According to Coin News, in 2020 it cost roughly 1.76 cents to make one penny. Not only is the cost of producing money a negative, the convenience of having exact change at your fingertips is playing a bigger part in the appeal of cash. The days of cash being the primary form of payment might be coming to an end.
Payments for goods and services have been trending toward digital for several decades and became commonplace by the 2010s.
- Banks have their own apps that allow virtual banking and mobile deposits. When you can get cash back at the grocery store for a minimal fee or even free, you don’t have to go to the ATM for cash. These conveniences have led to a trend where many people haven’t visited a bank branch for transactions in months or even years.
- The movement from bank transfers or cash payments to peer-to-peer apps like Venmo make it easier to settle-up with a friend for sports tickets, your half of dinner or even the sale of used items when you clean out your garage. These trends are even higher among younger generations.
- Contactless digital forms of payment through mobile wallets like Apple pay have become an ordinary way of life.
- The world of online shopping has grown by leaps and bounds, and experts predict it will continue to be a major revenue stream for retailers. Online shopping giant, Amazon, had a profit growth of 84% in 2020. Grocery pickup and delivery allow you to pay digitally as well. Transactions are trending to be online and instantaneous.
- The development of mobile payment technology like Apple pay have rapidly accelerated the use of digital as a preferred payment method for many.
- The adoption of digital payments was pushed even faster once the pandemic started as consumers were staying at home.
Digital payments have been on the rise across the world over the past decade. When we look at the number of digital payment transactions in 2020, it was estimated at the end of the year the United States would have about $160 billion in digital payment transactions. And, emerging markets in the Asia-Pacific Rim are projected to outpace the U.S. when it comes to digital payment transactions in the next few years.
There are potential implications for our economy when everything is electronic. The technological innovation has to grow at a pace to support the demand. As the number of payment options continues to increase, consumers are more concerned about keeping their payment information safe. One survey by TSYS found that 30% of consumers are very concerned about their payment security, and 58% are somewhat concerned.
The innovation in the world of cash and how we pay for things is going to continue to evolve and change. At Eric Scott Financial, our team of Financial Architects will continue to monitor changes and look for investment opportunities for you.
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