Cash – Part 2: Will cash disappear?

I am now in the first year since launching the “Junior Allowance Kit”, a highly valuable tool for families with children aged between 6 and 8.

For those who are not yet familiar with this product, the kit provides parents with a practical guide to help their children learn how to manage money using a small sum called an allowance. In this way, children not only develop healthy financial behaviors, but also build solid values in their relationship with money.

This model has been working for generations in developed countries, because giving children a regular allowance allows them to experiment, in real-life and low-risk situations, with the consequences of their decisions. It also opens the door to valuable family conversations about money.

However, although many parents understand the value of this product in their children’s financial education, most of them run into a practical issue: giving money in cash.

In this context, where we are dealing with a product designed for very young children, up to 8 years old, I would like to explain why I consider exaggerated the view that cash is an outdated approach. I will also explain why I believe that at this early age, physical money is the most suitable tool for developing first financial skills.

There is, indeed, a steady increase in digital payments (card, phone, online) and a decline in cash usage, both in Europe and globally.

In this context, it is worth looking at euro area data, which shows that in 2024 approximately 50% of in-store payments were still made in cash, according to the European Central Bank.

The transition to a cashless society in other countries

To better understand this direction, it is worth looking at the experience of other countries.

There are EU countries, such as Sweden and Norway, where the transition toward fully digital payments is indeed very advanced. However, even in these countries, authorities and banks still recommend that citizens keep a small amount of cash at home as a “backup” in emergency situations such as power outages, cyberattacks, or temporary payment system failures.

Let us look at why we might want a shift from cash to digital payments, and under what conditions this is actually possible.

First of all, digital payments benefit the state by helping combat tax evasion through better traceability of transactions. Companies also have their own interests in using consumer data for analysis and marketing purposes.

Digital payments undoubtedly offer many individual benefits as well: high convenience, fast card or phone payments, and the ability to make bank transfers without going to a counter.

But what about those who are skeptical—those who do not trust how data generated by digital payments is used?

If we look at countries that have successfully transitioned to an almost cashless society, we see that they generally have high levels of trust in banks and state institutions, strong digital infrastructure, and a population familiar with technology.

In contrast, in countries like Romania, trust in banks and public institutions is still relatively low, and concerns about transaction monitoring persist. For these reasons, eliminating cash is difficult.

In addition, there are significant differences between urban and rural areas. In rural regions, infrastructure is less developed, and a significant part of the population is older and less familiar with technology.

Because of these factors, it is very likely that Romania will maintain a hybrid payment system for many years to come, where cash and digital payments coexist.

The surprising return of cash in some countries

Another country that has rapidly moved toward digital payments over the past 10–15 years is Australia. However, recent data (2025–2026) shows a surprising shift: cash payments have started to increase slightly again after years of decline, and almost half of people now use cash at least once a week.

What are the causes of this change? First, let’s look at the impact that a high level of digital payments has had, in order to understand what drove the renewed need for cash.

One important aspect is the effect of reduced cash usage on cash infrastructure, especially the ATM network. As cash is used less frequently, the number of ATMs also decreases, since maintenance costs become harder to justify. This creates a vicious cycle: the harder it is to access cash, the less people use it, which further accelerates the decline of cash infrastructure.

And yet, why does cash remain important for people?

Why cash still matters

Even though the global trend is toward digitalization, cash remains useful in several situations:

• Emergency situations: when digital systems fail, cash becomes a safety net—like a flashlight in a power outage. You don’t use it every day, but it is essential when needed.

• Accessibility: for elderly people or those who do not use technology.

• Spending control: research shows that cash helps reduce impulsive purchases and improves personal budgeting.

• Privacy: in situations where people do not want a digital trace of transactions (for example, certain medical, legal, or financial services).

• Financial education: last but not least, cash is a useful tool for teaching young children how to manage money and develop financial responsibility through allowances. At this age, the process needs to be visible and concrete. Later, after they better understand how money works in general—typically around age 13—they can transition to digital payments.

Conclusion

In conclusion, in Romania it is not yet the time to talk about a full transition to a cashless society.

The experience of other countries that have taken this step clearly shows that there is a real need for cash in certain situations. Whether we are talking about people who want more privacy, the need to save for emergencies, or the use of cash as a budgeting tool, cash remains relevant. Physical money is also useful in the financial education of young children, whom we want to teach from an early age how to manage resources.

A society that understands this need will develop the discipline of periodically withdrawing a small amount of cash for situations that require it, while otherwise benefiting from the convenience of digital payments. At the same time, we need balanced public policies that ensure both the functioning of cash infrastructure and the development of digital alternatives.

As a country becomes more digitalized and cash is used less frequently, we observe that cash does not disappear—it simply changes its role: from the main means of everyday payments to a useful tool for occasional situations.