'The Power of Cash' in a digital world

Jay Zagorsky explores why physical money still matters for national security, financial health, and social justice.

Illustration by Fabrina Tiara

By Anna Fadiah and Hayu Andini

As societies move rapidly toward a cashless future, with smartphones and cards dominating our financial transactions, Jay Zagorsky’s new book, The Power of Cash, delivers a compelling case for why paper money still holds a vital role. Zagorsky, a senior lecturer at Boston University’s Questrom School of Business, uses years of firsthand research to explore what many now consider a relic—cash—and why it should not be dismissed so easily.

A shift in how we pay

Zagorsky’s journey into the power of cash began when he served as an unpaid adviser for a long-term research project conducted by the Federal Reserve Bank of Boston. The project, spanning from 2010 to 2018, analyzed American spending behaviors during a pivotal time when mobile wallets, tap-and-go cards, and contactless payments began outpacing the use of physical money.

In 2015, only 17.1% of Americans said they did not carry cash. By 2022, that number had climbed to 34.6%. For younger consumers aged 18 to 34, the change was even more dramatic: nearly half reported carrying no cash at all. ATM withdrawals followed a similar decline, peaking in 2009 at six billion before dropping to fewer than four billion by 2021.

Global attitudes toward cash

Despite this trend, the power of cash in a digital world still thrives in some parts of the globe. Japan leads developed nations in cash usage, with currency in circulation equal to 23% of its GDP. The United States lags behind at about 10%, while Sweden—often viewed as the poster child for a cashless society—uses physical money so infrequently that only 1.3% of its GDP is held in cash.

Germany, long known for its cautious approach to digital finance, maintains a strong relationship with cash. In a 2021 survey, just 4% of Germans said they didn’t carry cash, and nearly a third preferred it over digital options, despite widespread access to modern banking tools.

Why cash still matters

Zagorsky lays out three main arguments for preserving cash in his book: national security, personal finance, and social justice.

National security concerns

Cash, as Zagorsky sees it, represents a fail-safe in moments of crisis. In a cashless economy, financial transactions depend on electricity, stable communication networks, and secure computing systems. But what happens when any of these elements fail?

He poses hypothetical but plausible scenarios: a massive power outage, a natural disaster, or a cyberattack that paralyzes a country’s financial infrastructure. In these cases, those holding physical currency would be far better equipped to survive the initial aftermath, while others could find themselves helpless as digital systems crash.

Managing personal finances

Cash affects how we spend. Psychological studies show that people are more conscious of their expenses when handing over tangible money. Zagorsky notes that paying with cash triggers a sense of loss in the brain, promoting more careful decision-making compared to the seemingly effortless act of swiping a card.

Credit-card companies and retailers understand this dynamic and capitalize on it. By encouraging electronic payments, they subtly prompt consumers to spend more. On top of that, the data trail created through digital payments allows companies to manipulate pricing, often offering dynamic pricing that charges certain customers more based on their spending patterns.

Cash, by contrast, is anonymous and untraceable. This not only protects consumer privacy but also prevents exploitation by algorithms designed to maximize corporate profits.

A matter of social justice

The power of cash in a digital world also intersects with issues of equity and inclusion. Many people still operate outside of the traditional banking system—immigrants, the poor, and the elderly among them. For these individuals, cash is more than a preference; it's a necessity.

Zagorsky emphasizes that panhandlers, migrant workers, and unbanked citizens depend on physical money for daily survival. Tourists and recent arrivals, who may struggle to navigate digital systems in a new language, also benefit from the simplicity of cash. Additionally, authoritarian regimes can freeze bank accounts and digital wallets, but they can’t delete a wad of bills from someone’s pocket.

A look back at credit culture

One of the book’s more surprising anecdotes features astronaut Neil Armstrong, who in 1974—five years after his moon landing—was denied a Diners Club card for insufficient income. Zagorsky uses this story to highlight how rapidly credit has evolved. What was once an elite privilege is now available to almost anyone, with credit card offers pouring in even for those with poor credit histories.

The ease of obtaining credit has created a culture of instant gratification. Tech companies and financial institutions have optimized checkout processes to eliminate friction, store payment details, and minimize any moments that might cause second thoughts.

These “streamlined” digital experiences may appear convenient, but they have removed critical moments of financial reflection. By discouraging delay and encouraging impulse, the digital economy profits from speed at the expense of sound financial choices.

The interests at play

Zagorsky doesn't shy away from naming the entities benefiting most from the decline of cash: banks, tech platforms, credit card networks, and governments. These institutions are aligned in their interests. Electronic transactions generate detailed data, cut costs, and improve traceability. For governments, electronic payments are easier to monitor, tax, and regulate. For businesses, they mean fewer handling costs and greater spending.

But Zagorsky flips this argument. He notes that cash transactions eliminate the 2–3% fee merchants pay to credit card processors. In theory, that could translate into lower prices for consumers. Yet most merchants absorb the cost because the convenience of digital payments keeps customers spending more.

The human element

Zagorsky’s defense of cash isn’t purely utilitarian. He makes a more philosophical argument, too—one grounded in psychology, habit, and human connection. He suggests that cash promotes mathematical skills in children, fosters a sense of control over one’s finances, and even brings a bit of fun to everyday interactions.

He recalls the small joy of counting bills, budgeting with envelopes, or tipping a street performer with a few coins. These tactile experiences are quickly disappearing, and with them, a layer of financial self-awareness and engagement.

More than nostalgia

Some critics might see Zagorsky’s argument as overly nostalgic or romanticized. And indeed, there’s an element of “debate club conceit” to his defense of cash, as he acknowledges. But beneath the charm and personal stories lies a serious point: we are not yet ready to abandon cash entirely, nor should we be.

In an era of rising inequality, growing cyber threats, and shrinking attention spans, physical money offers a rare combination of resilience, privacy, and inclusivity. The Power of Cash is a reminder that even in a world racing toward digital convenience, there’s still value—literal and symbolic—in the money we can hold.