The Cashless Exercise

Wallet  Sorry for the inside baseball title, this post is not about net exercising options or warrants.

It is about an exercise I've been going through since the beginning of the year. I've always walked around with hardly any money on me. It drives the Gotham Gal nuts, but it's who I am. I don't like carrying cash and never have.

But the past few months, I've been walking around with no cash, not a dime. I carry a host of stored value cards and credit cards on me. The picture at the top of this post is my wallet. The black cord is my daughter Emily's hairband. In that stack is a metrocard, my drivers license, a parking pass for my garage, several american express cards for various personal and business entities, a visa card, and several debit cards. That's it.

I've gone without a wallet for years and this stack of cards has been my system for the past decade. But I've always supplemented it with some cash in my pocket as well. Not anymore.

What this exercise has taught me is that cash is almost unnecessary these days. Almost is the operative word. You have to work a little bit to operate without cash. I avoid the $2 or $3 purchase. I've never been much for the $2 or $3 purchase, but it does happen. Earlier this week I stopped at Joe, The Art Of Coffee for an espresso on the way to work. I forgot that Joe is cash only. Fortunately Joe gave me the espresso and took an IOU from me. I felt bad about that and now I have to figure out how to pay him back without breaking my no cash diet.

The thing that was holding me back from going no cash was the time it took to check out with credit or debit. But in the past year or two, most merchants have moved to a no signature required on transactions less than $20. If no signature is required, a credit or debit transaction is faster than a cash transaction.

And then there's cabs. It took me until this year to give up my 25 year habit of paying cabbies in cash. I thought the credit transaction would take too long or be unreliable. My kids told me I was being foolish and to give it a try. And I was sold in the first day. Paying cabbies with a credit card is simply a superior experience. It's fast, there's no waiting for change, and tipping is easier and I find myself being more generous. All in all it is much better.

So I believe we are on the verge of a cashless society, at least in NYC. I may be on the bleeding edge of it, but if I can go cashless, so can others.

The other thing this cashless exercise has taught me is walking around with plastic cards wrapped in a hairband is silly. We need to take the next step which I am sure is the phone. I've always got my mobile phone on me unless I am home. It would be so nice if I could simply enter all those stored value cards, credit and debit cards into my phone and stop with the stack of plastic entirely.

I hope to continue this cashless exercise going, at least when I am in NYC and not traveling. I honestly think I can do that. And as for the stack of cards in my pocket, well I'd like to get rid of them too.

#NYC#VC & Technology

Comments (Archived):

  1. David Noël

    Carrying no cash would be impossible in Germany and other parts of Europe. There are still so many places that look at you like a crocodile when you ask if you can pay with credit card and even debit card. It’s ridiculous.As for wallets: haven’t used one since I was 13 or so, instead I use this for my cards:

    1. Mohamed Attahri

      Germany has a very special relationship with cash.You can very easily live without cash in Paris, although some places have minimums before you can pay with a CC.Weird thing, Paris has one of the highest ATM/inhabitant rates in the world.

      1. Louis Berlan

        Most small, non chain, shops in France won’t take credit cards under 15€, and cabs don’t.One of the reasons I hate cash, is I like to track things. I hate looking at a bank statement and seeing “ATM, €60. Hmm, where did that go.”Which reminds me that we still don’t have a real Mint like in Europe (nobody can automatically pull bank records).

        1. Mohamed Attahri

          I’m in that business. You should take a look at the protocols available outthere to start a Mint…

          1. Louis Berlan

            Is there a French/European equivalent to Yodlee? If so, I’d love to know about it…

        2. Chris Cederskog

          There is a in several countries in Europe. In most others, there are people working on it right now. But it’s true, none have really broken out like in the US.

          1. Louis Berlan

            There are great money management/tracking front-ends, that operate on a lead generation model – I agree with you on that point.However, to date, I haven’t seen one that has the automatic account information pull features that Mint has (Yodlee technology, built on industry standards – European banks aren’t there yet). That’s what makes me use Mint for my US accounts, and the individual bank sites for my French accounts. I don’t want to have to manually copy and/or export Excel files. And I think it was one of the key selling points for many consumers.Obviously I could be wrong about the lack of pull technology, and I’d love to hear about any of them if they exist.

          2. Chris Cederskog

            There are some services built on Yodlee technology in the UK, there is a Yodlee equivalent in Spain and we have a bank-supplied standard in Germany (HBCI), which we use. I’ve heard some things about France, but I’m not sure how far they are. I think SEPA will eventually force a roll-out of fairly good APIs similar to HBCI across Europe. Right now it’s a combination of a fragmented market and extremely cautious investors.

          3. Louis Berlan

            Thanks for the insight into other markets!

    2. bartdenny

      But in other parts it is perfectly easy, Scandinavia for one. Here in Sweden, I almost never have cash. There is no penalty at all for $2-3 purchase, people do it all the time at 7 Eleven or the like. Taxis have taken cards for over 15 years. Subway? SMS ticket…It is surprising that places like Switzerland and Germany are so far behind in this…

      1. David Noël

        Yeah, Sweden is like the 51st US state ;)Still can’t believe that some restaurants (in major touristic areas inBerlin) don’t accept cards.Let’s get Square’s and Venmo’s back and push for its adoption

      2. fredwilson

        Scandinavia is showing the way forward.

  2. andyswan

    Ha! You and my wife would get along famously. She drives me nuts with nary a dollar on her 🙂 I love being all cash, all the time. A few reasons:1. There is something freeing about saying “here….you don’t need to know anything more about me.”2. Easy chip-in on split bills3. Service persons tend to appreciate a cash tip more4. You never know when you might come up on an opportunity to wager on something5. People will accept less “cash money” in a negotiation..

    1. sotek

      I agree with #3. Waiters indeed appreciate cash tips more…

    2. Dave Lewis

      I also enjoy cutting credit/debit network fees out of the transaction, especially on small local merchants.

    3. David Noël

      I like #1: still chuckle when in a supermarket, they ask me if I have a Payback card.

    4. fredwilson

      There seems to be a premium for cash as you point out. And so I tend to tip more generously when I tip with credit

      1. andyswan

        Ya I thought I saw a study showing the cabbies were banking mad coin with credit card tips…..they didn’t expect it and now they love it.Sent from my Millennium Falcon

        1. Doug Kersten

          That’s funny. I tend to tip less with the credit card in cabs. I guess it it because I don’t like the idea that the bank is getting a piece of the transaction, or maybe because I see the actual $$ amount on the screen. Not sure why but it is something that I noticed myself doing.

        2. Mark Essel

          Millenium Falcon = sweet rideNever tell me the odds!

    5. Mark Essel

      Ah my kindred cash carrying friend.My fiancé follows Freds habits of little to nocash.

  3. William Mougayar

    I’m pretty close to your behavior except for fewer cc & a starbucks card. It would be nice to have a universal cc that aggregates a bunch of them. Paying by phone is the way to go. I paid that way for parking meters in Vancouver already. Also there is Zoompass where u can send & receive $ via phone so u could have paid Joe that way. The telcos are in this pay by phone scheme of course.

  4. Charlie Park

    Agreed on both the utility of credit cards over cash, and the inevitability of keeping payment data on our phones.It seems like the “least invasive” choice would be a “Square-in-reverse” … you input your credit cards onto an app on your phone (which encrypts the data). When it’s time to make a purchase, you select the card you want from the list of cards on your screen, enter a password, pop the “male” dongle onto the phone jack, and then slide the dongle’s strip (emitting magnetic encodings that ape the card) through the card reader. Obviously, this doesn’t deal with machines like gas pumps that have “insert your card and pull it out rapidly” interfaces, but a single backup credit card in your pocket resolves that.I could also imagine a scenario where card data is emitted as audio tones, and the seller’s phone has a means of reversing the bleeps and bloops into the actual data (per old dialup connections). For security, the seller shows the buyer a security code printed on the screen of the seller’s phone; the buyer inputs that in; that code is part of the encrypting/decrypting process. The big downside here is that it requires all those sellers to get on board, and to have a phone capable of running the program at the point of need. So I think the “dongle” approach is probably a more likely scenario.

    1. chipcorrera

      Yeah, the human transfer of payment codes is a show stopper – unfortunately. Did you see Fred’s comment about avoiding use because it takes too long. Imagine the speed of fat fingering the authorization code a couple of times. Check out emerging NFC technology – think low power Blue Tooth, close proximity (<20cm), with quick connect times.All these mobile payment solutions require the POS systems to do some type of update – I suspect the consumer adoption on the payment side will drive the change – ideally quicker than self scanning credit cards came about.

    2. Dave Pinsen

      “It seems like the “least invasive” choice would be a “Square-in-reverse” … you input your credit cards onto an app on your phone (which encrypts the data). When it’s time to make a purchase, you select the card you want from the list of cards on your screen, enter a password, pop the “male” dongle onto the phone jack, and then slide the dongle’s strip (emitting magnetic encodings that ape the card) through the card reader.”Somehow, that seems slower than simply pulling a credit card out of my wallet and swiping it. Bear in mind, too, that lots of ordinary folks (who don’t need to have multiple cards for multiple different entities, as Fred does) prefer to charge everything they can (to the extent possible) on the one card that gives them the best perks.

