Study estimates the use of cash costs $200 billion a year

Even in the age of PayPal, Square and Bitcoin, many people pull out a green piece of paper to pay for their morning coffee without giving the transaction much thought.

Somebody, though, had to get that piece of paper to your neighborhood ATM, and you had to spend some gasoline (or shoe leather) to get it out. Cash also carries a risk of theft, and it allows some unscrupulous people to evade taxes.

Researchers from Tufts University added up all of those costs and came up with a big number. They say that based on “highly conservative assumptions,” the cost of cash in the U.S. amounts to $200 billion a year.

Households pay about $8 billion in ATM fees and lose $500 million a year to theft, but the study puts their total cost much higher, at $43 billion. Most of that comes from assigning a value to the time that people spend going to ATMs or check-cashing stores.

Theft is a much bigger issue for businesses, accounting for $40 billion of their more than $50 billion in total cost of handling cash. The biggest loser in the cash economy is government, which of course creates the cash in the first place. Printing and distributing the money costs only $1.2 billion, but the study estimates that tax evasion amounts to $100 billion a year.

Men carry nearly twice as much cash as women do, the study found, and people over age 55 hold roughly twice as much as the 35-and-under crowd. The younger group is more likely to incur fees for accessing cash, though. Rich people also tend to carry more cash.

The unbanked poor, however, pay a disproportionate share of the cost of cash. “The persistence of a cash economy creates social inequity and has the effect of a regressive tax,” the study concludes.

More in Herald Business Journal

Snohomish County’s campaign to land the 797 takes off

Executive Dave Somers announced the formation of a task force to urge Boeing to build the plane here.

A decade after the recession, pain and fear linger

No matter how good things are now, it’s impossible to forget how the collapse affected people.

Panel: Motorcycle industry in deep trouble and needs help

They have failed to increase sales by making new riders out of women, minorities and millennials.

Costco rises as results display big-box retailer’s resiliency

Their model has worked in the face of heightened competition from online, brick-and-mortar peers.

For modern women, 98-year-old rejection letters still sting

In a stark new video, female Boeing engineers break the silence about past inopportunity.

Tax reform needs the public’s input on spending priorities

The GOP tax plan is a good idea, but the next step should give us a voice on how taxes are spent.

Commentary: GM, Boeing fight a war of words over Mars

Boeing is strongly signaling how crucial deep-space exploration is to its future.

Under cloud of ethics probes, Airbus CEO Enders to step down

He leaves in 2019 after 14 years. Meanwhile, aircraft division CEO Fabrice Bregier leaves in February.

$4.99 sandwich promotion irks some Subway business owners

Management insists that “most franchisees support the promotion.”

Most Read