By Colin McGregor
I’m talking to a Montreal author. He opens his wallet and shows me a thick wad of lottery tickets. “Thank goodness we still use cash in our society,” he says. “How could the cashier at my convenience store pay me prizes for my scratch tickets if we didn’t have bills? You should write an article about that.”
Okay.
Almost every Quebecer has a debit card, and most have a credit card. So why is there still cash in our society? The lower the transaction cost, the more likely the consumer is to use cash. If you buy a coffee in the morning, chances are you’re paying for it in cash.
According to the Bank of Canada, about a third of all transactions are made in cash, which represents about 15% of the total value of goods and services purchased. Banknotes and currency are easy to use, inexpensive, safe, and almost universally accepted.
And it’s anonymous. If you’re paid in cash, it’s better to spend in cash. Plus, you only spend only what you have, and you don’t pay interest or sneaky transaction fees.
“What about people who aren’t connected to the internet?” my author friend asks. “What if the power goes out and everything goes out? The machines are useless.”
If you’re a senior or a low-income person in this world, cash is a better alternative. If you don’t have credit, cash is your only option.
Cash can be used by everyone and accepted by everyone. It’s inclusive. It doesn’t require a bank account or device to use. It does not discriminate based on age, gender, race, or ethnicity. It is easier to use for people with visual impairments.
A European Central Bank study written by economists during the pandemic observed that: “The pandemic has caused a significant increase in the demand for cash as a store of value, but a decrease in the use of cash in transactions.”
In other words, people were filling their mattresses with cash in case banks failed, or so they didn’t have to go out to a bank. But they were using less cash in their transactions because of the fear of transmitting COVID through banknotes and coins.
The same 2021 study, “Catch Me If You Can,” estimated that the risk of catching the COVID virus through currency was very low.
Money has very little value in itself. These pieces of paper and metal are virtually worthless. But we assign value to notes and coins. Everyone agrees on the value of this value. This leap of our imaginations makes transactions possible and universal.
The use of cash is decreasing over time in Canada. In Europe, according to the European Central Bank, it is used in 73% of all transactions. It is much less used on our side of the Atlantic.
When I was a journalist in Montreal in the 1980s, we were the leader in North America in bank robberies. One in two Montreal banks were robbed each year. These days, you rarely hear about bank robberies. Beyond the state-of-the-art security measures, thieves may think that cash is less valuable today.
Think again. Cash will always have a place in our society.
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