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Money Isn’t Free – Cost of Cash in the U.S. Study Released
September 11, 2013
The Fletcher School at Tufts University has been studying cash use patterns and the cost of accessing cash worldwide and recently released its in-depth report for the United States market,
The Cost of Cash in the United States
The report authors examine how cash use affects consumers, businesses, and governments and attempts to debunk the myth that cash is somehow “free”. The authors argue there are costs associated with all forms of payments and notes financially underserved consumers usually burden more of the cost.
“The truth is every payment instrument adds a disproportionate cost onto the poor,” said Bhaskar Chakravorti, senior associate dean for international business and finance at Tufts’ Fletcher School and co-author of the study. “Yet cash we tend to think of as the poor man’s best friend. That is where we’re wrong.”
In an interesting
released with the report, the authors estimate continued use of cash traps $200 billion a year in value to the economy. In addition, they state:
This study starts from a simple observation: cash derives its value from the information it contains and is a classic information good, which can be re¬placed by a digital substitute.
As we pointed out in our report earlier this year, Consumers and Cash: A Love Story, cash transactions represent one of the last hold-outs in the evolution of payments from paper to electronic. In fact, the authors state payments are a natural gateway to financial services, but addressing the issue of cash displacement will require a concerted effort across all stakeholders. In our report, we estimated that cash payment volume in the United States will decline at a rate of 2% per year, and if that holds true, we’ll have plenty of time to work on it.
Visit the Cardtronics Cash Strategy Session on PaymentsJournal.
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