Cognitive dissonance
over the fate of cash

thumbs-up-1172213_1280You probably know the term cognitive dissonance. It refers to the sensation of gears inside your head grinding to a halt at the appearance of contradictory data.

For a good example, look no further than prognostications about the impending fate of cold, hard, tangible currency. Depending on who pipes up and when, the future of minted and paper currency is either dismal or glorious.

Last week in a The New York Times piece entitled “Cash Is King No More,” writer Lee Siegel rued the demise of currency:

Cash. Remember? It’s what people used to exchange for things. You can see it sometimes in old movies on TCM. I think Gibbon mentions it in “The History of the Decline and Fall of the Roman Empire.” An old song, “Brother, Can You Spare a Dime,” was actually about a dime. It was not “Brother, Can You Spare an Amazon Rewards Card.”

Siegel is not alone. No shortage of predictions in both the consumer and business press place cash on the endangered species list, and there are plenty of reasons to hold to that view. In my recent ABA Bank Marketing article “Measuring the ROI of Digital Banking,” I discussed a study by Fiserv and Bank of the West showing the appeal that digital banking holds for rising generations, and how that dovetails nicely with the potential for banks to increase share of wallet, loyalty, longevity, and fee income. That’s a clear win-win—unless you happen to be currency, in which case it would be reasonable to fear that your days may be numbered. I mean, come on. Even food stamps are going digital. 

Now for the cognitive dissonance 

But not so fast. An article just published by Fiserv strategic partner ATM Marketplace entitled “Why consumers still love cash” claims that studies “… consistently show the hype about the decline of cash to be inaccurate and wildly overstated.” It goes on:

Despite continuing growth in alternative payment options, consumers still rely on cash as their primary form of payment for gifts, food, personal care, automotive, entertainment and transportation services.

But, with so many “more convenient” options available, why do people continue to rely on hard currency?

By way of answering its own question, the piece suggests that people are loath to give up cash due to concerns about potential hacking, dissociating from hands-on budgeting, loss of anonymity, and merchants who do not accept credit cards or digital payments. While all of those explanations hold water, I’m a little wary of explaining results of “studies” where no reference is cited, for they leave me powerless to check out the claim for myself. As University of Oregon Professor Emeritus of Psychology Ray Hyman observed in what has since been dubbed Hyman’s Categorical Imperative, “Do not try to explain something until you are sure there is something to be explained.”

But then, ATM Marketplace is no lone voice. No less than the venerable BBC challenges the sounding of “the death knell” for cash:

Physical money has been with us for thousands of years for a reason. Cash is essentially untraceable, it’s easy to carry, it’s widely accepted and it’s reliable. If the power goes out, or there’s a blip in the electronic systems that make the online commerce world go round, cash is there. If someone wants to buy something without anybody tracing it back to her, cash is the way to do it. If someone wants to be certain that their form of payment will be accepted, cash is the best bet. Even with advances in technology, some of the aspects of cash simply aren’t reproducible with bits just yet.

There is simply no alternative system of payment that is as convenient, reliable and anonymous.

Speaking of venerable, Georgia State University is of like mind. While many cash defenders echo ATM Marketplace’s reasoning—perhaps they share a common source—GSU offers some unique points. Among them are the fact that not everyone has a bank account (a problem The Republic of India must sooner or later face as it pursues its stated goal of becoming a cashless society); the suggestion that the removal of currency will only spur people to substitute some form of cash by another name; and the fact that the demise of cash has been predicted before. Such was predicted, for instance, with the advent of checks. Perhaps you noticed that cash is still in use.

The not necessarily venerable but not altogether dismissible Huffington Post opines that cash is here to stay. More notably, so does ACI Universal Payments. If you’d expect to find a pro-demise-of-cash bias anywhere, you’d expect to find it there. Yet in a delightfully comic piece that manages to bring rickshaw rides into the picture, ACI’s writer quips that cash “… is almost as good as money,” adding, “It’s universally accepted, there’s no surcharge to use it, and for some, it fits nicely into their fanny packs … ”

I cannot resist weighing in with own thoughts. 

It is, after all, my blog.

Digital is taking over, and there’s no reason to imagine that it will slow down. It will become the standard, and, I suspect, sooner than many think. With that said, of course currency will never altogether disappear. Neither have typewriters and rotary phones. The “demise of cash” should not be taken literally but understood to mean “the reduction of cash to a negligible proportion.”

In any case, neither I nor anyone else attempting to predict the future need worry. That’s the beauty of making predictions. If in time you turn out to be wrong, chances are that by then no one will remember that you even made a prediction, much less what it was.

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