Will Credit Cards and Online Shopping Kill Cash?



Once upon a time, shopping was pretty simple. While people may have ordered items from a catalog once in a while, most of their shopping took place in a brick-and-mortar store where they paid for purchases with cash or check. With the rise of credit and debit cards, ecommerce, online payments, digital wallets and peer-to-peer payments, cash continues to lose its dominance, but does that mean it will soon go extinct?

The Advantages of Cash

Physical money continues to have some upsides. For one thing, consumers can make a purchase that cannot be easily traced or tracked. In an era when data breaches and identity theft are very real and can wreak havoc on a person’s entire life, this is a compelling reason to pay with dollars and cents. Cash is also very nice to have on hand for impulsive activities such as throwing change in a tip jar or donating to those in need. Furthermore, cash is accepted almost everywhere without a problem. In some cases, businesses will even give customers a discount if they pay for their purchases with cash. Finally, cash is finite; consumers know exactly how much money they can spend, and when it’s gone, it’s gone. For many, this makes planning and budgeting a lot easier.

The Downsides of Cash

Many of the things that make cash great can also be liabilities. For instance, the fact that it cannot be tracked means that if money is stolen, it’s probably gone forever. Furthermore, while cash is instrumental in helping to create a budget and limit spending, unforeseen needs and emergencies arise that may require a person to spend more money than they physically have on hand. This is where having a credit card or a digital wallet set up on your mobile phone can be a life-saver. Many of today’s retailers are equipped with NFC card readers that securely process a payment in a matter of seconds.

Advantages of Credit Cards

Credit cards have some definite pluses. For one thing, they are more secure than cash. If they are stolen, the customer generally is only responsible for a maximum of $50 spent by the thief. In addition, customers who pay with plastic can dispute charges and eventually get their money refunded in many situations. Also, many card providers give extra benefits including extended warranties and reward points as incentives. The added purchasing power of credit cards cannot be denied. Finally, being a responsible credit card holder boosts a person’s credit score over time, helping them when applying for mortgages and business loans.

Plastic and Ecommerce

These days, people don’t even need to get out of bed to purchase the goods and services they want. Online shopping using a credit card offers great convenience and often more reasonable prices. Some consumers remain queasy about providing sensitive financial data online, and there’s no doubt that fraud, data breaches and other criminal activities still occur and will probably continue to blight the marketplace. However, today’s enhanced encryption, tokenization and other security measures continue to convince a growing number of consumers to shop online with a credit card.

The Bottom Line

The benefits of credit cards, online shopping, digital wallets and other modern payment methods cannot be overstated, but their presence in the retail landscape does not mean that cash will soon be obsolete. Although consumers might not carry around a lot of bills and coins, it’s probably a safe bet that they will never totally forego the freedom and spontaneity that carrying cash provides.