    3. fredwilson

      I feel like we are going to either bump/tap our phones or show some kind of bar code on the screens

      1. skysurfer172

        Someone should add the EZ-Pass chip on my Android so I can remove that hideous thing from my car window. Then we can integrate that account for all purchases!!

        1. ShanaC

          There are limits to how far some of us want to be’s an rfid chip I believe, I am not sure I want an rfid chip in my phone on top of gps…at least I can turn gps off…

        2. fredwilson

          Good idea

      2. Charlie Park

        I agree, in an ideal scenario. I like Morten Josefson’s comment (here) suggesting that the merchant show/print a barcode that the iPhone can scan, confirm payment, and then store a local receipt.I worry, though, that if the desire is to “go cashless,” it’s going to take a certain amount of flexibility on the part of the early-adopting consumer, as it’ll take a long, long time for enough merchants to get on board with whatever new technology develops.Ultimately, cash’s fungibility is going to be hard to beat. It’s going to have to be a pretty compelling system to get people onboard … especially considering that the people who aren’t currently letting us use credit cards as transaction vehicles aren’t even willing to adopt a universal, established, standardized form of payment.If someone can cross the chasm, they’ll have earned whatever riches come their way. I’m eager to see someone do it.

      3. Charlie Park

        As it turns out, PayPal just (now) released a “bump to transfer money” update to their ipod app. Here, at the iTunes store.

        1. fredwilson

          That was supposed to happen last summer. I wonder what took them so long

    4. ShanaC

      I don’t want to carry around yet another item….

      1. Charlie Park

        Yeah, as I was thinking about it later, I came to the same conclusion … a dongle isn’t really better than a stack of cards. I’ve had some more ideas on it … I’ll be replying off Fred’s comment in a few minutes.

  5. OurielOhayon

    Fred, you said it “at least in NYC”. more than a Challenge in Europe and impossible in Israelps: 1 more thing: Google is obviously doing a good job at contextual advertising on your post 🙂

    1. fredwilson

      That’s too bad

    2. Mark Essel

      I’m curious Ouriel what you think of this take on ads? It target’s the browser’s interests instead of the page context.

      1. OurielOhayon

        well i would say the opposite. it reads the article and matches it with anad. no?

        1. Mark Essel

          The ads match your social stream when you login to our site. Then any page that has the widget shows items related to your interests.

  6. sotek

    Yeah I can second your comment about going cashless in NYC – you can pay with plastic pretty much everywhere in the city, including Starbucks…

  7. Morten Josefsen

    This is, luckily, the way things are going. Back in Norway I rarely ever use cash. Even a $3 coffee goes on my card. Signing the bill stopped more than ten years ago, it is now all done via pin-code.The only use I now have for cash, is going to the beach when I am a bit worried my cards might be stolen while I am swimming.Also, all my banking (for the last 10 years) is done online (my bank does not have any branch offices), and now mostly via mobile. So I dont think we are so far away from using the mobile to pay for everything. Merchants could issue a barcode-like image that my phone could read, then the amount could pop up on the phone, and I would tap ok. This does not require much new hardware, so should be relatively cheap to implement.This would also allow me to automatically store all my receipts online or on my phone. No more losing those, and very easy to set up a budget!

  8. chipcorrera

    Hopefully mobile payment can do better than simply unifying cards – I think NFC progress may give it the kick that we need to get adoption moving quicker. Then we can be cashless, cardless and mobile card app-less.Can’t wait to see what kind of conspiracy paranoid theory the kid harbors around cash versus credit card tracking?

    1. kidmercury

      see my previous comment, i already dropped it like it’s hot.

    2. fredwilson

      He’s gonna go all virtual currency on us

      1. chipcorrera

        Nope, looks like he stocking banana for bartering. Just kidding, it will be me knocking on his shelter door when all hell breaks loose.

      2. kidmercury

        indeed, virtual currency is the end game, the happy conclusion. however i prefer to focus on the bad news.

  9. kidmercury

    boy boss, you must really trust the banking system. we are going to get a cashless society, and it will be liberating. but not until we get rid of the problems first.ask south americans what happens in a currency free fall. the only thing worse than fiat, paper money in a currency free fall is when your moeny is all in a bank. the banks will shut down (or, as they call it, go on “holiday”…….the only thing more ridiculous than the banks’ propaganda is the willingness of the people to accept it), electronic commerce will stop, and you will be totally screwed.i think my comment has been pretty discomforting thus far. but let me drop the cherry on top: search the web for “cashless control grid.”damn!

    1. kidmercury

      just wanted to add that one thing i like to do is shop using primarily debit cards, but to have cash in my apartment (preferably some foreign currency as well though i still need to work on that), as well as my gold and silver coins and my storable food for bartering. this allows the convenience and benefits of digital stuff, while satisfying paranoia concerns. though there is still the privacy issue, so it depends on how concerned folks are about htat.

      1. ErikSchwartz

        Not to jump on the Kid’s crazy train here but you should always have a few months worth of food/water stored away long term. It would only take a minimal natural or manmade disaster to royally screw up the just-in-time delivery channels that American food retailers live on.This goes double if you live in earthquake territory or any big city.

        1. ShanaC

          Excellent advice…

    2. kidmercury

      lol perfect timing! check this article published today from prison planet, a leading kook publication: prisonplanet. com/use-cash-and-enjoy-privacy-youre-a-terrorist.html

  10. Kevin

    There is a start-up called Venmo that lets you text people money. A bunch of the food carts at UPenn have started accepting it. I haven’t used it much, but it’s pretty cool. Like PayPal but via text message. The person you text to doesn’t need an account already set up. It’s a great way to split the bill at dinner or for drinks if you don’t have cash; and it couldn’t be much easier to use.

    1. David Noël

      Venmo’s a cool concept and they’re still in private beta so that’s why it hasn’t a wider audience yet. My guess is that in six month, Square and Venmo will be very present. They’re run by people who can execute and I’m sure they’ll get traction soon

      1. ShanaC

        Venmo actual scares me. it is one of the few really transformative peices of technollogy I’ve seen, ever. Technically it is banking on top of banking. You could give it to 10 year olds as a way of controlling thier allowances. With some effective monitoring systems put into place and a slight tweaking of trust, they effectively eaten up small time banking and the credit system. You wouldn’t need cash to exist the system at all to use it…That’s sort of frightening in a good way. They’ll speed up the velocity of money though if it picks up…it’s effectively another layer of m1, and I am not sure how many people using it would feel so happy about that effect…

        1. David Noël

          Here’s more to scare ;)Imagine you link your Venmo, Square, Blippy, Foursquare and Twitteraccounts.

          1. ShanaC

            I actually just wrote up about Venmo on my blog. I think the power in Venmo is not in sharing in the traditional social media sense- it’s power comes in sharing this trust concept which is essentially a form of localized credit. I get to judge your creditworthiness.Then I add it to my mint account, or some other new venture ion that space. So basically we now are cross responsible for each other’s credit-worthniess on a much smaller scale. It really changes the idea of who “loans” (albeit it is really purchases, not the point) who money. That’s the frightening aspect. It isn’t as much where I go or what I do, it is I can, via group usage of a very small product, reneogtiate in real time a massive retailer’s credit worthiness if and only if someone at Venmo decides to limit the idea of trust.aka if there are large amounts of people who go to Starbucks, and they all only trust Starbucks at $25 a month, but the same profile of people trust Joe’s coffee at $35 a month- which is more credit worthy? Furthermore, you could do the same with individuals. If we all do the same for each other…With teaching tools to track as individuals this data (ala mint), that’s scary in a socially revolutionary way. I mean it is good, but will call some major social upheavals (what if your best friend doesn’t trust you with money? Now it is part of your real time credit?) It changes the way we think of banking.That, is radical.

          2. ShanaC

            Oh one last thought- from what I can tell, you don’t need a bank account to use Venmo,(you can text back and forth money, and I am sure if the service picks up a check cashing service will happily text money into your Venmo account for a fee) so essentially they could become the intermediary bank for people who don’t have access to banking in the US (children, the poor).

          3. lessin

            ShanaC — your analysis on venmo is spot on… The Financial Trust Graph is fundamental in society.. just wait 😉

    2. fredwilson

      I use venmo but Joe wouldn’t take it when I offered

      1. Nate Westheimer

        But consumers have leverage on this one. If more of us showed up today and asked if we could pay with Venmo, they’d accept. We hit Simple Kitchen over the head with it and now they accept it and LOVE it. As a consumer (and mayor of the place 😉 it’s so nice to seamlessly transact with a business. It makes me buy more too 🙂

  11. Big Dan

    Does anyone feel a disconnect with how much money they’re spending? For quite a while I paid for everything with my debit card and didn’t blink an eye at pricing. One day I ordered two meals at McDonalds and paid with cash, I realized I just spent $15 on two ‘value meals’. Last time I remember paying attention to the prices at Mickey D’s meals were just hovering around $5 a pop.Since then for me paying with cash seems more real. Not to mention when things happen like your card geting flagged for unusual activity and you need to call the bank to strighten it out. Your pretty much screwed. Cash never gets flagged. 😉

    1. ipostelnik

      I find that for really small (< $5) transactions I’m more aware of the price when using CC, but as amounts increase I get desensitized to the number.

