In a world where cashless transactions rule does it still hold any benefit to carry around cash? Some people around the world still do. For example, QZ.com notes that Germans lean more on paper money, using it in a whopping 82% of their purchases compared to the US at only 46%. In this article we are going to compare the benefits of using cash vs. cashless payment methods. We will be looking at 3 areas for this discussion: security, convenience, and incentives.

Security

Some believe that card transactions win this category hands down. When paper money is lost or stolen it is gone forever, but cards can be shut down and replaced with one call. However, with cash access to your account information is not as easy. Using cashless methods leave you more open to identity theft, as the majority of identity theft victims (86%) experienced the fraudulent use of existing account information, such as credit card or bank account information says National Criminal Justice Reference Service.

After all, no one can hack your cash but they can hack into your online accounts. Thieves can clone credit/debit cards and make purchases. With access to your account information they can take out loans or credit cards in your name and destroy your credit. When it comes to security cash is much safer.

Winner: Cash

Convenience

With cash, your money is always available to you, and online payment methods are even more convenient. You can use them from the comfort of your own home, office or while on the go, although they usually require you to wait for physical goods to ship before receiving them.

It is also harder to track cash. If you want to look back at a past purchase your cash receipt is the only proof of purchase you have. One the other hand there is no need to reconcile receipts with account statements.

However when it comes to big purchase it’s better to go cashless. For example, who wants to walk around with thousands of dollars when buying a car? When it comes to convenience, it’s clear that cashless methods win hands down.

Winner: Cashless

Incentives

According to TheNest.com one of the benefits of paying physical currency is that you won’t have to pay interest. This option though also applies when using a debit card. Also when making purchases, there are vendors that will reduce their sale price if you pay with cash rather than plastic.

Furthermore, paper money when compared with cashless transactions can help you adhere to your budget saving you money, which is always a good thing. Because you can see the actual cash in your hand being reduced, you tend to be more careful when spending.

Now with credit cards you get many different bonuses, including points, air miles, and cash back rewards, benefits you don’t get using cash. With some credit cards, you can even get hidden benefits like travel insurance, emergency assistance, and rental car protection when traveling abroad. However, credit card companies use this strategy to keep you in debt and paying interest, so from a financial freedom perspective, you must be wary of this trap!

Full Disclosure: I personally ONLY use my personal credit card for big purchases that I know I have the money for already, and pay the balance off immediately. If I can’t afford it, I don’t buy it!

Winner: Cashless

Summary:

Is cash still king in our cashless world? Even though it’s obvious that cards and mobile payments are the preferred methods of payment, physical money shouldn’t be completely written off. With the many benefits it carries, it is recommended that you use cash along with other methods of purchase. That way you maximize the benefits of both worlds.