The Cost of Cash in the United States

September 1, 2014

The central inconvenience of money is its very physical manifestation.

The use of cash imposes costs on households, businesses and the government alike throughout the cash lifecycle. The cost of cash for households is estimated to be over US$100 billion a year with ethnic minorities and the self-employed using more cash than the average. The cost of cash to the business sector is estimated at US$80 billion a year; and small businesses are especially at risks as a result of theft, pilferage and robberies. The cost of cash to government in the form of tax revenue forgone is estimated to be in the range of US$75 billion to US$188 billion. Even if only a fraction of this amount can be recovered by reducing the cash economy, it would make a huge difference to the government’s fiscal health on a sustainable basis.

Part of a larger global study by The Fletcher School at Tufts University’s Institute for Business in the Global Context (IBGC), this report seeks to as¬certain the private costs and risks of cash management facing stakeholders in the American economy: consumers, firms, the government, and also financial institutions.

 

US Cost of Cash Infographic

 

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