Electronic payments by phone, card and computer continue to gain market share. And yet millions of Americans keep using cash.
Some lack an alternative because they don't have a checking account. Some value the privacy of cash transactions or the psychological security of knowing that cash is always accepted. For some families, using cash is cheaper than credit and helps them control their spending.
But there is a cost to using cash, in both time and money, that's not always considered. Those costs include fees to use a check-cashing service, withdraw from a non-network ATM or access wages loaded onto a payroll card.
A new study by Tufts University, The Cost of Cash in the United States, puts that price tag at about $200 billion a year. This figure includes $55 billion in higher costs to businesses, $43 billion for U.S. households and $101 billion in missed tax revenue because of off-the books transactions. For the average American family, the cost of cash is about $1,739 a year. The authors characterize their estimates as conservative.
"Obviously, cash is never going to go away—it's an important part of the economy," said study co-author Bhaskar Chakravorti, executive director of the Institute for Business in a Global Context at Tufts. "But we need to recognize the costs it's imposing, both real costs and opportunity costs."