    2. Dave Pinsen

      I still notice the prices when I pay with cards. And fast food prices have noticeably climbed.

      1. zackmansfield

        And for those who track expenses with any sort of rigor, it’s much easier to keep track of ‘card-based’ transaction than cash. This is the obvious extension of the cashless society, the data exhaust of purchases mish-mashed with demographics/social graph/online activity etc for targeting. There’s already a lot of this going on but it’s only going to proliferate.

    3. fredwilson

      Both are good points

    4. David Noël

      Good point, holding cash in your hands and you probably value it more.

    5. ShanaC

      Same with those hair-thingys…But more seriously, cash is a good way of tracking expenses…

    6. Mark Essel

      Big Dan, get away from mccy Ds value meals. You’re better off eating something fresh/healthy for the same price nowadays. It’s bizarre that fast food jumped up to health food prices.

      1. Big Dan

        I agree it’s a rarity that I eat fast food in the first place.. Perhaps that’s why I was so shocked at the prices? 😉

  12. BillSeitz

    There’s already an (Android) app to scan your value cards, then you have the scanner scan your phone screen. Unfortunately it doesn’t work with flat-bed scanners, you need the wand kind.Too bad PayPal dumped their Palm-beam-money service. Maybe they should be re-awakening it.

    1. Libby

      Sounds like CardStar on the iPhone

  13. Carl Rahn Griffith

    … and gives a whole new interpretation to Pink Floyd’s “Money – it’s a Gas” – increasingly so – now, it is just a transient, virtual unit, moving somewhere to and fro in the ether.A somewhat different meaning back in those post-hippy days of hard-cash.By the way, which one’s Pink? ;-)(Be a shame to not have a use for the hairband, though – found that quite touching)

    1. fredwilson

      Inserting pink floyd into the conversation gets you big kudos carl!

  14. Carl Rahn Griffith

    Oh, and rather ironically, the other Xmas, Helen (my wife) bought me a very cool Paul Smith ‘designer’ wallet, primarily because of the very funky Mini design inside which she knew I’d love. Which I do. My previous wallet was somewhat frail, being decades old.However, I have just a handful of cards and the wallet itself has a value FAR in excess of any amount of cash I have ever had in it! Or am ever likely to … 🙂

  15. ipostelnik

    The last 20% of the problem is to going to be hard to fix. Your experience at Joe is a great example of a really small transactions at small independent vendor is one case. A number of companies, like Square, are trying to fix that. The other area is privacy – there are some transactions people would prefer not to see on their CC bills. I don’t know if anyone is really tackling this.

    1. fredwilson

      Good point on private transactions. I don’t live an interesting enough life to have that problem

    2. ShanaC

      You are never going to get rid of hard cash for that reason. Some of it automatically leaks out to weird off the book transactions when people want to do private illegal activities (or what the state deems illegal)If I am not mistaken, we already print less cash. what needs to change is the fees for the cards or other systems (venmo, square, whatever else pops along) If so many people are using non-cash transactions, technically why should the merchants be paying so much anyway? The banks should be making plenty per transaction because the infrastructure is already in place…

    3. Chris Cederskog

      I don’t buy into the privacy argument. With cash-less pay (especially mobile) there is room for solutions from privacy advocate groups that paranoid people seem to trust. Plus, with twitter, facebook, google, foursquare and I’m finding it increasingly hard to argue privacy at all.

      1. ShanaC

        I could say something snarky, but I am not.

  16. AndreaF

    My wallet is very similar, a half broken metal case with credit, debit cards and driver license. I only carry minimal change as, in Italy, paying 1 EUR for a loaf of bread by card takes longer than paying by cash.Microsoft made some videos some time ago where it shows a digital wallet –…- although, as you say, putting everything into your mobile phone may be better. And then in the cloud, accessed by you from any device you’re using.

    1. fredwilson

      I forgot to mention that my drivers license is in that stack too

      1. kortina

        Facebook id might replace that.

  17. Dave Pinsen

    I’ve been going cashless for a few years, welcome to the club. At major chains, the $2 or $3 purchase isn’t an issue at all. No one will give you a hard time if you buy a box of hand wipes at CVS, or a double espresso at Starbucks with an Amex card.I’ve been to Joe a couple of times (prompted to go the first time after reading the founder’s story in the NY Times), and I noticed that, in addition to not taking cards, they don’t have WiFi (at least the location I went to). Also, for the city that never sleeps, they close pretty early. They don’t seem to like lingerers. Perhaps that’s a smart business decision on their part.

  18. RichardF

    I ski a fair bit in Austria, every time I go I have to take literally thousands of euros with me to pay for accommodation, food, ski passes, drink. Nobody wants to accept plastic, can’t think why that would be 😉 ….I’m surprised the car hire companies don’t ask for a 10,000 euro deposit to take a car away from Salzburg airport.I always feel like a muggers perfect victim

    1. Morten Josefsen

      I am just back from my annual snowboarding in Austria, and for the first time the local supermarket (Spar) accepted foreign credit cards. So I guess things are moving in that part of the world too.

      1. RichardF

        that’s good to hear Morten, more importantly how was the snow ? It’s pretty good at the moment isn’t it?

        1. Morten Josefsen

          It was awesome :)…

          1. RichardF

            v nice – Great place St Anton

  19. dbollmer

    Of course, going cashless makes it nearly impossible to slip a homeless person some money. Depending upon your point of view, that may or may not be a good thing.

    1. fredwilson

      i always prefer to buy them a hot meal than give them cash.i don’t want to think about what they will buy with the cash.

  20. Scott Smeester

    The only time I need cash is for downtown parking. However, have a few Ben Franklin’s always feels good.

  21. itamarl

    Interesting how this seems impossible in many European countries. It’s quite easy in London, with my Visa Oyster (Credit card + Metro card + contact-less) I’m a free man. Just came back from the bakery, bought a baguette and a cookie with my Visa (4 pounds transaction).Regarding getting rid of the card fees for the small merchants: Cash has a cost. You need to store that cash in the register (0% interest rate there) then transport it to your bank, throw away fake bills, deal with security issues of getting cash stolen, …Fred, if you want to move to card-less (phone only) we need contact-less payment to get more traction, it’s ready and starting to be rolled out in London and in some US cities and many RFID phone can handle the technology (Visa employees have been piloting phone payment last year).

  22. ErikSchwartz

    Before mobile can take the place of cards they need to make battery life a non-issue.The last thing you want to do is have no cash, no credit cards and a dead phone battery.

    1. Kevin Vogelsang

      Best comment on this post. There are still many practical issues with going “cash-less”. (Battery life is an issue for basically everything.)However, when we do go cash-less, we will have reached a transformative point that will change many industries. (ex. How will this change the credit card industry?)It seems there are a lot of startups playing in this space. Hopefully one will be able to get it right, so we at least have the option. I spend too much time digging through my wallet trying to find the right card.

      1. Mark Essel

        I’d prefer a few get this right for the sake of choice (and information diversity). If I have knowledge of all your purchases, I win the information game.

        1. Kevin Vogelsang

          True enough.

      2. ShanaC

        After seeing Venmo demoed and getting an invite (where can I use it in NY fyi) quite a lot. With slight adjustments of their trust system, it means effectively negotiating your own credit with others.I find that radical. Credit cards can’t let you negotiate your own credit.

        1. fredwilson

          i’m a big fan of venmo

    2. Radu Panciuc

      Things can be made in such a way that there is no need for the phone to be on while paying something. The phone should just be the medium of storing the “credit card information” (like a chip) and that’s it. I don’t remember where I read this but, as I recall, there is a system that allows you only to touch the POS with your phone and the transaction is being made. That’s pretty cool and simple, if you ask me.

    3. andyswan

      I lose my phone a lot. I never lose my cash. But that could be driven by a subconscious hatred for phones.I wonder….if my phone was my cash, would I lose it as much?

    4. fredwilson

      i carry a second battery on my google phone and blackberryprobably the number one reason i don’t use an iPhone

    5. kidmercury

      11 likes for this comment from erik at the time of this writing. is this the most popular comment in fredland history? congrats erik for making the record books!

      1. Mark Essel

        Could be, likes are flowing more now when you can see who was the first one (not showing up on firefox at the moment)

  23. jeremystein

    cash is one of the last competitive advantages banks have– via ATMs.if money is essentially data, once we move towards a cashless society i bet we see a new kind of financial institution.

    1. kidmercury

      indeed, a new kind of financial institution, probably one rooted in game play IMHO, will be needed. do you think the regulatory environment will allow it? if not, do you think entrepreneurs are educated enough and willing to create the regulatory change needed? hope i am wrong, but i highly doubt it. no one even talks about the regulatory threat.

      1. jeremystein

        i think it depends on how its structured. id like to see an institution thatdoesnt lend. there are so many ways to earn interest right now that you caneasily transfer from an ewallet to a money market mutual fund– so i thinkwe will see an extension of this model.ewallets are currently a grey area. if youre not lending, you couldpotentially incorporate as an RIA or broker dealer.

        1. kidmercury

          an institution that doesn’t lend is impossible under current monetary policy, because under currency monetary policy, all money is loaned into existence (and hence we have things like a debt crisis). almost all entrepreneurs and investors i’ve encountered are willfully ignorant of this simple fact, and hence i find it extremely unlikely much progress made until the barriers causing such ignorance are removed.

