In our increasingly digital world, it’s no surprise that electronic transactions are growing in both frequency and value. According to a study by the U.S. Federal Reserve, not only are the number of non-cash payments growing year over year, but the curve is steepening.
The number of core non-cash payments, comprising debit card, credit card, ACH, and check payments, reached 174.2 billion in 2018, an increase of 30.6 billion from 2015. The growth rate increased from 5.1 percent per year from 2012–2015 to 6.7 percent per year from 2015–2018.
While economists debate about the likelihood of a cashless society on the horizon, that possibility is—at best—lifetimes away. Coins are here to stay…and the reasons are simple.
Reason #1: The U.S. Mint makes a ton of it. And it lasts a long time.
The presses at the U.S. Mint are still running hot. In fact, 1,040 pennies are produced every second! In 2019, the U.S. Mint produced 11.9 billion coins.
While the rate at which the U.S. Mint produces coins has fluctuated in recent years, anything in the billions is a whole lot of coin being pumped into circulation. While a paper bill lasts an average of 18 months, the average circulating coin has a lifespan of 30 years!
Reason #2: Many people are concerned about a world without the penny.
Speaking of the penny, its efficacy has been hotly debated for years. However, many Americans would not favor eliminating the penny because of the implications of the “rounding tax,” which refers to the practice of raising prices to the nearest round number without pennies or coin. The group Americans for Common Cents purports that over three-quarters of Americans (77%) are concerned that merchants would raise prices without the penny.
Pennies are also popular among many people due to their historical significance and their sentimental nature. “Nickels from Heaven” just don’t have quite the same ring to it as the classic song made famous by Bing Crosby. The first penny was designed by Benjamin Franklin and has featured the image of Abraham Lincoln since 1909.
Reason #3: Cash is still widely used.
We don’t mean to ignore the trend toward a more cashless society (that’s why we’ve created a lot of our kiosk technology, after all), but cash is still widely used as currency. According to a recent Gallup study, 88% of consumers still use cash at least sometimes, and 10% make all of their purchases with cash. There are also a few types of businesses that tend to accept cash only, such as food trucks, smaller restaurants, vending machines, arts and crafts show vendors, nail salons, and more.
However, despite the trend toward a more cashless economy, economists predict that a completely cashless system likely won’t be realized in the lifetime of anyone who’s alive now. A cashless society would impose significant hardship on disenfranchised populations, many of whom are unbanked.
In fact, a survey by the FDIC reported that seven percent of U.S. households (about 9 million) are unbanked, and an additional 19.9 percent are classified as “underbanked” — meaning that these households have a checking or savings account, but seek financial products and/or services outside the banking system, such as payday loans. Bank fees and non-sufficient funds charges pose obstacles for lower-income consumers.
We make it easy to deal with coin
Ask us? We think coin is here to stay. This means that handling coins in bank branches will be a necessity for many years to come. People are using tangible currency differently these days with the rise of noncash payment methods, which is why the team at Coinstar helps people convert their coins into useful funds with Coin2Deposit, eGift Cards, and charitable donations. If we can help make coin funds more accessible to the consumers in your branch network, reach out to your Coinstar for Financial team!