Will cash eventually be phased out?

Recent efforts in Sweden and China to push cash away in favor of other payment methods have painted cash as something from the past. Cool, futuristic countries don’t need paper money, right?

Recent trends in payment methods might suggest that there’s something to efforts in some countries to become cashless. While cash is a necessity and the preferred form of payment in much of the developing world, people seem to prefer debit or credit cards when they have the option. According to a recent study by DepositAccounts, one third of Americans can’t make a $20 cash payment without taking a trip to an ATM. In China, the country that first brought banknotes to the world, cash is being phased out in favor of digital payments very quickly. As of 2017, over three-quarters of Chinese people were using digital payments over cash.

In the global race to become the world’s first cashless society, China is only behind Sweden, which has set a deadline for becoming completely cashless in 2023. Even in countries with no intention of scrapping banknotes at the national level, businesses and individual consumers seem to be slowly, voluntarily giving up on cash. This can also be seen on a generational level. According to the same survey, only 65% of Gen Zers didn’t have any cash on them when they were surveyed, as opposed to the 97% of the Silent Generation who did. Only a quarter of Americans prefer using cash, but a majority of Americans prefer to have cash on them in case of an emergency or small purchase.

The simple hassle of carrying and regularly taking out cash seems to be a driving factor in this global trend. In the US, 57% prefer using cards, according to the survey. As digital payments including cryptocurrencies become more popular, it’s likely that more countries will try to follow China and Sweden, who happen to be the first countries to introduce banknotes to their respective continents.