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.