Cash is alive (and kicking?)

Celine Wee
3 min readJan 27, 2023

“Low-value cash instruments are enormously flexible and robust payment instruments — you don’t need electricity, Wi-Fi, or cellular signals to make them work. Nor do you need to be literate,” — Peter Sands via IMF.org

I’m evaluating my position on cash. It feels odd to declare this, given:

(a) my day to day life includes little to no cash (thankful for instant payments and cards), except for the frantic hunt for fresh bank notes once a year [1].

(b) I used to sing/sell non cash payments acceptance.

But I realized the “digital payments are the BEST” fervour ignores the good and necessity of cash. The quote above sums it well — cash has no need for electricity, internet, cellular signal, literacy, and to add — or for people to speak the same language. The math just works.

Why Cash?

  1. Consumer preferences

Consumer preferences, which could due to a lack of trust in the banking system and the overall safety of funds in the financial system, privacy concerns , ease of budgeting (eg some studies that suggest one spends more using card than cash), ease of paying via cash in convenience stores (Japan, Taiwan), are some reasons why customers prefer cash. An interesting example — although the number of cards per capita in Germany is comparable with that of other European countries, domestic card usage is comparatively low (source), which could suggest that consumer preferences override access.

2. Consumer lack of access because of financial exclusion

Cash is something that someone with no bank accounts, no smart phone, no or limited internet access at slower speeds, or lower technical literacy, can use. Cash works in all those scenarios (doesn’t require a smart phone or an internet connected phone), and is fairly easy to transact across language barriers.

3. Perceived “zero cost of acceptance”.

Cash acceptance seems free (though one could argue that it is not free since banks charge for depositing large sums). Cash looks cheaper when it’s free cash acceptance vs a % + fixed fees for card payments.

Photo by Emil Kalibradov on Unsplash

All this to say - I see why cash is alive.

Why NOT cash?

I feel like keeping this section short since the digital payments growth wave is relentless. However, for completeness — here’s an overview of why NOT cash from various points of view (POV).

Government POV

  • Anti Money Laundering: cash movement is harder to trace than bank transfers through the banking system.
  • Easier taxation: it’s harder to tax cash transactions if businesses don’t declare them, vs digital payments that are more easily traced.

So governments have reasons to dislike cash and promote digital payments.

Consumer POV

  • Convenience and safety: It it easier to pay with a phone/cards than carrying a wad of cash.
  • Protection from bad merchants: Consumers can dispute a card payment if something goes wrong.

So, consumers arguably find digital payments more convenient and safer than cash payments.

Business POV

  • Easier reporting and management: Easier to reconcile transactions, maintain a ledger, manage taxes. Also makes it harder for cash leaks (eg petty theft from the cash register, or robbery).
  • Selling globally: Accepting more digital payment methods beyond cash means selling globally and accessing overseas consumers.

There’s a season for everything — including cash. While cash as a portion of overall payments may be decreasing in some markets, I see why cash usage continues in some sectors and its inclusivity for those who are underbanked, lack tech access, and simply prefer to pay in cash.

[1] More details

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Celine Wee

Opinions are my own: a collection of Go To Market, Payments, Biz Ops learnings across Stripe, Coinbase, Twitter. I also write @celinewee.substack.com