Demand for Cash is Rising in America
Alongside a surge in digital retail in 2020, as homebound Americans spent more time and money online, demand for physical money has also risen, with cash circulation 16 percent higher year-on-year after decades of mid-single-digit growth.
CNBC spoke to Doug Pertz, CEO of U.S. cash management company Brinks, whose 2020 results show six percent more cash being processed through its system than in prior years. This should come as no surprise, given the higher cash circulation, and the fact that 35 percent of all U.S. brick-and-mortar purchases are still being made with notes and coins. Pertz says that ‘clearly, cash isn’t going away.’
Cash is just as strong as it was before, and the amount of cash [used] in the economy is just as strong.
This is despite recent efforts from retailers to encourage customers to use cashless options, with around 40 percent of people reporting a retailer had steered them to make a card payment instead, and seven percent saying they had encountered a merchant refusing to accept cash at all. This would have been illegal in the states of New Jersey and Massachusetts, and cities such as New York, Philadelphia and San Francisco that have legislation stipulating merchants must accept cash. Washington D.C. is tipped to be the next city to ban cashless-only retailers.
Another recent issue—the coin shortage that made headlines in summer 2020—has largely been corrected by now, but even in the second half of last year, more than 60 percent of transactions under $10 were still being conducted using physical money.
“[Americans] are not avoiding paying cash in person. They haven’t been scared off by some of the sensational headlines [about it being unsanitary] that have come up from time to time.
A key reason for the continued popularity of cash among Americans is the unique privacy it offers among payment choices. A Fortune.com article notes that ‘cash is the most anonymous form of payment that exists right now, preserving privacy in a way that even cryptocurrency doesn’t.’ With an extensive data-brokering industry eager to monetise financial data, it’s in the private individual’s interest to preserve cash as an option in the payments landscape.
Cash is one of the last strongholds left to maintain anonymity and keep purchasing information truly private without handing heaps of data to the corporations that make a buck off your receipts—or worse, to hackers, in the case of a data breach.