Public policy experts are working to balance the pros and cons of our increasingly cashless economy.

A woman uses her phone to pay a bill.Cash is going out of style. Instead of carrying a wallet stuffed with bills, you can now rely on credit cards, mobile wallet apps, and money transfer companies like PayPal to make your purchases. In many ways, these cashless systems of payment make life easier. But what if there was no cash at all? Would that be a good thing?

The Current State of Cash in the U.S.

According to a recent study by Gallup, the number of Americans who report making all/most of their purchases with cash is decreasing, falling from 36% of people in 2011 to 24% of people in 2016.* That’s a significant and rapid decrease. The numbers for young Americans are even more striking. The same Gallup study found that among Americans aged 23–34, only 21% say they make all/most of their purchases with cash, which is an 18% drop over the course of 5 years.

These findings correlate with other studies measuring how often we use cash. In specific, the Federal Reserve Bank of San Francisco reports that cash accounted for just 32% of consumer transactions in 2015, down from 40% of transactions in 2012. Assuming these trends continue, the future will be increasingly cashless.

The Benefits of a Cashless Society

Convenience

Swiping a credit card or scanning your phone makes buying things quick and simple. It requires no counting out of cash or making of change, and it allows you to buy whatever you want whenever you want without having to first stop by the bank to withdraw cash. It’s also convenient for retailers. They don’t have to deposit as much cash every day and can more easily balance their books, since electronic-transfer-based sales can immediately and seamlessly enter computer systems.

Crime Prevention

If you’re not carrying hundreds of dollars in cash, you’re less of a target for robbery. And even if a thief does steal your credit cards or smartphone, most companies provide theft protection, ensuring you don’t have to pay for anything a criminal purchases on your card or mobile wallet app. In addition, cashless transactions can help law enforcement. Most forms of cashless payment leave a digital record of when and where a purchase was made and what was purchased, helping law enforcement detect criminal behavior and/or helping them track the movements of criminal suspects.

Stability

A banking collapse can lose a lot of people a lot of money. However, cashless systems don’t necessarily require a banking system to function. In Somalia, for instance, so-called mobile money has all but replaced a banking system that was devastated by several years of war.

The Drawbacks of a Cashless Society

Less Privacy

Cash allows us to make purchases anonymously. Without cash, we would be forced to leave a record of everything we buy. While this may not bother some, there are many who worry that governments and/or corporations could use our purchasing histories as a way to track us, monitor us, and even intimidate us.

Decreased Monetary Security

When you have cash in hand, you know it’s safe from everything except direct robbery or physical destruction. But when your money is in digital form, it’s vulnerable to hackers and system malfunctions. Plus, any sort of power outage or network problem can make it impossible for you to retrieve your money. In many ways, cash offers a level of monetary security that a cashless system cannot.

More Sophisticated Criminality

Since law enforcement can track digital transactions and/or freeze bank accounts, many criminals—including drug cartels and terrorist organizations—operate in cash. It’s an easy way for them to keep their money safe. But it also gives law enforcement a unique advantage. They can seize or destroy stores of cash, devastating criminal organizations. In a cashless society, law enforcement loses that advantage. While a cashless system would likely make it easier to track the transactions and freeze the accounts of certain criminals, the lack of an easy, cash alternative would likely push many larger criminal organizations into offshore banking, Bitcoin-style currencies, and other sophisticated digital tricks that would make finding and confiscating/eliminating criminally obtained money much more difficult.

How You Can Help Manage Monetary Policy

The slide toward a cashless or mostly cashless society is unlikely to stop. As such, we’re going to need public policy experts who can help develop and administer the rules and regulations necessary to ensure the drawbacks of going cashless don’t outweigh the benefits. If you want to play a leadership role in setting the monetary policy of the future, the best choice you can make is to earn a Master of Public Policy (MPP). A master’s in public policy can give you the knowledge and tools you need to make a real difference in the world, and it can prepare you for public policy jobs in government, private, and nonprofit sectors.

While you might think enrolling in a graduate program and earning a master’s degree will take too much of your time, that’s no longer true, thanks to online learning. When you choose to earn an MPP online, you won’t have to travel to a campus or even attend classes at specific times. At an online university, you can complete the majority of your coursework from home while taking advantage of a flexible schedule that lets you choose what time of day or week you attend class.

Our increasingly cashless system will require good public policy to avoid bad outcomes. Thanks to online education, you can become the kind of public policy expert we need.

Walden University is an accredited institution offering a Master of Public Policy degree program online. Expand your career options and earn your degree in a convenient, flexible format that fits your busy life.

*A. Swift, et. al., Americans Using Cash Less Compared With Five Years Ago, Gallup, on the internet at www.gallup.com/poll/193649/americans-using-cash-less-compared-five-years-ago.aspx?g_source=RETAIL&g_medium=topic&g_campaign=tiles.

W. Matheny, et. al., The State of Cash: Preliminary Findings From the 2015 Diary of Consumer Payment Choice, Federal Reserve Bank of San Francisco, on the internet at www.frbsf.org/cash/publications/fed-notes/2016/november/state-of-cash-2015-diary-consumer-payment-choice.

M. Rowley, Cashless Societies: The Pros and Cons, The Network, Cisco Systems, on the internet at https://newsroom.cisco.com/feature-content?type=webcontent&articleId=1750635.

Walden University is accredited by The Higher Learning Commission, www.hlcommission.org.

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