Debit Cards – the End of 'Cash' as we know it?

Do you use a debit card regularly? If you have a checking account, it's very likely that your bank offers either a Visa- or MasterCard-embossed card that will debit funds directly from your account when you make a purchase. Not only do they make shopping more convenient, debit cards also reduce the need and risk of keeping large sums of cash on one's person. As a matter of fact, there's an ongoing debate as to whether or not these cards will eventually take the place of paper money altogether.

On the one hand, some experts admit that while debit cards indeed are rapidly replacing the carrying around of 'physical' currency, there remains an interesting point that cannot be dismissed – the profusion of vending machines. It would be difficult at best to change the entire vending-machine process to incorporate any type of electronic card. It likely would take years for a new method of payment to be infused throughout the plethora of machines in the marketplace today. The overwhelming majority currently don't have the electronic capacity to accept anything but dollar bills or coins.

On the other hand, financial experts argue that electronic money is not a new form of currency that replaces the more substantial forms, but rather a new way of employing existing money in financial transactions. And because electronic money is not 'real' money but merely a different method of usage, it 'logically' follows that it cannot replace real money. They readily point out that electronic money is merely a device for storing information as it relates to debits and credits. As such, it has no independent purchasing power of its own nor can it ever become money itself of and by itself.

While a debit card certainly offers ease and convenience, there will always be a demand for paper money. Most pundits agree that as long as people regularly exchange goods and services with each other, money will continue to maintain its importance. A new way of using cash won't mean that it will be replaced or that there will be any significant fall in demand for it.

When you stop to think about it, these conclusions make a great deal of sense. Let's take a look at one common example that bears out the point. Many people around the world shop at farmers' markets or similar arenas. At such locations goods are almost always sold for cash. If the farmer (or other provider) can't or won't accept debit cards, what good will they be to the buyer? The same holds true for flea markets. While there are a few vendors (and, certainly, the numbers are growing) who accept credit- and debit cards, most of the folks that offer items for sale choose to be paid with cash. It's also not hard to imagine the look that would frame the face of person holding a garage sale if a buyer walked up and presented him or her with a debit card to make a purchase.

In light of these considerations, it's safe to conclude that as long as there are goods and services which lend themselves to cash purchases – vending machines, Laundromats, coin-operated telephones and postage machines, farmers' markets and the like – paper money will to remain "en vogue."