          1. jeremystein

            im not saying there shouldnt be lending, just that i would prefer to storemy liquid money in an institution that doesnt lend. its safer because itsnot a balance sheet business. in fact, i do this with ewallets today.i also use my bank account in a similar manner. the cash in checking is notearning interest and that is really only to cover short term expenses. it isso easy to transfer money between institutions that should i feel the needto lend, i can transfer to another institution that allows me to do so.i think bofa’s keep the change program is indicative of where the industryis headed. its an interesting pitch to consumers… “save your change” butwhat they are really doing is converting money in checking to deposits sothey can lend.

    2. robertavila

      Classic monetary theory has already crashed and burned with the rise of universal credit. There was a time when such theories could depend on individuals maintaining positive cash balances, to meet unexpected emergencies, something that large credit lines now mitigate. The payment system now seems able to expand or contract at will leaving central banks as well as banks to scramble in the wake of consumer mood swings.

      1. jeremystein

        well. in our financial system, banks are not the largest source ofliquidity. we operate a shadow banking system where investors can withdrawfrom institutions that are a large source of liquidity in times of should read up on minskys financial instability hypothesis. essentiallyin a time of stability investors assume this will continue in the future.that encourages them to take more risks and lever investments, creatinggreater instability in the future.

        1. robertavila

          Minsky is a most interesting theorist. The basic problem which he put his finger on, however, goes quite beyond banks and applied equally well in Dickensian England when the main form of circulating payment were bills drawn on third parties. The central issue is in times when optimism runs high and uncertainty about the future is low, future payments have a high value, assets have a high price and current liquidity is of reduced value. Regardless of the official interest rate expected growth in earnings is high and risk premiums are low, Think 1997-98 or 2006-07. On the other time when optimism about the future is low and uncertainty is high currently liquidity is at a premium and asset prices are depressed. Again regardless of the official interest rate expected growth in earnings is low or negative and risk premiums due to uncertainty are very high. Think 2000-01 and 2008-09. We can never KNOW the future. and asset markets are always about no more than what we BELIEVE about the future. Wall St is more an institution of faith than is the Catholic Church.Your point about more of this instability in the future is largely due to the increasing inability of central banks to “take away the punch bowl just when the party gets going”

          1. jeremystein

            i understand your point but youre getting into valuation. the model youdescribe above is the constant growth dividend discount model. you areassuming that an investment pays a steady dividend and grows in reality this doesnt happen in equity investments. a good valuation modelwill adjust these inputs to account for industry maturity. if the dividen isnot steady, a multi stage approach is more appropriate. and in high growthindustries where no dividend is paid at all, the model cant be used.the interest rate and risk premium are actually extremely important andvaries across different countries and industries. in an emerging market,even times of optimism there could be a very high risk premium due to thenature of the asset can use a dcf model but because it relies on accounting, the inputs canbe manipulated by management and need to be adjusted accordingly. in anycase, a multi stage model is probably more appropriate in a deep valuation.what you are essentially describing is speculation– or the ponzi phase ofthe minsky model. optimism is high so you can buy an overpriced assetassuming someone else will pay an even higher price.

          2. robertavila

            Constant growth dcf is indeed the conceptually most simplified version, but optimism in any form is an expectation that there will be more in the future than now. It may be a near term expectation (My house will increase in market value by 30% in a year) or it may be some longer term growth projection. The first point is is when optimism is high and perceived risk is low the price of assets go up while the relative interest in holding liquid assets goes down. and vice versa. In such times Minsky pointed out banks make lots of foolish loans, which further fuel the asset price rise. All the careful models projecting future performance are no more than codification of current levels of optimism and confidence about the future. So, yes the risk premium, the measure of confidence in knowledge about the future, is very important and it can move quickly even in the most developed markets, as can expectations, as they both did in 2008.

          3. jeremystein

            isnt optimism only before we start making bad loans?lenders know they are making bad loans when companies don’t have enough cashflow to pay off interest. the only reason these loans are made is becauselenders assume companies will borrow or liquidate to pay back principal andinterest.i suppose you could call that optimism in the sense that you believe you bepaid back. but is the lender as optimistic as a company about futureearnings growth? i dont think so.

          4. robertavila

            Most bad loans are made long before good money is being thrown after bad when it seemed like a good idea at the time.

  24. Ben Weiss

    I think you’re spot on, particularly in New York City. Even a few years back, I never carried cash, aside from cab money, since everyone accepted by Amex or Visa card. Of course with cabs going the way they have in NY, you can virtually avoid cash entirely.The question is how much this lifestyle will apply to places outside New York, particularly in economies where cash is still very much king. I live in Tel Aviv right now, and I can assure you, without cash, you could hardly survive a day here – many stores do not accept credit/debit, tips at restaurants are almost always in cash, and there are many active local markets with vendors who have not yet gotten their Square device (or their iPhones for that matter)… The question is, when will the cashless lifestyle become a reality outside the metropolitan areas of the US?

  25. awaldstein

    I’ve been channeling you Fred in this experiment.Broke down and had to find cash for tips for haircutter (salon policy) and guy who cleans my apartment.Best app on iphone towards a ‘cardless’ reality is Equinox app which displays a bar code. Very cool and useful. Would love to have Foursquare store barcodes so I don’t have to check in and open app every time I work out.

  26. Rob Sobers

    To me, the best aspects of paying with credit all the time: 1.) your spending is tracked and chartable, 2.) you can dispute a charge when you feel you’ve been treated unfairly by a vendor.

  27. Michael Lewkowitz

    Zoompass just announced a RFID sticker here in Canada that works with payment systems and a special account that you can use your mobile to move money in and out of. They’ve been working on replacing the wallet with the mobile phone.

  28. Rick

    Fred, you may be responsible in paying off those credit cards, but many people in this country are not, and remaining “cashless” just adds to their debt levels.Oddly I’ve taken the opposite experiment and have been using more cash, and making far fewer payments on credit card. I find myself now thinking twice before making many purchases – shelling out $200 for something in cash doesn’t feel the same as paying for it by credit card.Sure, debit cards may be a better solution – but banks typically allow overdraft and then just charge customers additional fees. I understand that may be changing soon however.

    1. fredwilson

      but debit cards don’t have that issue

  29. Robert Bareuther

    That’s funny – I thought I was maybe the only person that uses the ‘hairband wallet’ that you picture above – is this more common than I believed? I have found that a little supplemental cash is important, like when the boy wants a slice of pizza after school.

  30. Andrew

    FredReally interesting thread. I too dislike carrying cash because its tougher to keep track of and generally less convenient. What happens to your trial if someone in your family or a business contact picks a place to eat that doesn’t take credit? I live in Williamsburg and here there are more than a few restaurants that don’t take credit cards. It isn’t that these restaurants are run by inexperienced operators and I don’t want to accuse anyone of anything but there have to be other motives for being cash only. Sure, the fee for American Express isn’t pleasant but when people use credit cards they tend to spend more. Even if you’re a small business, the cost of accepting credit cards is smaller (when increased spending is factored in) than just taking cash (decreased sales, errors involving count etc.). I’d love to hear a restaurateur’s opinion if there happens to be one reading this.

  31. JFM

    I find it hard to use credit cards with cabs in a lot of cities that I travel in. Cabbies seem to prefer cash. Biggest disadvantage that I see to your plan is having to forego the local cash-only hot dog stand, or street-level shoeshines in NYC.

  32. Ray Gauss II

    No health insurance card in that stack?

    1. fredwilson

      i do have one in that stack. left that out. good catch

    2. Carl Rahn Griffith

      Not a problem in the UK.:-)

  33. Doug Kersten

    The only reason I use cash is as a management technique. Plastic makes it easy to spend a lot of money very quickly. If you make purchases with only the cash in your pocket you avoid this. If there was some way this could be easily provided with plastic it would be excellent. For example, if I could set a personal $300 limit for daily transactions and then have to reauthorize to receive another $300 limit that would be fantastic.I also agree that mobile phones will take over for plastic. It just makes sense and I can’t wait for the day.The only other issue is political. If you use only plastic you loose a level of control of your money. Someone else can easily remove your access to your cash/credit. Run on the bank, weather disaster, government overreaching, economic disaster…sorry you can’t take out your money…which is why most people keep a stash of cash around. You do get value letting someone else hold your cash but there is also risk. The current economic disaster showed many people that that risk truly exists and is not just a mental exercise, which is why you see a lot of people paying off credit card debt and moving to cash/debit card only.In the end, we are a modern society and you can’t avoid ceding some level of control of your money to an external party but it does deserve thinking about.

  34. timhoran

    i love your wallet fred. until that no cash, wallet less mobile nirvana is able to be delivered to the masses, here’s another cheap, practical, and reliable ‘wallet’ option that’s worked great for me…

    1. fredwilson

      i tried the clip but like the hairband better

  35. Mark Essel

    Why bother paying with a phone, just pay with your identity (finger print, retina scan, etc).Too far out?

    1. PhilipSugar

      Paybytouch was a famous huge flameout on the fingerprint theory.

