The digital revolution is continuing to change the way payments are made across a variety of industries. Cash is becoming less and less of a preferred payment method compared with plastic or digital payment options, and for good reason.
One of the best reasons to switch from cash to credit or debit cards is that cards are safer to carry and recoverable when they’re lost. Cash that is damaged, stolen, or lost is gone forever, while credit cards can simply be canceled when lost with no financial penalty. Credit cards also offer consumers protection from fraudulent charges, taking the worry out of cases where credit cards are lost or stolen.
Paying with a credit card also offers the cardholder protection in cases other than theft. For example, consumers can file disputes to ask their credit card companies to reverse charges if they fail to receive orders or when their products or services are not as advertised or arrive damaged.
In addition to security features, many credit card brands offer a variety of perks and bonuses to consumers, making them a far more attractive payment method than cash. Cash-back rewards or airline miles benefits are some examples of popular credit card perks. Some card issuers also offer free credit reports or monitoring to their cardholders.
Another reason to prefer plastic over cash is that credit card transactions are faster than cash transactions. For example, McDonald’s estimates that their average card transaction is 3 seconds, while the average cash transaction takes 10 to 15 seconds. The difference of a few seconds per order can make an enormous difference. Studies have shown that around 40 percent of customers will leave a check-out or drive-thru line if they think they will have to wait longer than desired. For businesses, encouraging card transactions, there is another surprising benefit that will lead to increased revenues. Strawhecker Group, a marketing consultancy, released a study finding that consumers spend up to 80 percent more when paying with a credit card versus paying with cash.
In addition to perks, convenience, and protection against loss, the COVID-19 pandemic has given consumers another big reason to switch to credit cards and other contactless payments. Given the public’s attention to limiting the spread of the virus, circulating cash is viewed as a less hygienic payment method. Some studies have shown that a cash bill can accumulate as many as 26,000 bacterial colonies on it. To avoid coming into contact with those germs, consumers are beginning to shift away from using cash for payments.
A recent consumer survey conducted by the Strawhecker Group consultancy found that half of all respondents indicated they would use less cash even after the pandemic ends. Underlining the impending shift, a Reuters study reported that nearly 40 percent of Americans would welcome a cashless economy. There is a generational shift happening, as well. According to the American Credit Counselling Services organisation, a full 100 percent of 18- to 24-year-olds report using cards for everyday purchases. Whether due to hygiene concerns, convenience, or security, it looks like a cash-free economy is on the horizon.
