Please ensure Javascript is enabled for purposes of website accessibility

Ask a Fool: What Is the War on Cash?

By Matthew Frankel, CFP® - Nov 30, 2018 at 2:29PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

You may have heard this term -- here's what it means and how to invest in it.

Q: What is the "war on cash," and why should investors care?

The term "war on cash" refers to the general societal trend away from cash-based methods of payment in favor of card payments and other electronic forms of money transfer.

Banks, merchants, governments, and other entities are all gradually shifting away from cash, and it's easy to see why. Cash is relatively easy to lose, can be expensive to secure and move, and in many situations, cash is simply not a convenient method of transferring money.

From an investor's perspective, there are several types of businesses that stand to benefit from the gradual transition to a cashless society. Most obvious are payment-processing businesses like Visa, Mastercard, Square, PayPal, and others. The majority of payment transactions worldwide are still done in cash, so these companies still have a tremendous runway for growth.

Banks are another potential beneficiary, especially when it comes to consumer adoption of mobile deposit and mobile payment technology. In fact, an electronic deposit or transfer costs a bank more than 10 times less than a similar teller-assisted transaction. Many banks also have large credit card businesses that could stand to benefit as well.

In a nutshell, the amount of cash that is used for everyday purchases can be expected to decline over the coming decades, and some companies will get very rich from the transition.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
336%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.