      1. Mark Essel

        voice + something else. There’s certainly characteristics which are unique to me besides an object I possess.

        1. William Mougayar

          True, the airport automated customs pass (Nexus) uses retina scan recognition, and it does a damn good job, but these devices are expensive to deploy.

          1. ShanaC

            People may want an object to touch and handle. It can be soothing…

  36. JordanCooper_NYC

    I’ve been thinking more about this since we discussed…as you know, I am a proponent of the shift to cashless, and we invested in Venmo largely under the thesis you describe…but my sense it the “cashless society” you describe is at least 10 years out…”on the verge” would imply that we will see mainstream penetration of your experiment in the next 12-36 months, i think…and that’s not gonna happen…re: the mechanism by which we will get to cashless…i will be contrarian for a second and say that I think there are enough unique identifiers out there now, many of which already have a credit card attached to them, that it is as likely that you will be paying for physical world goods and services with your Facebook account or email login as it is your mobile phone…I think Fbook Connect is a fascinating piece of infrastructure that has an immediate application in the browser, but an identical value proposition in the phsyical world. As retailers start thinking about the value of capturing their physical world customers’ email/contact info etc…so that they can reach them in the online sphere (as evidenced by flash sale, deal a day, etc…growth curve)…the notion that mechanisms will be implemented to have a phsycial world customer “login” when entering a store or transacting…seems quite likely to me

    1. kidmercury

      the quality of your comment is surpassed only by the coolness of your avatar. thanks!

      1. Mark Essel

        nice kissing up Kid. Where’s the Facebook’s gonna steal my virtual sheep paranoia?(i agree)

        1. kidmercury

          as you know mark i take great pride in being a hater and a downer. but in order for my hate to preserve its punch i have to applaud that which i believe deserves praise. fear not, it’s all about serving the hater energy. thanks for keeping me on my toes!and while fb is terrible and i am filled with nightmares about losing my virtual sheep (if i were to trust fb to buy some in the first place), fb is still the most likely candidate at this point to execute the business plan that saves the world. will they? extremely unlikely. but can a kid dream? absolutely!

          1. Mark Essel

            I understand.My own praise giving needs occasional criticism to base it in reality. If I love everything too much, what’s the point right? I don’t love Facebook, but mostly because I don’t get any cool info there and I have to ask for permission to share stuff I generate in it’s gated community. “May I please share this content I created in your kingdom?” Tyler’s cooking up something fun at, it’s what we both think will be a widely adopted social format of the web in a few years. Note the isn’t open yet hehe.

          2. kidmercury

            nice! i’m bullish on looking forward to seeing what you guys build.boy, that’s two nice and happy things i said today. to make up for that i just want to remind everyone that 9/11 was an inside job and that is way more important than anything else in this thread, nothing even comes close, and the only reason people ignore that is because they’re scared of the implications. too bad that doesn’t change a single thing and makes the inevitable payday for ignorance that much steeper.phew. okay, i feel better now.

      2. JordanCooper_NYC

        hahahha. My friend took pic at a bar in Berlin…oddly…it was taken at a moment where i was contemplating the future of payment 😉

    2. JLM

      An interesting observation. I suspect that we will soon be assigning cell phone numbers at birth and they will become THE identity mother lode. Much that same as a SSAN might have been had it not been managed by the gov’t.

      1. JordanCooper_NYC

        i don’t know that it’s going to be a phone number…in fact…funny you should say. My lawyer, Pat Mitchell, just had his first kid…my gift to him was that a created his newborn son’s gmail address so he wouldn’t have to be [email protected] when he gets old enough to need it 🙂

        1. JLM

          Fair comment. Maybe it’s the trifecta of cell phone, e-mail address and domain name? With the cell phone being the pivot point. Who knows?

          1. kidmercury

            i think we are going to see multiple private networks all with their own protocols. for instance, perhaps in fredland you will need a fredphone to use your fredbucks. conversely, facebook connect and your facebook identity may be how you shop in the facebook world, which currently includes 400 million+ citizens. most likely that like obama you will be a dual citizen — sometimes you’ll shop using facebook credits stored in your facebook profile, other times you’ll shop using fredbucks from your fredphone. unlike obama though you won’t have to lie about your citizenship status — dual/multi-citizenship will be the norm, and will protect you from tyranny (i.e. in case fred ever turns into an evil dictator we can just pull a run on fredbucks and abandon the economy… the new world order, the central banks compete for us, rather than own us). and that’s what will save the world!

          2. JLM

            Agree completely. There is a huge “convergence” power at work here. In much the same way that the cell phone, PDA, GPS, digital camera and web apps have converged into the “smart phone”.In the future, I just want to be the Sec Treas of Fredland and have control of the FredMint.

          3. JLM

            Oh, yeah, I CAN operate Turbo Tax and I did NOT cheat on my 2008 taxes. Have not yet filed my 2009 taxes yet, so if it is a requisite to be a tax cheat to get the job, there is still time for me to close the deal!

        2. ShanaC

          so many people I know are doing that. I got lucky that I have a semi-unusual name. Sometimes I go places and my first name is already registered (and that scares me, I know it is relatively unusual in my age group)What are we going to do when we run out of boring names!?

    3. fredwilson

      two conversations i had, one with you and one with andrew parker, inspired this postthanks for the inspiration jordan

  37. Eric Friedman

    I tried this late last year for about a week, then broke down shortly after and went back to a wallet. I find that I needed some other device to carry the cards, and always needed some cash to get things done. I also found myself wanting to take two cards (1 ID, 1 credit card) – then everything was separated and I had a higher chance of misplacing something.I am waiting for a smaller footprint and combining cards. This is a stop gap to the mobile solution hopefully coming soon, but until then I am still going with my wallet.

  38. Luis Gizirian

    Fred, I think Japan and NTT Docomo are a bit ahead of you on the idea of having all your means on your mobile phone. As you well said, it might fit well for some cities but not for others or other under-developed countries.

  39. kraximus

    One of the advantages to using credit and debit cards is for personal finance reasons. All of my transactions can be digitally tracked which then of course I can better keep track of my money and where it’s going. However, in dire times, probably best to use cash when budgeting to ensure no specific budget category is exceeded. It is easy to get carried away when using plastic.Have you tried RideCharge or TaxiMagic? Pretty amazing service that is integrated with taxi dispatches all over the country. You can use your Blackberry or iphone to either text or call for the nearest taxi in a particular city, and then you can pay using just your phone- either by calling a number or using the app. No need for plastic or cash! Obviously the service is limited to the larger cities and participating taxi companies, but here in Dallas it’s just fine.Another thing I like about going cashless is emailing of receipts. I remember purchasing an ipod at the Apple store and instead of giving me some paper receipt that I’ll throw away in a few days, they send it to my email where it can be stored for however long I want. Might save a few trees too. This would be really nice to see in the future, so that all of your plastic transactions are emailed to you and can be permanently documented.

  40. amishshah

    Seems like most people are talking about the convenience and hypothetical mechanics about going cashless. I don’t disagree, and I’m certainly as cashless as I can possibly be all the time (note: Chicago is less favorable for this then NYC).BUT – I think we’re overlooking the most valuable thing about going cashless. Data. Knowing where, when and for what purpose my money is spent is far more important to me than how I spent it.

  41. Tony_Alva

    Fred,My wife and I have been cashless for many years relying on AMEX as cash. Have no complaints. Funny thing though, when I come to NYC for a visit, I’m typically forced to grab cash, which like you, I hate. When I’m up in the coming month I’ll see if I can get away without it and let you know how sucessful I am.

    1. fredwilson

      must have been our upbringing tony. something about the army brat lifestyle???btw – so nice to see you in the house again here at AVC!!!

  42. Derek

    yeah, the problem is buying coffee. Other than that, I don’t need cash.

  43. Ben Appenzeller

    Fair point about phone batteries. If you have an iphone you need a charger for home, office and car because it won’t hold a charge for any reasonable period of time (especially if you have push turned on). That said, I think there are bigger hurdles to creating a mobile payments solution that will finally do away with cash.There are a lot of interesting companies developing new platforms for mobile payments, but it’s one thing to create a working prototype and something far different to get merchants to adopt your solution in mass. Some retailers are making investments in supporting RFID (tap to pay) and other interesting new payment methods, but many are not and to eliminate cash means getting everyone on board. Case in point, I don’t know the last time any of you have been to Macy’s, but I think their P.O.S. is older than I am. If mobile payments solutions can’t work with or around what’s in place today, we’ll have a long wait until we can leave our cash at home.

  44. bijan

    That’s one of the things that drives my wife nuts too. no cash on me either. the other thing is that i let my fuel tank get to fumes before i fill it up 🙂

    1. fredwilson

      i guess we have more in common than our musical tasteand i have the same pair of varvatos shoes you were wearing to the boxee meetingthey are the most comfortable shoes. i love them

      1. Mo Koyfman

        sadly i have them too. the guys at the office make fun of bijan and i.btw – while i’m convinced we will eventually go cashless, how do you currently deal with the coat check gal or something of that order? venmo?

        1. fredwilson

          coat check is tough. i try to venmo the money. if i get a dirty look, then i bum a couple bucks off of whomever i am with

          1. Mo Koyfman

            yeah. that’s the only tough part. otherwise i’m with you 100%.

