Credit card companies dream of a cashless world — what that would mean for you

Cash could become a relic of the past if credit-card companies have their way.

Visa V, -0.10%   announced Wednesday that it will grant up to $10,000 to 50 restaurants and food vendors who stop accepting cash in favor of credit cards, debit cards and mobile payments. “We’re focused on putting cash out of business,” said Visa’s Chief Executive Al Kelly, at the company’s investor day in June.

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Some restaurants have already stopped accepting cash. The salad chain Sweetgreen announced in December 2016 it would gradually stop accepting cash at all of its locations in New York, California, Illinois, Pennsylvania, Maryland, Virginia and Washington, D.C. throughout 2017. In Boston, state laws require businesses to accept cash payments, so Sweetgreen’s locations there will accept it.

But many consumers still resist the idea of a cashless world, whether it’s because of fears about “Big Brother” banks and governments tracking their spending, or because individuals want to keep their transactions under the table.

Despite the rise of credit cards and payment apps, the amount of cash in circulation in the U.S. continues to grow, according to the Federal Reserve. There are currently some 39.8 billion bank notes in circulation, up from 25.6 billion in 2005.

Banks have made it easier for people to access their cash. Consumers made some 5.8 billion withdrawals from ATMs in 2015, the exact same amount as they did in 2012, but the average amount consumers withdraw during one transaction actually rose from 2012 to 2015, from $118 per transaction to $122, the Fed found.

Some experts predict the love for cash may not last as they opt for credit-card and mobile payments. U.S. consumers spent some $2.1 trillion in cash transactions in 2016, but that’s forecasted fall to $1.9 trillion in 2021, according to the market-research firm Euromonitor International.

Here are two pros (and two cons) of a cashless world:

Using cash may help you avoid debt

Going on an “all-cash spending diet” is a popular way for consumers to budget and over-spending, by putting a set amount of cash aside, sometimes in envelopes, for specific purposes such as food and entertainment.

“Cash forces you to be physically involved in the repercussions of your transaction,” said Janessa Jackson, a 28-year-old who has tried a “cash diet.” “You hand the money over and you receive less back. Swiping does not hold you accountable in the moment.”

Others still find it useful to use debit and credit cards, which allows them to keep a paper trail of where they may be overspending. There are also apps that track spending and can point out patterns, but they can’t do that analysis on cash spending.

…and cash may keep store prices down

Credit-card companies typically charge merchants between 1% and 3% in processing fees for each transaction made on their cards.

But it’s “a contentious point of debate” among the merchants, card issuers and networks whether those processing fees actually make products more expensive for consumers, said Kendrick Sands, a senior consumer finance analyst at Euromonitor International. Card networks recently have provided merchants with consumer-spending data that could make their businesses run more efficiently, therefore saving them some money, which can help keep costs down, he said.

Keeping cash in circulation is expensive because governments and banks must pay to produce and store cash, and consumers sometimes lose dollar bills or have them stolen, said Mark Ranta, the head of digital payments at ACI Worldwide ACIW, +0.89%  , a payment systems company, who obviously has a vested interest in people going cashless.

Most businesses already have credit-card fees factored into the price of their products, and they have for many years, said Matt Schulz, a senior industry analyst at the credit-cards website CreditCards.com.

But credit cards are cleaner

Do you know where your greenbacks have been? In May 2016, a store in Kentucky called Tobacco Road announced it would no longer accept cash that patrons pulled out of their bras or socks, stirring up Internet discussion about how disgusting it is to handle sweaty money.

That wasn’t the first time people raised concerns about germy dollars. Cash is made of cotton and linen, materials that make it easy for bacteria to grow, according to a new report about $1 bills in New York City. Researchers from New York University found traces of cocaine, feces, acne agents and dog spit on those bills. Plastic carries less bacteria, they found.

…and cards come with rewards and guarantees

In recent months, major banks and credit-card companies have competed to offer better rewards, marking what some have called a “golden age” of rewards points. Some of the most popular premium cards are Chase Sapphire Reserve credit card JPM, -0.93%   and American Express Platinum AXP, -0.07%  , both of which come with a large sign-up bonus.

“It’s money in your pocket you wouldn’t otherwise have,” said Kimberly Palmer, a credit cards expert at the personal finance website NerdWallet. But only if you pay off your monthly statement on time: “The benefit comes as long as you can program yourself to make sure you either automate your payments or do it manually, but not letting it go,” she said.

Many credit cards come with additional perks including customer service that will negotiate for incorrect charges, Ranta said. Some even come with price-matching, when cards will offer refunds to consumers if they find the same items they already paid for, at lower prices later.