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Why America Is Going Cashless

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I'm at some gas station in Hawaii on the last day of a family vacation, and I've just changed a $20 bill into three $5s and five crumply $1s. After double-checking that the cashier didn't miscount, I fold the pale green slips of paper into my wallet. Then, because I'm something of a germaphobe, I take a whiff of my palms. Mistake. Inky rancidity, mixed with locker room and a hint of weed killer. The stink sticks with me for hours, like some viral video you wish you'd never watched.

Thing is, I need the cash. We're on our way to the airport with some heavy suitcases and I plan to get help from a curbside porter who I'm guessing won't accept tips via PayPal Mobile or some other smartphone-based payment app. As Benjamin Franklin is believed to have said while trying to decipher precisely when, where, and just how much to tip during his time in France: "To overtip is to appear an ass: to undertip is to appear an even greater ass."

After checking in at the airport, I head to one of those newsstand stores to buy a bag of potato chips. I take out a credit card, because what airport in America doesn't accept plastic for even the smallest purchase?* But as I try to hand it across the counter, I'm told that this is a cash only store.

"What? Why?"

"We don't have the thingy," the cashier says, pantomiming a card swipe through a reader device -- and quite deftly, I might add, considering she doesn't use one of those thingies.

"Because they're so expensive," I volunteer, nodding sympathetically about those steep transaction fees. "Yeah, but also we don't really have the time," she adds, doing the swipe yet again and punching a few invisible numbers.

This response is insane and illuminating. I don't mean insane like the Hawaiian lady is insane and I'm out to pick on her; she's just doing her job selling potato chips and magazines. It's insane because, while telling me that dealing with electronic money takes too long, she is literally counting out my change -- a bunch of $1s, three quarters and some even smaller and -- let's be honest, here -- essentially worthless little metal plugs.

As she hands me this pile of inconvenience incarnate, I think back on a study I'd seen about how much Americans spend dealing with pennies in their everyday lives: something on the order of $3.65 per person, or about $1 billion annually. And that's just the typical consumer; a study commissioned by Walgreens found that the company loses about $1.3 million a year due to the time required for cashiers to hand out correct change out to the one-hundredths column. That might sound like chump change for a company like Walgreens, but zoom out from there to add WalMart, Target, Whole Foods, Burger King, 7-11, and, in addition to such multinational colossuses, every boutique and mom and pop shop in the galaxy, and the costs of dealing with small change suddenly start to look, well, not so small.

That seemingly insignificant aside -- We don't really have the time -- is illuminating because it speaks to the broader issue of money's different functions and forms, how we feel about them, and our ability (or lack thereof) to think clearly when it comes to cash.

Cash is an anachronism -- and it may be on its way out. No one knows if physical money is in its twilight or just very late in the afternoon. It's getting there, though. Much of this is because of technology. If you've been in a Home Depot lately, you may have seen that PayPal has a pilot project underway that will, in theory, help speed transactions even further and strike another blow to cash (or more accurately, its utility). Square, the company started by Twitter co-founder Jack Dorsey, has been making waves with its credit card processing unit for cellphones and, more recently, an app called Card Case. And international development experts are gaga over so-called mobile money and mobile banking services, which are being touted as critical tools for helping people convert cash into electronic money, which is key for building the financial stability necessary for climbing permanently out of poverty. All of this and more pushes cash further and further to the margins.

But cash -- loveable, hypnotic, unassailable, cash -- has worked its way so deep into our hearts and minds that it's hard for many people to accept the idea of its obsolescence, however gradual and possibly beneficial. Instead, we keep believing that it's a swift, cheap, and clean form of money, even though it's none of those! OK, it's kinda swift when I hand you a $10 for my half of a $20 lunch tab. Yet stop to think just a little more about the backstory of that $10 bill: how it made its way to me by way of an ATM, armored trucks, banks, the Bureau of Engraving and Printing, anti-counterfeiting technology developers, cotton fields where the linen fibers originated, and even the wallets of drug traffickers, pimps, and tax evaders who used that banknote before me... not so simple, clear, or swift anymore, is it?

The good news is that cash is getting bumped further and further to the edges of our everyday lives, with indicators popping all over the globe that people are wising up about it's costs, or at least open to conversations about them. While in Hawaii, I visited Volcanoes National Park, where I saw a sign at the Park entrance that caught my attention; something to the tune of we prefer credit card payments.

Yes, there's some delicious irony to the idea of a National Park dissing the national currency, or at least paper versions of it. But those taxpayer-funded park managers should be applauded for running the numbers and determining that storing, counting, and babysitting cash isn't cost effective -- and for trying to do something about it.

*One of the tragic shortcomings of the English language is the absence (to date) of a simple verb describing the act of acquiring goods or services with credit money, which is to say a short-term loan. It's not buying. I suggest curchase in my book, although my brother has come up with what is probably a better candidate, a portmanteau of borrow and buy: burrow. The stuck-in-a-hole imagery is an added bonus.

David Wolman (@davidwolman) is a contributing editor at Wired and the author of the new book The End of Money [Da Capo Press, $25.00].