  45. scyphers

    By going cashless, you’re leaving a data trail. Do you ever worry about the privacy implications of your choice?

    1. fredwilson

      i don’t care about privacy. i know that many do. i’m not suggesting its not a concern. but its not my concern

    2. Michael Kogan

      Maybe somebody can come up with a way to have a prepaid cash card that can’t be tied to an individual. This way you can have your cake and eat it too 🙂

  46. kirklove

    Do you find the NY Taxi drivers reluctant to take credit cards? I often do. They always try to lie and say the machine is broken.Also you should be a big fan of Commerce restaurant then. They don’t take cash. Credit only. Got a lot of slack for it when they switched, but I liked the reasons… easier to track and bookkeep and less potential for theft when there is no cash lying around (both employees and robberies)

    1. kidmercury

      yes i have had the same experience. or they give me this, “come on, man” look. i’ve basically been pressured into using cash in NYC cabs.

    2. fredwilson

      i’ve never had a problem with NYC cabbies. i tip them well via credit

      1. kortina

        Have you noticed the suggested tip is dynamic? $2/$3 or 20%/30% displays depending on which is in the cabbie’s favor. Brilliant.

  47. Andrew

    I’ve had them float me at Joe as well—they practically insisted on it. Smart business too – it’s not a place I’m at regularly, but I was back the next day to pay it back – and pick up another cup.

  48. Rob

    For 15 years my wallet has been the little removable drivers license insert from a standard coach wallet. It’s a little frayed by now, but it’s enough for a few cards and ID, along with an emergency $20 and a spare car key. Cash goes separately in the pocket.More recently the best part about it has been the “blink” paypass/RFID chip in my most commonly used visa card. New York City has really adopted this, where I can pay for a taxi by just tapping my wallet up against the sensor on my way out. Talk about fast–this beats any swiping transaction by a mile.The biggest problem will be when one of my other cards adopts the same RFID system–the sensor will trigger them both, and I’ll never know which one will respond first.

  49. Garrick Van Buren

    I use a metal Retro1951 business card holder as my cashless-wallet. It’s thick enough to hold 9 cards (a combo of credit cards, drivers license, transit cards).

  50. monsur

    I feel the same way about cabs; I would always carry around a few bucks for them. Even when the credit card machines were installed, I was hesitant to use them. What changed my mind is that lately when I’m waiting for someone to vacate a cab, they are *always* paying by credit card.Whats nice about going cashless is the power it gives you over analyzing your own finances. All those minor transactions are captured and can be analyzed in Mint. In fact, I’d love it if stores could go a step further and log itemized receipts with my credit card company. That way I could say “Oh, looks like Celmentine oranges are taking up 10% of my grocery bill!”

  51. dgulbran

    I do carry cash: one “emergency” $20. But in all honesty, I go *months* without ever needing it. It’s really only when I encounter a “cash only” biz (usually a hole-in-the-wall food joint) that I ever touch it. And that’s hardly an emergency. 🙂

  52. Scott Wolfgang

    Added benefit from using cards only (or primarily) is the purchasing behavior data generated and the potential impact on savings. I still carry cash though because the cost of not doing so can be quite high. A simple example is being in a rush and having the only cabbie that stops tell you he only accepts cash.

  53. Joe Lazarus

    I’m sort of the opposite. I still carry cash, but limit the number of cards I’ll put in my wallet so it’s thin as possible. Storing all my cards on my phone would be great… or maybe even just one card that I could load with all my accounts.

  54. lazerow

    Fred, throw a single bill ($100) in your stack just in case. Emergency in the city and you need to get there, you’ll be glad you had some cash.Love,Your Mother

    1. kidmercury

      hahahaha mom knows best!

    2. fredwilson

      great advice. been getting it from my wife, not my mom, for yearsbut i can’t do it. i lose it, forget it, misplace it, whatever. cash is nuisance to me and always has been

  55. Chuck

    “I felt bad about that and now I have to figure out how to pay him back without breaking my no cash diet.”Tea leaves? Salt? Cattle? Silver? That would be the old-school approach.

    1. ShanaC

      I know plenty of people who still barter services….

  56. Boris Mann

    I’ve been doing this for years in Canada. The Interac / debit system is basically ubiquitous and has been for quite some time. It’s not run by MasterCard / VISA – all the banks got together and support it directly. One advantage to having a small population, I guess.

  57. lindsayrgwatt

    Hey Fred – don’t ever visit Brooklyn or you’re going to be in for a surprise. “Cash only” is the unofficial motto of the borough. I think Marty Markowitz is going to add it to the signs that greet you when you cross the bridges and tunnels.

    1. fredwilson

      i love brooklyn but that’s going to be a problem for me

  58. PhilipSugar

    The tipping point to completely cashless would be when you could make it anonymous on both sides and I don’t think that will ever happen due to both regulations and trust that it actually was. It can be totally anonymous now and you just can’t take that away.I do think somebody will find a much more efficient way for me to take money from my bank account and put it into yours. Again I do think that to be successful you’ll have to choose whether you give your personal identifier or not (and I think that there will be an incentive to do so, just like there is today with loyalty cards)Very interesting area that I am close to….

  59. reece

    Why don’t the banks just start sticking us with RFIDs already? ;)I try to carry at least $100 cash on me. Cash is king, as invaluable as each stupid paper bill actually is, it’s still necessary. In NYC you can get away without it, but get off the grid and you need cash.Also, speaking as a lifelong bartender/service industry type – yes, we prefer cash tips. Credit card tips can be/are reported to the government and when you’re getting paid $2/hour the last thing you need is to report all of your tips.(Apologies if people said this already. No time to read through all 130+ comments.)

    1. ShanaC

      basically you are saying what a lot of people are saying- for err illegal, semi-legal activities, there will be a need for cash.Or we could just pay bartenders and service people what they would have made in tips, resolving the issue…

      1. reece

        No. The beauty of the service industry is it is competitive. It isessentially a sales position and the best sellers, have bigger checks,provide better service and EARN bigger, better tips.You pay standard wages and you’ll get the same shitty service that you getat traditionally non-tipped establishments. There’s no incentive to providebetter service.

        1. Pascal-Emmanuel Gobry

          Absolutely right. France is a high salary, no tips country for service providers, which is why we’re world famous for having execrable service.

    2. fredwilson

      if i offered to venmo you $10 at the end of the night, how would that compare with a cash tip in your mind?

      1. reece

        “Show me the money!”I’m savvy enough to know about Venmo, but your average bartender will laugh in your face and I’d still rather the cash right now. It’s guaranteed value in my hand.Didn’t we just talk about time value of money recently? 😉

    3. Dave Pinsen

      “Cash is king, as invaluable as each stupid paper bill actually is, it’s still necessary.”Not sure if “invaluable” is the word you wanted there.

  60. Ivan Kirigin

    I take it you use neither drugs nor CraigsList. Cash isn’t going anyway. The anonymity is the killer feature – convenience has nothing to do with it.

    1. fredwilson

      true. i live a boring life

      1. Pascal-Emmanuel Gobry

        Wanna trade? 😉

      2. NICCAI

        Two considerations for cash: 1) You can only carry so much, so (to me) there is a built in level of security – I can only lose what I carry. 2) I always considered cash as a purer influx to the economy – ie by tipping in cash, there is less likelihood of taxation, and thus more cash going directly to spending and other economic activity. As Ivan mentioned, anonymity.

  61. RacerRick

    If we can go cashless, then more people will have to start paying more taxes and lift the burden off those of us who pay all our taxes.

  62. Natron (

    I always wondered as more people use credit transactions, will the cost of good increase because of the overhead associated with credit transactions?

  63. Guest

    Totally agree with you. I’ve been relatively cashless for over 4 years now and have no plans of going back. I almost exclusively use my Amex Blue Cash and Chase Freedom cards to take advantage of the cash back features.

  64. BmoreWire

    Your basically making us all vulnerable to Tyler Durden wiping out the entire economy in one fell swoop.I will continue to try to use cash over credit until there are more credit card companies to drive fees down for merchants.

    1. ShanaC

      One of the reasons I like venmo is in fact if you are going to go cashless, you may as well develop systems where you and your merchant relationship have to develop a credit system between the two of you, rather than through an intermediary (the banking/debt market system)I just think they need to tweak the whole trust thing. That’s when credit will get very interesting…I could effectively say only xyz amount of credit to Joe’s Coffee. Sucks for me otherwise. Sucks for them too. However it would make credit development extremely interesting on a micro-level…

  65. JLM

    Odd thing, in my personal life I have gone completely cash. I carry cash all the time. I hate to deal w/ the bills. I resent the recording of every thing in my life. I want to fly below the radar.In my professional life, I have gone almost completely cashless. Somebody else has to worry about the bills.

  66. peeramid

    The Cred-Ex service ( allows the phone to substitute for a credit card with qualifying merchants. I hadn’t heard of Zoompass or Venmo. Square is just a card reader for street vendors, of course. What matters here is getting the merchant system and the customer system to work together within a single authorization mechanism that everyone agrees to. Sounds like a great idea for a venture.

