At our latest edition of the Global Neighbours Breakfast Club, Prof. Dr. Julia Pitters explored the psychological nature of cash payments and why it should be a priority to “keep cash alive” in a society that increasingly relies on digital payments.
The Psychology of Cash
Pitters argues that the use of cash has inherent psychological functions which cannot be replaced by alternative modes of payment. Ranging from its use as a control tool for spending habits to its educational properties in teaching children money’s abstract value to its role in providing a sense of security, online payments, she stresses, cannot replicate the stimuli cash transactions induce in our brains. Citing internationally conducted surveys, she highlights that cash produces associations that are highly value-based: while online payments are usually linked to practical impressions such as convenience and speed, cash is associated with emotional and structural values such as security, freedom, and independence.
A “World Formula” for Cash Value
While cash is still the most used form of payment globally, Pitters guides attention to data showing a significant trend towards the demise of cash payments as a viable alternative to online payments. This is why, she argues, a focus on the value of cash – both psychological and societal – is more important than ever. As part of her effort to raise awareness on the issue, Pitters’ research currently focuses on the creation of a “world formula.” This formula is meant to include all impact factors of cash use, its monetary benefits, and its psychological advantages to precisely measure the value of cash as a form of payment.
Discussion Highlights
The expert discussion that followed Pitters’ talk highlighted how an important part of “keeping cash alive” is to make its use more attractive again. Ideas included the introduction of new designs and early childhood familiarization.
Moreover, participants stressed the crucial role of banks in protecting the use of cash. Though they financially benefit from the low cost of online transactions, it was argued that it should still be in their interest to protect cash – not least because the dependence of many online payments on external servers may compromise national security in case of blackouts. Cash would serve as a buffer or safety net against such threats.
The importance of considering a policy addressing whether businesses’ acceptance of both cash and online payments should be made obligatory was also brought into the discussion.
Pitters closed by once again reminding everyone to consider the irreplaceable benefits of cash that she had introduced. While she did not want to make a case against online payments, she wants to ensure that the value of cash as an additional viable payment option is kept in mind.
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