You may be familiar with the phrase “cash is king,” but with cash alternatives like credit cards, PayPal (PYPL), Venmo, Apple Pay (AAPL), Google Wallet (GOOG, GOOGL), and bitcoin flooding the market, the king might be about to lose its crown.
So is this the end of cold, hard cash? Not quite—but we’re getting there.
Last year, a study by Bankrate found that 40% of American consumers carried less than $20 in cash on a regular basis. About 9% of those surveyed said they didn’t carry cash at all.
According to the Federal Reserve, cash still accounts for 40% of all U.S. transactions but only 14 percent of the value of total payments. That means people are still using cash, but mostly for low-cost items like their morning cup of coffee.
Sixty-six percent of consumers use cash for purchases between $0 and $10, but less than 12% of consumers use cash for purchases of more than $100.
The new king(s)?
So what’s replacing cash? Well the obvious answer is debit and credit cards. Together those account for about 42% of all transactions and 34 percent of the value of total payments.
There’s also a new crop of mobile and electronic payment methods—Apple Pay, Google Wallet, Venmo, PayPal, and more. About 14% of U.S. households have linked their credit cards to Apple Pay, and there are more than 173 million active PayPal accounts.
What would Sweden do?
Americans might not be totally cut off from cash, but let’s take a look at a society that’s nearly cashless: Sweden.
There are currently about 80 billion worth of Swedish krona in circulation, down from 106 billion in 2009. Between 2010 and 2012 alone, more than 500 bank branches went cash-free and four out of five purchases were made electronically.
Credit Suisse writes that the rule of thumb in Scandinavia is: "If you have to pay in cash, something is wrong."
So will America be the next Sweden? Probably not. For one thing, the U.S. has a population of 319 million compared to Sweden’s 9.5 million.
There’s also the small fact that about 29% of Americans still keep at least some of their savings in bills and coins.
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