BROOKINGS, S.D. — Mike Lee, CEO of the ATM Industry Association, has argued in a lengthy opinion piece that cash is likely to remain the dominant payment method for at least the next 25 years and maybe for the next century.
While he acknowledged that he has a vested interest in the question as the CEO of an ATM trade group, Lee argued in a piece appearing on the ATM Marketplace.com Web site that authorities that have predicted the demise of cash for some time have consistently overstated their case.
"It's the simplicity of cash that has resulted in its longevity. Cash produces instant results virtually anywhere on earth. That is an immense strength," Lee wrote. "Cash is not a technology that easily reaches exhaustion because of resource depletion. And cash has a strong resistance to substitution," he added.
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Cash is valuable, fee-free for consumers, tangible, carries certainty of acceptance as legal tender, provides immediate settlement, is free of credit risk and is a publicly traded asset regulated by a central bank. It is also functionally anonymous and cannot be tracked, easy to access and use, universal, interchangeable with other cash and fast, he argued.
Lee cited a lack of historical perspective among the principal architects of what he called the "cashless society myth" for the persistent willingness to proclaim the death of cash.
"Future thinking tends to overestimate technological change and to underestimate the role people, culture and society. The simple truth is that most visionaries of the cashless society don't understand the history of cash," Lee wrote. "The use of coin stretches back to Lydia in the 7th century B.C. And paper currency's origin can be traced to China's Tang Dynasty, circa 618 A.D. How many other technologies can claim to have survived that kind of span?"
Lee also argued that cash is strongly suited to resist substitution from other payment forms and that the advent of the check, credit card and debit card have merely nibbled away at the edges of cash's position.
"The check was the first product designed to substitute cash, and it was extensively used for the first time in Holland in the early 1500s. But in five centuries, the paper check has failed to replace cash," Lee wrote. "And then there is the credit card, which came out of a New York restaurant in the 1950s. The credit card has been a remarkable piece of technology, but it may be comparatively short-lived because of its inherent risk. And the economic downswing isn't expected to help credit's cause. In fact, in China, the world's future superpower, credit is not regarded as real money–real money in Chinese culture is cash in the bank. The credit card, too, then, like the check, has failed to topple cash.
"Whether we talk about mobile payments, Internet payments or gift cards, the more each one is likely to absorb some market share of some payment technology. The payments landscape is multichannel and somewhat cannibalistic. But no one payment device, whether an electronic funds transfer, a mobile phone or a prepaid card, that can substitute for cash." Lee concluded.
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