July 14, 2011 7:00 AM PT

Do Fewer Bills Mean More Plastic?

The U.S. Treasury Department announced that the number of bills it printed during the last fiscal year on its government presses in Washington D.C. and Fort Worth was at an all-time modern era low. During that year, the Treasury’s printing of $5 bills was the least it has been in 30 years, while concurrently, it halted all production of $10 bills.

Some observers believe that this is an indication that the era of cash is soon to end, to be replaced with credit and debit cards and other forms of electronic financial transactions.

Although, there is plenty of anecdotal evidence painting this trend in bold strokes, after all, we all know folks who do the bulk of their shopping online and may have even been to a store or restaurant that only accepts credit cards, hard data regarding the demise of cash are hard to come by. Partially, this is due to the fact that people who like to pay with cash are often the type of people who do not like to be tracked. However, according to the New York Times, the value of currency in circulation in the U.S. has dropped 50% since 1970 from 5% of the country’s total economic activity to 2.5%, a sign that probably means that cash is used less often than it was 40 years ago.

Some of this difference has been made up by the evolution of electronic payment methods. We give gift cards as presents, use E-Z passes at automatic toll booths and now have access to virtual wallets such as Google Wallet.

Despite all of this, Ron Shevlin, an analyst with the Boston research firm Aite Group, was quoted as saying that that paper currency would still be being used in America for 200 more years. “Cash works for us,” Shevlin said. “The downward trend is clear, but change advocates always overestimate how quickly these things will happen.”

Brian Dodge of the trade group the Retail Industry Leaders Association has similar sentiments and said “It’s a rarity for a retailer of any size to go cash only, and it’s a rarity to decline to accept cash at all.”

So no matter how efficient and safe debit and credit cards and electronic forms of payments become, cash may be with us for generations to come.

Andrew Green is a contributing writer at CreditDonkey, a credit card comparison and reviews website. Write to Andrew Green at andrew@creditdonkey.com

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