Running head: SHOULD AMERICA EVOLVE INTO A CASH FREE SOCIETY? 1

Should America Evolve into a Cash Free Society?

Jeremy Heady

Brown Mackie College

Author Note

This paper is prepared for Principles of Macroeconomics SSC2230 taught by Instructor

Doug Hess.

SHOULD AMERICA EVOLVE INTO A CASH FREE SOCIETY?2

Should America Evolve into a Cash Free Society?

One thing that is consistent in all societies is change. Sometimes this change is for the

better and sometimes it is for the worse. As new technology is introduced, older technologies

often become obsolete. Many people speculate what the next big change is going to be in a

given society, but the fact is that most do not know. One thing that has become increasingly

popular in American society, as well as other developed countries abroad, is the use of debit

cards to conduct transactions rather than using paper and coin currency. Even minimum wage

workers are provided pay cards with either the Visa® or MasterCard® logo on them to conduct

everyday transactions, so paychecks are already becoming a thing of the past. If paychecks are

still being used and the payees do not operate a bank account, they have to pay a check cashing

business exorbitant amounts to access their money. Is American society ready to remove the

paper currency and evolve into a cash free society?

There are many benefits to moving to a cash free society: The first one and the most

obvious would be the effect on the crime rate. It would be virtually impossible for a burglar to

rob someone for their money without the transaction being easily tracked. Drug dealers would

have a much harder time conducting transactions with their clientele because of the fear of being

tracked. The black market would cease to exist as it is today. Firearms sales would be easier to

track. The list is endless. The next benefit would be addressing the underreporting problem with

personal finance and very likely, some business finance as well. If someone wants to tip a server

at a restaurant or the pizza delivery person, it would have to be tracked. This would be beneficial

to the government to accurately record taxes.

Have other developed societies considered this move? Well, Sweden is a prime example

of a society that is almost cash free today. Although Sweden is not completely cash free yet,

SHOULD AMERICA EVOLVE INTO A CASH FREE SOCIETY?3

many businesses and especially banks are making the move on their own. Since the

implementation of a virtually cash free society with cash free banks and transit system, armed

robberies have hit a 30-year low. They have experienced some negative effects as well: One

being that fraud has more than doubled. Another effect is that tourists who are not plugged in to

the Swedish system have to acclimate to the new environment (Russell, 2014).

There is an independent organization known as “The Better than Cash Alliance” which

make up the leaders of the effort to transition to cash free societies all over the world. This

United Nations based organization’s mission statement states, “The Better than Cash Alliance is

a partnership of governments, companies, and international organizations that accelerates the

transition from cash to digital payments in order to reduce poverty and drive inclusive growth.”

It is funded by some major players in the financial and economic world including: The Bill &

Melinda Gates Foundation, Citi Foundation, Ford Foundation, and the United States Agency for

International Development to name a few (Author Unknown, 2015). The mere existence of this

organization makes it apparent that this idea has been on the world’s governments’ agendas for

quite some time now.

One of the biggest questions concerning this transition is whether society is

technologically advanced or not. Richard Branson, the famous billionaire and founder of the

Virgin group of companies, has recently invested in a company called Clinkle. This company

has promised to revolutionize the way we conduct person to person electronic transactions, but

has given little information as to how (Burkeman, 2013). The existence of software and apps

such as Bitcoin, Square, and Intuit, have really given this conversation speed. Currently, a

person can transfer money from one person to another quite easily through the use of one or

more of these devices.

SHOULD AMERICA EVOLVE INTO A CASH FREE SOCIETY?4

How much is using cash costing American people and businesses? Transporting cash is

actually a costly business (Chakravorti & Mazzotta, 2013). Armed guards and armored trucks

are needed every step of the way. American people are constantly losing cash in some form or

another. There is also the issue of disease being spread. The currency in circulation right now

has changed many hands without any regards to germ spread. Single dollar bills are used at

gentleman’s clubs and bars to tip performers and waitresses so many times the bills are taken out

of patrons’ mouths and placed on various body parts of the performers. This is a pretty sickening

thought if one thinks about it.

Although bigger cities and metropolitan areas may not see a huge transformation in a

move to a cash free society, the rural areas may see a significant change. Many rural areas are

not up to date with current technologies. Cell phone companies still have struggles getting

reception in these areas and the internet is still low quality in these areas. Is this the major reason

for delaying the transition? A lot of the older generation may not be ready for this change. There

are still a number of people that rely on cash and even paper checks to conduct transactions. In a

cash free society, would the need for paper checks still exist? If so, would checks undermine the

benefits created by going cash free? The good news is that checks are photocopied and tracked,

so this may be a viable alternative to areas that still struggle with getting connected in a digital

world.

There are some downfalls to this type of society as well. Psychology research has shown

that people spend less when spending cash as opposed to using a card. There seems to be a

connection with the possession of physical currency and having a tangible item leave their

possession (Burkeman, 2013). Also, in light of the Edward Snowden scandal with the National

Security Agency, people fear letting too much of their personal information being available to the

SHOULD AMERICA EVOLVE INTO A CASH FREE SOCIETY?5

government. This is beyond the scope of the “Big Brother” scare introduced by the famous

fictional novel “1984” by George Orwell (1949). To make a seamless transition, the government

would have to assure the American people that privacy will still be a priority and for someone’s

records to even be viewed by human eyes would require a search warrant in accordance with the

Fourth Amendment to the United States Constitution. One other concern is international trade.

If someone immigrates from a cash society to America, safeguards must be in place to protect

Americans from underground foreign currency. If transferring foreign currency into an

American bank account is too easy, absolutely none of these benefits will be realized and there

will still be a black market currency.

In conclusion, a cash free society may be realized in America sooner than Americans

think. As long as privacy concerns are addressed and the transition is a slow and painless

process, Americans will be better off for it in the end. All crimes involving cash would be

virtually nonexistent although history has shown that when crime prevention tactics evolve, the

criminals evolve as well. These criminals would have to be smarter than the thug who robs

someone at gunpoint, though, so we would have less criminals, but they would be smarter.

SHOULD AMERICA EVOLVE INTO A CASH FREE SOCIETY?6

References

Author Unknown (2015) Better than Cash Alliance. Available on

https://www.betterthancash.org. Accessed on Dec 21, 2015

Burkeman, O. (Sep 27, 2013) The Cashless Society is Coming. More Reason than Ever to Use

Cash. The Guardian. Retrieved on Dec 21, 2015 from

http://www.theguardian.com/news/oliver-burkeman-s-blog/2013/sep/27/cashless-society-

spend-money-clinkle

Chakravorti, B. & Mazzotta, B.D. (Sep 2013) The Cost of Cash in the United States. Available

on http://fletcher.tufts.edu/CostofCash/~/media/Fletcher/Microsites/Cost%20of

%20Cash/CostofCashStudyFinal.pdf Accessed on Dec 21, 2015

Orwell, G. (1949). 1984. Nineteen Eighty-four.

Russell, H. (Nov 12, 2014).Welcome to Sweden - The Most Cash-Free Society on the Planet.

The Guardian. Retrieved on Dec 21, 2015 from

http://www.theguardian.com/world/2014/nov/11/welcome-sweden-electronic-money-not-

so-funny