CMV: The United States will be a cashless society by 2040

The above interpretation of cashless society proposes that all transactions that might otherwise have been conducted with physical cash will be conducted digitally. In short, there will be no physical cash in circulation with the exception of physical cash kept for posterity sake. This post is not meant to infer or forecast the type of digital payment system(s) that will replace physical cash; only that physical cash will not be used for transactions in the United States by 2040. The CMV post does not propose any view about the status of the US dollar in other countries where it is currently used as legal tender.

There are many drivers that are moving and will move the United States toward becoming a cashless society, some of which are already well established. Credit and debit cards are widely used in the United States. Payments and transfers via established financial technology companies such as PayPal and Square are becoming more and more common. Emerging trends also point to movement toward becoming a cashless society. The following trends have shaped my view:

1. September 2021 comments from Chairman of the Federal Reserve, Jerome Powell, indicate continued US government effort toward developing a digital currency. (Source)

2. More and more businesses and governments are recognizing digital currencies as an accepted currency or legal tender. (Source)

3. Companies such as Apple, Facebook, and Amazon are exploring digital currencies. (Source)

2040 is an accurate date for the US to become cashless based on several factors. First, the current velocity and momentum of the above cashless trends leads toward 2040. The US will likely launch some type of Central Bank Digital Currency (CBDC) in the near future; however, it will take considerable time to test, evaluate, and finally fully deploy the CBDC. Considering the Diffusion of Innovation Theory (Innovators, Early Adopters, Late Majority, and Laggards), the United States is likely in the “Laggards” portion of the adoption curve in terms of acceptance of cashless payment indicating widespread acceptance. This means that most people have accepted transacting using credit or debit cards, or through some other type of non-physical cash means. On the other hand, the US is likely in the “Innovator” portion of the adoption curve when considering US national acceptance of becoming a cashless society. Geopolitical events and fast-paced technological innovation combined with the above trends will drive the US toward becoming a cashless society by 2040. What do you think?