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 Are We Closer to a Cashless Society?

History has shown that humans are quite adaptable - on both a large and a small scale. For example, many people who would have never considered using Zoom for a meeting, PayPal for a virtual payment, or DocuSign for an important signature now do so daily. The same could be said about getting pet supplies from Chewy or electing to have groceries delivered to your front door.

The pandemic's stay at home/work from home movement has pulled technology assimilation forward at a rapid pace. Many experts speculate that this exponential growth would have originally taken years to achieve. (A)

With electronic payment methods like Apple Pay, Google Pay, PayPal, Square, and Venmo now easily accessible via your smartphone -- what is the future of cash and coin?

The US has been moving towards a "cash lite" economy for some time. ATM usage declines at about 6% to 10% a year. But Covid-19 seems to have supercharged this transition. "During the lockdown, cash withdrawals from ATMs were down about 60%." As the coronavirus hit, many retailers moved to ban cash transactions because of concerns that coins and bills might spread the Covid-19 virus. (Contrary to reports, the World Health Organization never instructed consumers to avoid cash during the pandemic.) Within days of retail stores starting to close in March and April, cash usage dropped by 40%. (B)

Is going cashless even legal?

A section of U.S. Code on the American monetary system states that "United States coins and currency are legal tender for all debts, public charges, taxes, and dues." (C) That sure makes it sound like cash must be accepted everywhere, doesn't it? However, like many things, even rules and laws seem to become a little more fluid during pandemic life.

Signs reading "contactless payment only" became common at points of payments throughout the US.



One Los Angeles golf course stated that cash is not accepted in the hopes of stopping the spread of the virus. "It was a simple decision," said the Golf Manager at Los Angeles Department of Parks and Recreation.

The Purple House Restaurant in Maine asked that you consider paying with a credit card or mobile pay to avoid cash transactions.

A sign posted at the San Francisco Urban Creamery says, "We are encouraging contactless payment methods at this time."

In their reopening guidelines, the Centers for Disease Control recommends that if you have to use cash in a restaurant, bar, or retail establishment, you should use a tray to pass it to your server or cashier. (D)

Serving the Underserved

Experts argue that cash must remain a viable payment option, as going cashless excludes the millions of unbanked and underbanked people in America, most of whom are from challenged social-economic backgrounds.

Approximately 6.5% of U.S. households are unbanked, according to the FDIC’s 2017 National Survey of Unbanked and Underbanked Households. This means they live in a household holding no accounts with insured financial institutions. Another 18.7% of households are underbanked, which means they have at least one account at an insured institution. However, they regularly use financial products or services outside of the banking system, like payday loans or cash-checking services. Quick math shows that’s 1 in 4 households are either unbanked or underbanked.(E)



There's a reason they say cash is king

Cash is still the second-most-used form of payment in America today after debit cards.

Physical objects like coins and paper bills have been used since ancient societies made the switch from bartering goods. America started issuing its own currency in 1776, and this evolved into the dollar we know today. The cashless movement started in the late '60s/ early '70s when credit cards became popular. Yet still, a cashless society hasn't managed to go mainstream after all these years.

While its use has certainly declined in recent years, cash will likely never disappear. Many cities like Philadelphia, San Francisco, and New York have recently passed legislation barring merchants from accepting only card and contactless payments. The New York bill, introduced in November 2018, had plenty of pushback from already-cashless merchants, technology companies, and credit card companies. Nevertheless, it became the law. Another reason for cash is that it's the best way to pay while maintaining a modicum of privacy; cash is integral to many longstanding practices like tipping and gift-giving.

And finally, while doomsday scenarios may seem far-fetched, how would we access our money if there were no access to the internet or a reliable online or card-based financial system? It's an important question to ask when creating laws and infrastructures. When technology fails, cash is there.

Consumer choice is key

Consumer choice is one of the most fundamental tenets of the free market. Eliminating cash reduces freedom of choice in payment options available to consumers.

In a recent research piece feature on CNBC, 46% of the people polled said they had stopped using cash due to the pandemic. An astonishing 66% also said they would consider the credit/debit device found at most retailers unsanitary and prefer a non-contact method.

