Are We On the Verge of a Cashless Society in 2024?

The concept of a cashless society has been around for decades. But with 84% of payments in the US being made digitally in 2024 according to Clearly Payments, research suggests that the transition from physical currency could take place sooner than we once thought. For businesses adapting to this shift, the best mobile POS systems can help streamline digital transactions and ensure a seamless cash-free experience.

Yet, while the convenience of contactless POS payments remains unmatched, and climbing interest rates accelerate the transition to digital payments globally, the majority of Americans aren’t on board with going fully cashless. This poses a pressing question for businesses — is 2024 too soon to consider going cash-free?

We talk to financial experts and collect the receipts to gauge how likely it is that the US will switch to a fully digital economy anytime soon. We also weigh up the benefits and drawbacks associated with going cashless, to help you decide if it’s the right move for your business.

Use the links below to jump to specific sections, or scroll down to learn more about the reality of going cashless in 2024.

In this guide:

• Key Takeaways
• What Is a Cashless Society?
• Cashless Society Statistics
• When Will Society Become Cashless?
• What Are the Benefits of a Cashless Society?
• What Are the Disadvantages of a Cashless Society?
• Which Party Wants a Cashless Society?
• Steps Businesses Should Take Today

What Is a Cashless Society?

A cashless society is one where cash, coins, and all forms of physical tender aren’t used for financial transactions. Instead, payments are made through digital payment methods like debit cards, credit cards, mobile wallets, and mobile payment apps.

Cashless Society Statistics 

To present a clearer picture of where society is heading, we round up some statistics about cashless societies below:

• Two-fifths of Americans used no cash in 2022 (Source: Pew Research)
• 13.4% of American consumers have stopped using cash completely in 2024, compared to 11% in 2022 (Source: Capital One Shopping)
• The average number of cash payments fell from 26% in 2019 to 20% in 2021 (Source: Federal Reserve)
• Between 2012 and 2022, cheque transactions declined by almost half (Source: Federal Reserve)
• The annual growth rate of digital payment is estimated at 9.25%, which could result in digital payments reaching $16.69tn by 2028. (Source: Statista)
• 70% of Americans believe that the US is becoming a cashless society (Source: Card Rates)
• More than 23 million people in the UK used virtually no cash in 2021 (Source: The Guardian)
• Cash only represents 1.3% of Sweden’s GDP (Source: International Monetary Fund)
• The number of cashless payments in the Asia-Pacific is forecasted to be higher than Europe and North America combined in 2026 (Source: Statista)

When Will Society Become Cashless?

While it’s impossible to accurately predict when the US will move to a fully cashless society, a 2024 survey by Card Rates reveals that 70% of Americans believe that the nation is becoming a cashless society, with two in five respondents never usually carrying cash.

“Today you can actually conduct all aspects of your life without ever spending a single dollar bill”- Mario Almonte, Managing Partner at Almonte PR

The popularity of cash payments has been dwindling for some time, but the method took a massive hit during the first year of the pandemic when the portion of cash-based transactions fell by 7% to just 19% of all transactions. The trend toward digital currency has accelerated ever since, with the number of card and phone payments climbing higher each year.

Due to the accessibility of digital payment options, Mario Almonte, managing partner of the financial PR company Herman & Almonte explains that for many US citizens, a cashless society is already here. “Every vendor offers cashless payment options,” Almonte tells Tech.co, adding “today you can actually conduct all aspects of your life without ever spending a single dollar bill”.

But the phasing out of paper and coins isn’t just taking place on home soil. While no fully cashless countries exist, cash is used in around 10% of transactions in Sweden, and the value of cash now only represents 1% of the country’s GDP. Similar rates have been recorded across other Scandinavian nations, while Hong Kong predicts cash will account for only 1.6% of point-of-sale (POS) transactions by 2024.

Recent technological developments like the growing sophistication of digital wallets, and the rise of blockchain-based systems like Bitcoin and central bank digital currencies (CBDCs) are accelerating the move away from physical tender too. Specifically, the influence of Bitcoin can’t be understated, with the currency currently booming due to President-elect Donald Trump’s recent endorsement of cryptocurrency.

But despite this global shift away from tangible currency, the US isn’t likely to transition officially any time soon. Despite popular belief, the government has no plan to make paper money worthless and the majority of Americans aren’t ready to make cash a thing of the past either — with 56% of Gallup respondents revealing they like to have cash with them at all times when they leave the house.

What Are the Benefits of a Cashless Society?

Not convinced of the advantages of going cashless? Here are some reasons dropping cash could benefit businesses, and society at large.

• Improves convenience – Digital systems help to streamline practices by eliminating the need for bank runs and extra POS accessories like cash draws. Therefore, the biggest reason businesses decide to go digital is convenience.
• Saves costs – While the costs of digital payments can add up – with the average POS charging credit card processing fees of 1.5% to 3.5% per card-based transaction – moving away from manual methods means that businesses will no longer need to cover banking costs associated with depositing and processing cash.
• Helps to prevent fraud – Physical cash is much harder to track and trace, making it the method of choice for criminals and fraudsters. Switching to digital payment methods has been shown to reduce instances of money laundering and improve financial transparency in countries like Sweden and China, while also reducing cases of burglary.
• Boosts consumer spending – Research shows consumers spend 160% more on credit card transactions than they would on cash transactions, likely because using tap payments and Venmo feels much more abstract. While this isn’t ideal for the bank balance of consumers, it can provide valuable opportunities for businesses looking to maintain healthy profits.

