossible) to do that. Everything would leave a mark in the banking systems, so we could ensure that everyone is paying their fair share.

More Efficient Processing of Transactions

We have all experienced the agitation of being stuck in line at a store or vending machine, or on a bus behind someone who is attempting to pay in exact change or write a check. Paying for things using stored value cards makes transactions much faster and efficient.

Increased Spending

Studies show that people are more likely to forego small purchases when paying in cash because they don’t have the cash on them or they don’t want to break large bills. Alternatively, when people use stored value cards, they are more likely to spend on small purchases, such as buying a pack of gum at a gas station. Such increased public spending could provide a boost to the economy.


Cybersecurity concerns

Hackers are the bank robbers and muggers of the electronic world. In a cashless society, the consequences are higher if somebody drains your account because you don’t have any alternative ways to spend. Even if you’re protected under federal law, you face significant inconveniences and other consequences after a breach.

Technical glitches

A cashless society would be vulnerable to technical glitches. Any problems with the global payment system could halt trade and cause panic among consumers.


The poor and unbanked will have an even harder time in a cashless society. They don’t have expensive devices for making payments, and those who operate in the informal economy would have no way to get paid or receive aid. The U.K. is experimenting with contactless ways to donate to charities and homeless individuals, but there’s still a long way to go.

Fees eating our funds

If we’re forced to choose from just a few payment methods, can we expect financial institutions to give us a fantastic deal? Payment processors may just cash in on the high volumes, eliminating the savings that should come from less cash handling.


The last advantage that I mentioned was increased spending. But there is also a darker side to it, namely overspending. With electronic payments, it’s easy to swipe, tap, or click without noticing how much you spend. Consumers will need to renew their efforts to manage spending.

The potential threat from the government

In a cashless society, the means of exchange would be fully controlled by the government. As we know, there are countries in the world, that have very little regard for privacy, and personal freedom. If we are all stuck with the government issued digitized currency, it can be easily used to control the entire population.

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