Are We Heading Toward a Cashless World?

The phrase “cash is king” has been around forever, but today that is changing and a lot faster than you may realize. Around the world, the financial community is gearing up to make cash a thing of the past. Countries are depending more and more on technology and their citizens depend more on electronic methods to handle day-to-day methods of shopping and paying bills. Are we heading toward a cashless world?

Are We Heading Toward a Cashless World

Back in my parents’ day, when a person got paid each week, they used the “envelope system” and put their cash in envelopes earmarked for their spending and bill paying. It was a simple system and made it easy to deal with their money each week to make it until the next paycheck. But the technological changes in the last few decades have fostered a new way of looking at cash, and with very good reasons.

Cash is very expensive for governments to print, distribute, secure, count, and clean.  Worldwide, its cost is about $200 billion a year. And more worrysome, it can’t be tracked. Cash contributes to many illegal activities such as tax evasion, money laundering, robberies, and thus a worldwide black market. Electronic transactions are much more transparent and safe.

Countries like Sweden (the very first country ever to print and distribute paper money) say those days of cash being king are numbered. Last year 89% of all business and personal money transactions there were done electronically, with just 11% executed in cash according to CNBC (in the USA 22% was cash transacted). That’s not just credit card usage, but also a concentrated effort by the Swedish government to replace traditional ways of using money with the placement of money machines in places where cash was common. Using an electronic card with facial recognition for verification and apps available on tablets and smartphones have made cash almost irrelevant there.  Out of 1,600 bank branches in Sweden, 900 no longer offer cash-handling services. Retailers in some areas are no longer accepting cash.

These new ways to pay are very convenient and easy to track, so much so that the government is saving money on its cost of cash. Banks are now charging negative interest on cash accounts and are even leaning toward monthly fees to hold cash for customers to discourage cash use.

In the rest of the world, developing nations are being targeted to become less cash dependent and more focused on the idea of electronics. Right now, these countries such as those in Africa, in South America, and the quickly developing nation of India, use cash in the majority of their monetary transactions. That cost to these countries is currently 1.5% of their Gross National Product which is a huge expense.

The use of electronics payment by consumers will enable theses countries to leap forward and avoid the infrastructure costs that we in the USA had to pay for in the 20th century. The leap will be very quick and much less costly on some things like developing their phone system as they go directly to cell phone usage. This expansion will includes using those devices for driver’s license IDs and receiving their government benefits and subsidies.  This year, 33% of that population will have those systems in place.

Back home here in the USA, cash usage costs the typical American family and American business a combined $1,700 per year due to theft, bank fees, and carelessness, as well as paying for all the government costs passed on to taxpayers for maintaining the system according to the New York Times. The use of mobile apps, cash cards, and credit cards will continue to grow and reduce those costs. In fact, MasterCard is introducing an app that allows a selfie to be taken at purchase for facial recognition and allows you to use that for all purchases. It makes passwords obsolete!

But is it all good?  Credit cards particularly make it very easy to overspend. We all know that we have to use some restraint to prevent ourselves from landing in a bad situation and growing debt. The days of the cash envelope helped prevent that for sure.

With the electronic advantages of transparency and speed will come the increasing chances of hacking and fraud even with things like facial or thumbprint recognition. One thing is for certain; money will still be talked about, thought about, tracked and spent even if it’s done in the form of credits and debits to a ledger (just like Star Trek forecasted back in the 60’s). I just don’t want to be in a place like a restaurant when the “system” goes down and I can’t pay for my meal because they don’t accept cash!

Top 10 Cashless Countries
10. South Korea (70% cashless) 5. Sweden (89% cashless)
9. Germany (76% cashless) 4. United Kingdom (89% cashless)
8. USA (78% cashless) 3. Canada (90% cashless)
7. Netherlands (85% cashless) 2. France (92% cashless)
6. Australia (86% cashless) 1. Belgium (93% cashless)

How do you feel about the growing trend to use technology and eliminate cash? Is it a real convenience or does it frighten you in some way? Can you control your own personal spending habits when it may be even easier than ever to get and spend money?

Image courtesy of ddpavumba at (with changes)


  1. It’s an interesting topic for sure. Talking with a group recently about teaching children about money and someone suggested balancing a check book and several of us replied we need to teach them about debit cards, credit cards and apps. Its really the future for them. My debit card is my main form of payment.

    1. I guess I’m like you and so many other people that I never seem to have much cash with me and use mostly my credit card, which is not always a wise thing. The debit card gives you the opportunity to substitute it for cash and as long as you’re aware of your balance, it works. When I was working for a bank, I can’t tell you how many people overdrew their accounts because the ATM/debit card allowed them to overspend and they didn’t keep track themselves.

  2. Emily @ JohnJaneDoe

    It may be a weird concern, but cashless would make it a lot more difficult to teach kids about money. Kids learn better with tangible items, and cash engages more senses (touch, sight, sound, even smell). It’s important for them to visually see their money increase as they save and decrease as they spend.

    1. I taught my children about money with coins when they were little. I can’t imagine a world where that wouldn’t be something you can do, but from my research, that’s where we’re heading. I guess you can put that up alongside not teaching kids how to write script because they’ll be using keyboards instead.

  3. I cannot be trusted with cash – I fritter it away too easily. So I’m OK with this for the most part. And I think it’s slowly happening. I used to be so good at finding spare change, but it’s just not around anymore! Lots of people paying with plastic. Time to rename my blog…think She Used to Pick Up Pennies has a ring to it? 😉

  4. Great post there Gary,
    Nowadays I am getting used to more plastic and electronic money and only use cash on rare occasions. Why do i need it if I can spend it in some other means. I also believe that come 10 years time, people will have forgotten that there was something like cash, it will be a tale to the kids 🙂
    Thanks for sharing.


  5. I like to use cash because it limits my spending and helps me budget. It’s so easy to swipe a card and not really think about how much you’re spending. Those facts about how much cash costs the average American are interesting though. I’d never considered that. Great article!

  6. I didn’t know about banks charging negative interest on cash accounts. It wouldn’t surprise me if we transition to entirely digital currency soon – I mean really, money is just paper, it’s not intrinsically worth anything on it’s own anyway, even change isn’t actually worth what it represents.

  7. Super interesting about Sweden! And it’s funny, my first thought was that as long as there’s crime, it’s going to be hard to get rid of cash. I’m sure if the full switch ever happens payment methods in those industries will evolve, too.
    One thing I worry about is low wage workers. There’s already been recorded cases of them being taken advantage of with prepaid cards loaded with fees in lieu of checks in the name of the unbankable. And this really would an additional burden on the unbankable, unless we start adapting systems like those they use in the Philippines, but I’m not holding my breath.

  8. Miss Thrifty

    I rarely have cash and never was able to take to Dave Ramsey’s idea of an envelope system seriously. I guess I’m of a younger generation than Mr. Ramsey because I think cash just feels antiquated.

    No, I don’t feel frightened by our increasing use of cashless systems. I am compulsive about checking my transactions and tacking my numbers multiple times per day. Cash would be a nightmare for me; I don’t have enough faith in my own record keeping skills as I’ve grown spreadsheet and budgeting program dependent.

    P.S. That selfie verification is what frightens me. I cannot see myself doing that!

          1. Miss Thrifty

            I sure do have a place, it was just hiding under a pesky ad. Click “Show 2 comments” and the comments field should show up. I’m figuring out that Squarespace is not always super intuitive for the blogger or the visitors! Harrumph!

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