The Cost of Cash in the United States

This paper presents the results of opinion surveys conducted on American consumers and merchants to understand the real costs and risks they face as private actors in their usage of cash. Studies were conducted on individual consumers, businesses, and government. Key findings and observations include:

• The cost of cash is meaningful;
• The cost of cash is higher for poor and unbanked Americans than for other groups;
• Theft of cash is a relatively minor problem for individual consumers while the same proves costly for businesses;
• Small businesses do not stand to realize significant costs savings by encouraging other payment modes over cash;
• A cash economy exacerbates social inequalities;
• Triggers for switching to non-cash alternatives are different for consumers and businesses;
• The most important cost of cash to the U.S. government is forgone tax revenue from cash transactions. A conservative estimate yields this value to be USD 100 billion annually;
• The government also incurs cash-related expenses from the production and distribution of cash in the United States. In 2012, these costs totaled USD 1.2 billion.
• Policies to shrink the cash economy can help grow government revenues.