The way the American economy functions these days is what some experts call "cash lite," meaning there are a lot of payment options for consumers to choose from, and a small majority prefer the digital ones as shown in the chart below.



America won't be going cashless anytime soon

Even as new and exciting financial technologies become available, people keep returning to cash. Despite fears at the beginning of the COVID-19 pandemic that cash might increase the risk of contracting the virus, people are using paper money at 80% of the rate they were in the fall of 2019. So, the "greenback" is showing it may be as resilient as the virus itself.

Often the simplest things, backed by centuries of tradition and familiarity, hold their place in society – whether pandemics rage or technology advances. Are we closer to a cashless society? Without question, alternative payment methods exist and are increasing in popularity. However, that does not necessarily mean a cashless society is imminent. For generations, cash has been a huge part of our economy, and we do not feel that will change anytime soon.

SOURCES:
(A)https://www.forbes.com/sites/forbestechcouncil/2020/07/24/how-digital-transformation-and-innovation-have-been-accelerated-due-to-covid-19/#6000181113d

(B)https://www.theguardian.com/money/2020/jun/24/you-cant-pay-cash-here-how-cashless-society-harms-most-vulnerable

(C)https://www.govinfo.gov/app/details/USCODE-2010-title31/USCODE-2010-title31-subtitleIV-chap51-subchapI

(D)https://www.insideedition.com/why-some-businesses-are-refusing-cash-during-the-pandemic-59812

(E)https://fortune.com/2020/06/25/cashless-society-coronavirus-cash-america-fintech-unbanked-privacy/

Disclosure


WT Wealth Management is an SEC registered investment adviser, with in excess of $100 million in assets under management (AUM) with offices in Flagstaff, Scottsdale, Sedona and Tucson, AZ along with Jackson Hole, WY and Las Vegas, NV.

WT Wealth Management is a manager of Separately Managed Accounts (SMAs). With SMAs, performance can vary widely from investor to investor as each portfolio is individually constructed and managed. Asset allocation weightings are determined based on a wide array of economic and market conditions the day the funds are invested. In an SMA, each investor may own individual Exchange Traded Funds (ETFs), individual equities or mutual funds. As the manager we have the freedom and flexibility to tailor the portfolio to address an individual investor's personal risk tolerance and investment objectives - thus making the account "separate" and distinct from all others we manage.

An investment with WT Wealth Management is not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency.

Any opinions expressed are the opinions of WT Wealth Management and its associates only. Information offered is neither an offer to buy or sell securities nor should it be interpreted as personal financial advice. Always seek out the advice of a qualified investment professional before deciding to invest. Investing in stocks, bonds, mutual funds and ETFs carries certain specific risks and part or all of an account's value can be lost.

In addition to the normal risks associated with investing, narrowly focused investments, investments in smaller companies, sector and/or thematic ETFs and investments in single countries typically exhibit higher volatility. International, Emerging Market and Frontier Market ETFs, mutual funds and individual securities may involve risk of capital loss from unfavorable fluctuations in currency values, from differences in generally accepted accounting principles or from economic or political instability that other nations experience. Individual bonds, bond mutual funds and bond ETFs will typically decrease in value as interest rates rise. A portion of a municipal bond fund's income may be subject to federal or state income taxes or the alternative minimum tax. Capital gains (short and long-term), if any, are subject to capital gains tax.

Diversification and asset allocation may not protect against market risk or investment losses. At WT Wealth Management, we strongly suggest having a personal financial plan in place before making any investment decisions including understanding personal risk tolerance, having clearly outlined investment objectives and a clearly defined investment time horizon.

WT Wealth Management may only transact business in those states in which it is registered, or qualifies for an exemption or exclusion from registration requirements. Individualized responses to persons that involve either the effecting of transactions in securities, or the rendering of personalized investment advice for compensation, will not be made without registration or exemption. WT Wealth Management's website is limited to the dissemination of general information pertaining to its advisory services, together with access to additional investment-related information, publications, and links.

Accordingly, the publication of WT Wealth Management's website should not be construed by any consumer and/or prospective client as WT Wealth Management's solicitation to effect, or attempt to effect transactions in securities, or the rendering of personalized investment advice for compensation, over the internet. Any subsequent, direct communication by WT Wealth Management with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides.

