Naked Capitalism has the very interesting article, The Global War on Cash – Lessons from History.

If payments systems users were that eager to adopt non-physical cash, they would have done so by now. Attempts to provide alternatives date back 25 years or more. Yet physical notes and coins remain in circulation and are the only legal tender in most jurisdictions.

Physical cash’s variable unit costs are progressive — the less wealth you have, the less of the systemic costs is passed onto you as a currency user. Stored-value card systems impose a cost on users and that cost is regressive — the less wealth you have, the higher the unit cost becomes.

Smartphone, “app” and NFC/virtualisation based systems impose an even bigger cost on users due to the high up-front purchase price of a smartphone. Even in cultures which have exhibited a fondness for novelty, technological advances and gadgetry like Japan, a payment system based on smartphones, apps and NFC technology have not proved to be transformative to the payments systems in that country.

I have led a nearly cashless life for many years. I have always realized that this works well for me because I am a free rider in the system. I always pay my credit card bills in full and on time, so I get a free loan from the credit card company for the time between when I make a purchase and when I have to pay the bill. I get the credit card for free. The people who carry credit card balances and pay high interest rates to the credit card companies are the ones paying for all the free stuff I get. This works so well for me, that I have never given much thought to the reality that this Naked Capitalism article discusses. As long as it still works for me, I am going to continue to take the free ride. However, what has never occurred to me before is that when the free ride is over, the old system may no longer exist for me to return to.