  67. sweller

    An interesting exercise Fred.Paper is the common api for transactions and it’s hard to break free from it. 😉

  68. ShanaC

    Oh, and if you can cut a few cards out-…

  69. Marshall Clark

    Fred – you might be interested what I’ve been using as a wallet alternative. It’s a double-sided cigarette case with elastic bands on each side to hold cards in place. Works great as a card holder and there’s room for a small pen and notepad for jotting down business ideas. Here’s a couple of pics – works great:

  70. vita/

    Great post and let me add I completely agree, however I am biased as my company has created a contactless payment product. Anyway, here is an article from “American Banker” that seems to suggest the opposite but if you read closely it indicates that people are moving to the types of cards you mention not cold hard cash. good read –

  71. Jitle

    I definitely agree with a cashless future. My present solution to go wallet-less is to use the CaseMate iphone case that has a credit card slot on the back –…It perfectly holds an ID and a credit card and even a metro card when I’m back in NY. Here’s mine –

  72. nahumg

    In other cities, it is impossible to park the car at the meter w/o cash. I’m looking forward to pay with my phone or with an equivalent of a bart code implanted on my skin or with the help of an instant genetic analysis or other biomarkers…

  73. Pascal-Emmanuel Gobry

    “I felt bad about that and now I have to figure out how to pay him back without breaking my no cash diet.”Maybe you can send him some FarmVille cash. ;)This is fascinating (somehow I’d missed this post and my wife told me about it when she got home).As a pointless aside, I find that day to day financial transactions are much easier in New York than in Paris.The big thing is that in France credit card companies charge a flat fee for transactions so most places don’t take plastic under 15€. Except for Starbucks and other chains, which is why I go there often even though I’m not a fan of chains.Also, since in the US all dollar bills are the same size they’re much more convenient to carry around. And since they go down to $1 I don’t carry change around — I always say “keep the change.” Much handier. I like the feeling of paper cash. I’d be sad to see that go away.But I agree with you re phone transactions. As I’m sure you know, this is already big in Asia, especially Japan. And also in the emerging world, in different ways and through different means (phone minutes have basically become an alternate currency).Apple could do this no problem. They already have our credit card information and they could use a technology like the “Bump” app: bump iPhones together and I’ve paid you money. I guess they don’t want the hassle of processing payments for third parties and handling customers. But this is something the mobile payments companies a la Boku could clearly do.

  74. Liam Lowe

    Spend I need to track goes on my card but for all else, use cash, as do no want admin hassle. My wife on the other hand uses card for everything but ends up never been able to review her spend as her monthly statements exceed 20 odd pages!Cash will always be with us for that very reason – discretionary spend which we do not wish to re-visit.On macro basis, cash is an important component of keeping card interchange rates down. No cash means no pricing competition for card schemes.

  75. NW

    While I carry cash, I do actively try to avoid using it, and favor plastic. For me, a huge advantage is the audit trail so I can see where I spend my money (transaction download/categorization in Quicken), I also make fewer visits to the ATM (a real chore as I almost never visit a bank branch for any other reason), and then there are the rewards for signature transactions. Interestingly, we (consumers) are all hooked on these, and our love of plastic has increased transaction costs (rather than decreased). This is because the balance of power lies with the card issuers/networks, so the retailers are stuck earning 2 to 4 %pts less margin (or we are paying 2 to 4%pts more), although I think they showed in Australia that reductions in the fees are not passed on to consumers by the retailers.On a related note, it blows my mind that I can go via to and buy a plane ticket for which I earn 1% cash-back at ebates, ~1% equivalent ThankYou points at Expedia, ~1-2% points/cash-back on my credit card, and ~1-10% equivalent in FF miles on the airline. I wonder what would happen if all those costs/incentives went away?

  76. Meganlisa

    Losing power and phone lines (dsl attached) at the same time made me appreciate wireless and batteries. Having said that, I’ve been mostly cash-less for years.Nice insight into how just because something was doesn’t mean it has to continue (being the way people do things).

  77. MC

    Using cash means making a trip to the bank or paying ATM fees, neither of which I’m fond of. Carrying change messes with the organization of my pockets. And when my wallet was stolen, it was a lot easier to replace the credit cards than the cash that was in there. So I’ve been cashless for about four years now.With the exception of one place I love, if a business doesn’t take credit cards, I don’t go there. For that one I use checks.

  78. joey horvitz

    I’ve been doing this for quite a while. Its almost perfect except for one thing. I used to work in the service business and tips were my livelihood. So now, I always tip, and unfortunately, while sometimes this option is offered via cards, a lot of times its not. Ironically I tip the most frequently when I’m in NY. So, until bell boys and street artisans all have iphones with card readers, I keep some cash on me 🙂

  79. HowieG

    Fred obviously certain developments have enabled this behavior. NYC cabs take Credit Cards. Parking meters are starting too. The subway going to metro cards the same. Of course this is good and bad for vendors/retailers. Good because no worry about being jumped when making the cash deposit at the bank. Bad because that costs them a percentage of sales which they either pass on to us or take the hit. And of course not using cash costs the economy billions in fraud and theft. I just read how your cell phone can now be hijacked when you are walking around. I feel like for every benefit we get a negative sadly.

  80. mikerofe

    How about fingerprint debits? Each finger can act as a seperate debit account or credit card. Maybe the right hand is credit and the left hand is Debit.

  81. Erik M Jacobs

    While the idea of cashless is wonderful, and I hope we can get there, I would strongly recommend against keeping no cash around given the current economic situation. You want to have at least a few days worth of living expenses in cash available in case the grid goes down, in case the banking system stops for a few days, etc. Smaller bills is better. Even aside from the current economic peril, having some cash around is not a bad idea. It doesn’t necessarily have to be on you, but it should be somewhat accessible in an emergency.

  82. Maxiosearch

    Going cash less is ok. Going credit-full is not! Startups should save every penny they can. That will be their basis for the first two years of operation. This is an interesting conversation about reducing expenses, save money and re-invested in your biz!

  83. Lancelot_dL

    What about beggars and people who play music on the street? Sometimes you want to give them money and they don’t accept credit cards.

    1. fredwilson

      i don’t like to give beggars cash because i don’t know what they will do with it. i prefer to buy them a hot meal.

      1. Lancelot_dL

        The people who play music or dance on the street are often a different case. One can even liken them to bloggers, performing outside the system. Sometimes you hear a very impressive performance.

  84. Teddie Wardi

    I’ve been going cashless in Finland for years. It has been possible because credit/debit cards are accepted everywhere and there has been no minimum limit.EMV has made this much more difficult as chip+pin is required instead of just signature. I also carry multiple personal cards and cards of various business entities. Remembering all those PIN’s, especially the cards that I rarely need to use, is almost impossible (atleast for me). Looking them up from a mobile kind of defeats the whole added layer of security.Mobile digital id’s are pretty common nowdays (all the major telco’s in Finland are using Valimo Wireless’s technology), so payment processing should not be a big step from authentication. It would just need some standards and critical mass, driven for example by the same telco’s.

  85. Dave Hodson

    Fred – I used to work at Visa in the early 90s when the debit card (fka the “check card”) was intro’d. Going cashless is great … until there is a power outage.

    1. GraemeHein

      Good point – cashless existence didn’t work well in 2003 North Eastern blackout. Doesn’t work in emergencies either. If your life’s on the line, a pile of bills is very helpful in ensuring one’s safety.

  86. obscurelyfamous

    I use a money clip and it usually only holds onto cards. Very infrequently I get some cash (poker games or taxis?) and hang onto that amount for a long time. Yesterday I spent my last two dollars.I bought yogurt.

  87. Lee Lin

    Unfortunately, food trucks, anything Chinatown, bars, and tipping doormen / maids ruin the Manhattan cashless experience for me.

    1. fredwilson

      try venmo

  88. marketfolly

    Fred, you’ve highlighted one of the biggest secular changes that I think is just underway. The US is just starting to adopt it mainstream and the rest of the globe is slowly starting to come around to this as well. As such, it should be no surprise that some of the most respected and prominent hedge fund managers out there have been investing in Visa (V) and Mastercard (MA). These companies bear no credit risk and are simply the middle man. Every transaction that takes place, they take a cut. It’s practically an oligopoly.Your post here is the perfect example of this secular trend. Cynics have argued that this trend would take much longer to play out, pointing to a generational “difference.” I disagree with them and again, your post and real life use is the perfect example.As for using phones for a payment, that also seems like the next logical step. Square, the new mobile phone payment acceptor is just the beginning here. It will take time to flesh things out, but eventually I can see the physical phone as being the payment source, rather than an add-on device.Would be curious on your take on PayPal these days, as I recall reading some of your thoughts in the past. Currently Ebay owns it, but I think some big value could be unlocked if they spun PP off as a separate entity.

    1. fredwilson

      paypal is a very valuable asset and i think it will become even more soi believe the move to a cashless world will bring us new and better payment processors than visa and MC. my bet is they will be disintermediated within a decade. they simply charge too much in a cashless world.

