Once upon a time, say about 1970, cash was king in the United States. Many people paid bills by check, but cash was used for every-day expenses. A trip to the grocery store, restaurant or service station (remember those?) then usually involved payment in cash. No more. Today, plastic increasingly is the currency of choice. Credit and debit cards might not rule the marketplace yet, but they are strong contenders for the throne.
It's getting easier to make a case for the primacy of plastic. Treasury Department numbers tell the tale.
The number of dollar bills printed by the Treasury Department last year declined to a modern low. The number of $5 bills printed was the lowest in 30 years. No $10 bills were printed. The use of plastic is not the sole cause for the declines. Modern paper currency lasts more than twice as long as that of two decades ago so fewer bills are printed. And contemporary business models and lifestyles seem to favor plastic.
Online businesses, for example, have no provision for payment in cash. It's plastic or nothing. Electronic payment systems have reduced the need for cash, too. And many consumers feel safer when they aren't carrying large sums of cash. Moreover, the use of remote and handheld devices have made it easier and more efficient for consumers to use a credit or debit card than cash in many instances.
In New York City, for example, more than a third of taxi fares were paid with plastic last year. The use of plastic to pay for relatively small purchases is not limited to big cities. It occurs here with increased frequency.
A spokesman for the Chattanooga-based Krystal restaurant chain, says, "The use of credit and debit cards has been growing for the last five or six years. Approximately a fourth of all purchases are now paid for with cards." The chain has no problem with the cards.
"It's a speed of service tool," the spokesman added. "It's easier for employees and customers to use a credit card than to collect cash and to make change." A convenience store cashier here confirmed the popularity and utility of plastic.
More and more customers, she said, pay for small purchases - a six-pack of soft drinks or a gallon of milk - with a credit card rather than cash. Still, cash is unlikely to become obsolete. It remains the only option in some circumstances.
Perhaps a third or more of the nation's small businesses still do not accept credit cards. Neither do babysitters or the neighborhood kid who mows your lawn. And try as you might, you can't buy a Tennessee lottery ticket with plastic. That's a cash-only transaction.
The demand for U.S. currency applies overseas, as well, especially for the $100 bill. The Federal Reserve doesn't know for sure, but it believes that about two-thirds of the seven billion $100 bills in circulation are owned by foreigners, who relish its safety and convertibility. They are so popular that the Treasury printed more $100 bills than dollar bills for the first time last year - and made a tidy profit doing so.
Plastic is likely to continue to gain popularity at the expense of paper currency. The latter, however, seems almost certain to retain a smaller but still viable share of transactions. For many individuals, that pace should provide some assurance and comfort that modern technology will not completely replace the tried-and -true ways of doing business.
Indeed, it seems unlikely that the familiar question of "paper or plastic?" will disappear from the U.S. marketplace anytime soon.