The use of cash is on a steady decline due to the popularity of options like credit and debit cards, ACH payments, e-wallets and other payment solutions. StreetAuthority predicts the need for cash will disappear in the next five to ten years. It actually says shoppers won't even need to carry their leather wallets anymore – everything is going digital. According to StreetAuthority, electronic payments will make up almost two-thirds of all payments completed in 2015.
Thanks to near-field-communication technology e-wallets are now possible, which basically turns your phone into your wallet. StreetAuthority predicts that this technology will drive people to abandon their physical wallets and go full-out digital. According to StreetAuthority's small-cap stock expert, Andy Obermueller, Google's new changes to their e-wallet will change the way people spend their money. The e-wallet application from Google uses a chip in newer smartphones to transmit payment information. The equipment to read and process payments from the chip is already available at many places. Because the technology is already in place, Obermueller expects Google's new product to be big.
"It's also going to open up mobile payments to a whole new audience, notably among young people and a portion of the population that doesn't use banks," Obermueller said. "That's because not only is the credit card in Google Wallet available as a prepaid card – no credit required – it is also available on a prepaid smartphone through VirginMobile. This will certainly help push this technology into the mainstream…"
Some argue that cash will stay king for a while
While the increase in electronic payment technology is undeniable, Tom Fish and Roy Whymark, of the Bank of England, told the Telegraph that they think cash will stick around for several years. They cited the fact that cash is untraceable and doesn't need any technology to be used.
The Telegraph noted that the demand for bank notes has actually risen faster than the rise of spending in the U.S., Australia, Canada and the U.K. This is due to the fact that there are more ATMs than ever before. Also, some people are keeping cash in safety deposit boxes and other safe storage locations instead of putting it in a typical bank account.
Banks are pushing for cash abolishment
Bloomberg Business cited a Citi Bank economist named Willem Buiter report that suggested abolishing cash to deal with issues pertaining to interest rates. Currently, interest rates are low, and one of the only things keeping them from going lower than they are is cash. According to Bloomberg, central banks could bring interest rates below zero if cash weren't around. While there are some economists who feel cash should be abolished, the chances that it will be any time soon are small, according to Bloomberg. Bloomberg reported that Buiter noted abolishing cash comes with its own problems and would dramatically change the lives of people who rely on it every day. He also said that central banks and governments would lose seigniorage revenue, making the abolishment of cash improbable. Still, the use of cash is declining so some day Buiter's wish that cash be abolished may come true.
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