A copy of WT Wealth Management's current written disclosure statement discussing WT Wealth Management's registrations, business operations, services, and fees is available at the SEC's investment adviser public information website (www. adviserinfo.sec.gov) or from WT Wealth Management directly.

WT Wealth Management does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to WT Wealth Management's web site or incorporated therein, and takes no responsibility therefor. All such information is provided solely for convenience purposes and all users thereof should be guided accordingly.

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Any opinions expressed on this website are the opinions of WT Wealth Management and its associates only. Material listed on this website is neither an offer to buy or sell securities nor should it be interpreted as personal financial advice. You should always seek out the advice of a qualified investment professional before deciding to invest. Investing in stocks, bonds, mutual funds and ETF’s carry certain specific risks and part or all of your account value can be lost.

At WT Wealth Management we strongly suggest having a personal financial plan in place before making any investment decisions including understanding your personal risk tolerance and having clearly outlined investment objectives.

View Disclosure
WT Wealth Management is an SEC registered investment adviser, with in excess of $100 million in assets under management (AUM) with offices in Flagstaff, Scottsdale, Sedona and Tucson, AZ along with Jackson Hole, WY and Las Vegas, NV. WT Wealth Management is a manager of Separately Managed Accounts (SMAs). With SMAs, performance can vary widely from investor to investor as each portfolio is individually constructed and managed. Asset allocation weightings are determined based on a wide array of economic and market conditions the day the funds are invested. In an SMA, each investor may own individual Exchange Traded Funds (ETFs), individual equities or mutual funds. As the manager we have the freedom and flexibility to tailor the portfolio to address an individual investor's personal risk tolerance and investment objectives – thus making the account “separate” and distinct from all others we manage. An investment with WT Wealth Management is not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. Any opinions expressed are the opinions of WT Wealth Management and its associates only. Information offered is neither an offer to buy or sell securities nor should it be interpreted as personal financial advice. Always seek out the advice of a qualified investment professional before deciding to invest. Investing in stocks, bonds, mutual funds and ETFs carries certain specific risks and part or all of an account's value can be lost. In addition to the normal risks associated with investing, narrowly focused investments, investments in smaller companies, sector and/or thematic ETFs and investments in single countries typically exhibit higher volatility. International, Emerging Market and Frontier Market ETFs, mutual funds and individual securities may involve risk of capital loss from unfavorable fluctuations in currency values, from differences in generally accepted accounting principles or from economic or political instability that other nations experience. Individual bonds, bond mutual funds and bond ETFs will typically decrease in value as interest rates rise. A portion of a municipal bond fund's income may be subject to federal or state income taxes or the alternative minimum tax. Capital gains (short and long-term), if any, are subject to capital gains tax. Diversification and asset allocation may not protect against market risk or investment losses. At WT Wealth Management, we strongly suggest having a personal financial plan in place before making any investment decisions including understanding personal risk tolerance, having clearly outlined investment objectives and a clearly defined investment time horizon. WT Wealth Management may only transact business in those states in which it is registered, or qualifies for an exemption or exclusion from registration requirements. Individualized responses to persons that involve either the effecting of transactions in securities, or the rendering of personalized investment advice for compensation, will not be made without registration or exemption. WT Wealth Management's website is limited to the dissemination of general information pertaining to its advisory services, together with access to additional investment-related information, publications, and links. Accordingly, the publication of WT Wealth Management's website should not be construed by any consumer and/or prospective client as WT Wealth Management's solicitation to effect, or attempt to effect transactions in securities, or the rendering of personalized investment advice for compensation, over the internet. Any subsequent, direct communication by WT Wealth Management with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides. A copy of WT Wealth Management's current written disclosure statement discussing WT Wealth Management's registrations, business operations, services, and fees is available at the SEC's investment adviser public information website (www. adviserinfo.sec.gov) or from WT Wealth Management directly. WT Wealth Management does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to WT Wealth Management's web site or incorporated therein, and takes no responsibility therefor. All such information is provided solely for convenience purposes and all users thereof should be guided accordingly.

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