As you go out to shop for a fancy outfit or to get a can of your favorite soda, be it paying for your newly leased vehicle or its fuel. The mode of payment without a doubt will be a card, if you’re an average working-class folk rarely would you have cash lying around, chances are even less if you’re a millennial or are in your 20s.
Remember the last time you were splitting the bill with a friend, and you noticed the card they’re using and discussed what benefits they’re getting. It’s very rare to find a card that doesn’t give you almost ubiquitous benefits like complimentary lounge access and 1% cashback points(or more).
But if you and I are going out and paying the same price for the same thing at the same place, and you’re paying via a card which would give you up to 6% cashback(yes, certain cards do give this kind of returns for certain merchants) and I’m paying cash, ain’t I the idiot. Or rather where is this free money coming from, is your bank super generous?
Nope, you’re paying for it yourself. All prices in store are marked up assuming that the payment gateways charge of 2–3% when the customer buys something for $100 and uses their Amex to pay for it the store usually just gets 98–97 from that 100. And you might get back the 1.5 bucks for 3 dollar transaction fee that was just deducted(when reaching the shop owner). And you will praise the card, wow this is so cool, had you used cash you would have not got back the 1.5 bucks, though small, when your monthly card bill is around 1500 dollars per month in a year you would be accumulating points worth around 270 dollars. Wow! That would easily get you those new AirPods Pro.
So when you’re getting handsome amounts of points back, and the ease of not having to manage those change and expense management: Then why would anyone ever use cash? That’s a totally right question.
But where will it stop, people will keep on relying on these digital modes of payment, and we (unknowing) will be paying for the cost of it. India’s UPI shows a huge potential for this, which soon might span to countries like UAE and Singapore.