Discussion Paper

The Future of Cash

Abstract: In many advanced economies around the world, the share of transactions conducted using cash payments has been falling over the past several years. This change has likely been because of a combination of shifting consumer tastes, improvements in payment technology (specifically credit and debit cards), and the rapid growth of online transactions. As the decline in the cash share has led to some businesses choosing not to accept cash payments, many policymakers have discussed interventions to ensure access to the modern economy for consumers who prefer to pay in cash. Despite the reduced use of cash as a means of payment, currency in circulation has continued to increase in many countries, including the United States. This increase suggests that cash is still providing utility as a store of value. This paper surveys literature and data on the use of cash as a means of payment and discusses how and why the cash share is falling in the United States and around the world. Furthermore, it also discusses the opportunities and challenges of a transition away from cash for consumers, businesses, and society.

Keywords: cashless society; cash payments; electronic payments;

JEL Classification: E42; G20; G21;

https://doi.org/10.21799/frbp.dp.2021.03

Bibliographic Information

Provider: Federal Reserve Bank of Philadelphia

Part of Series: Community Affairs Discussion Paper

Publication Date: 2021-09-13

Number: 21-03