      1. keithrdennis

        Fred,Interesting discussion and with some excellent points all around. Having been involved in one of (if not the first) digital cash implementations in the US (SmartCash) which cratered back in the 90’s I have had the opportunity to ponder many of the issues raised in this discussion – too many thoughts to list here so I’ll attempt to offer a then and now comparison:The Situation in the 1990’s:1 – the established players (banks & CC brands) had a vested interest in it not working (they enjoyed control and per/transaction processing fees) and there was no visible threat to their dominance2 – the installed infrastructure did not support the move to cashless and it was much too expensive to replacea – high cost of issuing payment tokens (smartcards) to consumersb – high cost of replacing/retrofitting POS terminals to accept them3 – the merchants (generally) were satisfied with the existing payment methods4 – some technology challenges regarding security – generally having to do with ensuring the overall integrity of the system and to ensure that digital dollars couldn’t be minted. 5 – battles over control of the real estate (by this I mean control over which applications would be installed on the Smart-Cards (90’s application platform)6 – the internet was irrelevant at the timeThe Situation Now:1 – the established players still have a vested interest in the status-quo2 – the installed infrastructure still does not support the move to cashless but the effort and costs to do so are much diminished.a – a huge (and growing) portion of the population already has the payment token (mobile phone) interestingly containing the same technology as in the 1990’s (SIMs)b – NFC technology in phones and POS devices is available and relatively inexpensive – the mobile device can be both the consumer token and the merchant POS device3 – If the transaction can be simplified for both the consumer and merchant then merchants will be interested – simple transactions = more transactions4 – Potential security threats to electronic transactions has increased and much of the liability for these threats has been transferred from the banks to the merchants.5 – There are a new class of merchants on the web that didn’t exist in the 90’s6 – The mobile phone platform holds the potential for greatly improved transaction security (encryption and 2-factor and 3-factor authentication)7 – There are significant players who are positioned to mount a real threat to the established players – problem is, the best positioned (mobile carriers) don’t understand this business.In summary:I personally think the time is right for a move to more secure digital payment options including a cash replacement along with the current options (debit & credit). I believe that the mobile device is the key enabling technology and provides an almost ideal platform for the delivery of these services.

        1. fredwilson

          Great historical perspective thanks!!

  89. Jason Crawford

    I’m surprised–I lived in NYC for three years (2001-2004) and it always seemed to have a lot more cash-only than other cities.I think cashless will happen pretty soon, and it will happen on the phone–in part because payment cards are going touchless via RFID, and phones are going to have RFID in them in a few years.

  90. GetYourBizSavvy

    Great idea with the phone and the credit cards. You’re definitely right about being cashless. I went to a breakfast place the other day and it has people of all ages. The cashier said 60% of there customers pay with a card. I rarely carry cash. I also see it helping me from silly spending.

  91. howardlindzon

    but what if you are with me and I need 10 bucks?

    1. fredwilson

      i’ll venmo it to you. i’ve got your cell phone number in my phone.

  92. garywatts

    Things are maybe a bit different in the UK since a lot of stores are still reluctant to accept credit cards for transactions below £8.00. The stored value cards aren’t really catching on fast here either. I’m not really surprised because they expect you to pay something like £21.50 to put £20.00 on a card that I can use instead of cash, for shops that accept it, Unless you are heading out to a really scuzzy estate, I can’t see why anyone would I want to use this. (Am I missing something?) Anyhow Barclays new system that they are starting to roll out seems to have potential. Instead of using chip and pin for purchases below £15.00 you just wave the card at a kind of radio receiver. Now that’s got to be progress!

  93. Natacha

    I am a “cashless person” too and have been for many years. My debit card is my cash, I find it simple and efficient. I sometimes have a couple of dollar notes in my wallet, but never more than $5-$10 at a time, and this is for tipping purposes, at the gas station and etc. Before the US, I lived in a country where cash on you could get you killed, so I was forced into it a long time ago.

  94. FTower

    Interesting post Fred. You might want to check out Cardagin Networks ( a recent start-up that has a phone app for storing loyalty and rewards cards on the phone. – FT

  95. Guest

    I have often hoped that we would walk around without cash in our pockets. If this trend continues, petty criminals will be less likely to try mugging someone, money management is made easier and our everyday lives are simpler. Electronic money is definitely the way to go.On the other hand, a lot of investment needs to be done in avoiding identity theft and e-crime.

  96. jeremytasset

    Been cashless for months. Love it. I’m sure the hairband works fine but I use

  97. samfjacobs

    I just moved to Brooklyn. I’m making “Cash Only Sucks” t-shirts. It’s smug and pretentious. I’m with you, Fred. I hate cash.

  98. Jen Grogono

    Couldn’t agree more, Fred! I’ve been conducting my own cashless science project and, for the first time, was able to go completely cashless to NY this week on a business day trip. No hiccups. Train to/fr Newark via Penn Station, Amex in cabs (the best), restaurants. I suspect that a hotel stay would have caused me to fork over the typical $2-$3 tip here and there to hotel valet/doormen…

  99. Evan

    one of my frustrations living in Buenos Aires is the need to carry cash, but even so I don’t carry it very often. And most of the time it’s not businesses that make it socially awkward for me not to have cash; it’s the social convention to share the costs of meals, even if you’re visiting a friend in their house.btw, i like not having to guard my phone. if there’s enough people like me, the phone won’t evolve into the payment mechanism.

  100. Alan

    I like the hairband. I use a small binder clip.

  101. Hockeydino

    Screw that noise. Give me an app for my crackberry or Iphone, that combines all of my credit and debit card information. I then can swipe my phone, and pick and choose which account it goes to.Encrypt the hell out of that sucker – use voice recognition, or a thumb print, or some kind of bar code.

    1. fredwilson


  102. Oded H. Breiner

    I’ve been trying to be cashless for a few years now, at one point i even managed to put my cards inside my phone, under my battery cover. when having too little cards was impossible i bought a silicone cover for my phone and put the cards there. Fred- you can have an “sos” bill under your phone’s battery cover too.The reason i’m so hyped about the cashless society is because of the social implications. If cash is cancelled by law, crime will reduce significantly, stolen stuff will be alot harder to sell, including illegal stuff like drugs.The technical solution imo is an rfid chip inside the phone, it does not need battery and visa is already working on making an rfid card to be put inside a micro-sd card.

  103. ADstruc

    Fred – this blog post from ABC News on Tabbedout got me thinking about your post:…Now, I am just curious as to how they sell B2B.

    1. fredwilson

      yup. that’s the kind of thing we need more of

  104. markslater

    i’ve long wanted to go cashless. and i actually carry around an old money clip with similar plastic to you in it.i can see the developed world being cash free very quickly. The developing world not so.I was in Vietnam yesterday and there is just no way you can use a CC at any location other than your hotel – ok some restaurants in Ho chi mein yes – but generally its a no-no.The second problem was that i bought something and received change in cash that consisted of notes that they no longer offer or accept.That said – the developing world (countries in Asia that i know well like Vietnam and Indo) are mobile crazy. this will surely be the platform to cashless for these countries. They are already miles ahead on short code applications that provide for coupons and discounts.

  105. TanyaMonteiro

    257 comments, 100 reactions and counting – you hit a nerve! NYC way out there in the lead…….yet again.

  106. rhitu

    Thought of this post when I read the article –…you need them at the corner coffee shop mentioned

    1. fredwilson

      I use them. Works great

  107. Paul M

    Fred, I try to carry as little on me as possible. For the four credit cards, drivers license, and maybe one $20 bill I like this: http://www.saddlebackleathe…. Compact, looks great, wears like iron. Stop stealing your kid’s hair bands! No, I don’t work for them, but I do buy their stuff. Paul

    1. fredwilson

      I don’t steal them. I ask. And its a way to remember them every day in the minutia of my day

  108. Andrés Maier

    Fred, we are seeing a cashless trend in South America too.Last november, here in Argentina, First Data -worldwide POS & transactional data processor – has launched a mobile payment system by SMS. It allows credit card users to pay in stores nationwide with only their phones. The first credit card to launch it is the local Tarjeta Naranja with the service Naranja Mo. Here you can see the TV ad which shows people saying goodbye to their wallets. company Pax ( ) has created and developed this payment system, and we have a partnership with First Data to market it in south America.At this point we are seeing some steady and solid usage of the system, and users are growing daily. In the next weeks we are launching with the major banks their mobile payment system to, so we believe mobile payment will become -in a short time- mainstream here in Argentina.Great blog Fred.

  109. Steve Holden

    Visit Iceland. I’ve now been there four times for a total of almost a month and never acquired any local currency. You just don’t need cash.

  110. Caspar Aremi

    You can live in London cashless. Pretty much every shop from the local corner store to the largest supermarkets accept debit or credit cards. Travelling on the subway is easy, we don’t even swipe tickets, we have a contactless card called Oyster which you just swipe over the gate. Same for ‘topping it up’ or renewing a season pass, you just swipe it over a ticket machine, select what you want to do, swipe your credit card and you’re done. They’re also extending that to cover small purchases in stores so if you want to pay for a coffee or newspaper, you can just tap swipe the same card past a reader and you’ve paid. I love it!

  111. robertavila

    Cash may actually take on a degree of lurid romance about it, something which big wads of cash have always had, suggesting a degree of independence from the “system” and the glamor of mysteriously got gains. Similarly might we move to a time and place cash is not accepted or only received with suspicion.

  112. fredwilson

    i didn’t but the gotham gal did and she told me about it

  113. fredwilson

    i have one other secret weapon. a wife who carries cash 🙂