 What Are the Disadvantages of a Cashless Society?

So going cashless sounds great, right? Well, while phasing out physical tender can deliver clear benefits to businesses, it’s important to be aware of the potential drawbacks of a cashless society, too.

• Increases financial exclusion – Around 5.6 million US households are currently unbanked, meaning that the occupants rely on cash to make daily purchases. By making digital methods mandatory, the most marginalized members of society will be placed further on the back foot, including members of the homeless population, who often rely on cash donations from the public in order to get back on their feet again.
• Increased risk of cybercrime – While cashless businesses aren’t likely to encounter traditional burglaries, digital systems are much more vulnerable to cyber attacks, and these types of crimes tend to cost businesses a lot more. In 2022, cyber attacks cost many US SMBs over $100,000, with 41% of businesses reporting cyber attacks cost them over $500,000.
• Lack of privacy – Since digital payments leave a digital trail, lots of experts we spoke to raised concerns around data privacy, including Cyrus Vanover, founder of personal finance site FrugalBudgeter who tells Tech.co. “A cashless society could make it easier for governments and financial institutions to track individuals’ financial transactions, raising concerns about privacy and surveillance”.
• Mandatory negative interest charges – If we ditched cash for good, normal citizens wouldn’t be able to avoid paying negative interest rates imposed by central banks to curb the impact of inflation. Examples of this have already been seen in Japan, when the national bank introduced a policy that charged its users a negative interest rate of 0.1% back in 2016.

“Cashless payments can be a barrier for people who do not have access to technology or who are not familiar with digital payment systems.” – Doug Carey, a chartered financial analyst and CEO of WealthTrace

Which Party Wants a Cashless Society?

While the debate around going cashless isn’t neatly split down partisan lines, in recent years the republican party has been more vocal in supporting a business’s right to ditch physical tender.

In a 2021 hearing about the government’s role in preserving cash payments, Rebuplicans and conservative witnesses opposed government mandates to protect cash, and openly advocated for free competition in the fintech market. Certain Republican Representatives like William Timmons also spoke up about the issue, expressing that ‘businesses make their own decisions” when it comes to refusing to accept cash payments.

President-Elect Donald Trump has also been publically outspoken about his support for cryptocurrency. With Bitcoin reaching the $100,000 mark for the first time ever after election day, it’s expected that alternative forms of digital currently will continue to thrive under Trump’s presidency.

On the other side of the coin, the Democratic party is more supportive of protecting cash as a viable payment option. In a reality where approximately 7% of the US population is unbanked, Democratic Representatives argue that the acceleration of cashless payments could leave certain segments of the population behind, potentially exacerbating economic segregation as a result.

This doesn’t mean that both factions don’t ever agree when it comes to the future of the payment ecosystem, however. Several US states including Arizona, Illinois, New York, and Kentucky have recently banned retail establishments from going fully cashless after the bills received cross-party support from legislators. So, while Republicans are generally more welcoming of a cashless society, bipartisan support for physical currency suggests that this change won’t be happening anytime soon.

Steps Businesses Should Take Today 

Going cashless won’t be right for every business. Here are some important considerations to make if you’re curious about ditching dollar bills for good. 

Know your customer base

If you make a large portion of your income through cash payments or primarily serve demographics who still consider cash to be king — such as elderly consumers and those from lower socio-economic backgrounds — removing cash may cut off vital streams of revenue. 

Check if your state is eligible

While most states don’t have any policies against going fully digital, certain states and cities prohibit cashless businesses too. These states include Connecticut, New Jersey, Massachusetts, and Pennsylvania, making ditching cash in these locations impossible.

Invest in a good POS system

However, if you’re looking to streamline your checkout experience and tap into the ever-growing digital payments economy, embracing tech for cashless payments could prove to be a wise decision for your business.

For those serious about taking the next steps, POS systems offer streamlined ways for businesses to accept and manage digital transactions. Most POS systems let you accept a wide range of digital payment options including e-wallet, bank transfer, and contactless (including Apple Pay and Google Pay) – with our top-rated provider Square even offering buy now pay later (BNPL) and split-payment options. 

They’re also packed with extra POS features like end-to-end encryption (E2EE), stock management, and sales reporting, helping you to handle a range of business processes from one centralized system, while keeping your data safe and secure.

With smart tech like POS systems making the switch to digital easier than ever, businesses shouldn’t leap into a cashless future blindly. Physical currency isn’t becoming obsolete any time soon, so it’s important to weigh up your options before deciding to go fully cashless in 2024. Ensuring you can accept some cashless payments though, is essential to keeping with today’s trends and customer expectations.