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Paper money is somewhat of a dinosaur in current times. Many current payment routes are already closed to cash, with a preference for on line, credit or debit card or cheque payment being the preference. In fact the humble cheque is also in decline with many businesses in the UK now indicating that they will no longer accept them as a means of payment.

The cost of production of paper money has of course increased over time, from simple wage increases and production costs and of course the continuing battle to make such money harder and harder to counterfeit. This in itself is one reason why a Government may wish to promote cashless transactions. The other option is to make larger coin denominations and this has also been seen in the UK, replacing the smaller paper money values with one of metal.

This means the note or bill is already reducing in commonality, lower denominations now being in coin and more and more businesses preferring other means for payment. As this process continues there will be less and less paper money in circulation.

Another reason why paper money will reduce in quantity and popularity is the shrinking world. It is much easier for all to simply use one's credit card when spending abroad, letting the card company perform the exchange rate within it's own system, as opposed to queuing up at an exchange bureau or arranging in advance for your foreign currency.

Something else that may make authorities and Governments wish for less paper money to be available is that it supports the black economy. It is much harder to carry out hidden transactions without a traceless medium such as cash. Many businesses are willing to do work for you and accept cash as payment and reduce the overall cost of the work by taking off a tax element. This means that tax revenue is reduced and all Governments look for ways of reducing such transactions.

For the demise of paper money to be a success, banks will have to find an alternative. Merchant accounts for those businesses currently taking credit cards as payment are charged for this per transaction. Unless some sort of card is developed for such small transactions an impasse will exist as businesses will not wish for charges to be levied on small transactions but they will not want to accept cash either.

However, it is already possible to make on line payments on the move as many mobile phones now easily access the internet, perhaps this will be the medium that will be developed and you simply pay for your morning paper and coffee using your mobile phone.

Learn more about this author, Mike Mccarthy.
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