The End of Cash? Businesses--and even some countries--are moving toward eliminating the use of cash, a trend that worries some economists and privacy advocates.

• Author: Stoffers, Carl
• Position: ECONOMICS

During lunchtime in New York City, the line at salad chain Sweetgreen stretches out the door. It moves quickly, though. Instead of opening up their wallets, counting out their money, and waiting for change, customers just swipe an app on their phones. They can't pay with cash even if they want to because Sweetgreen no longer accepts it.

"It took some getting used to, but I don't mind now," says Lori McGuire, a 22-year-old student. "The line moves much faster, and I'm in and out quicker."

Cash is rapidly going the way of the horse-drawn carriage and the typewriter, as people and companies turn to apps and other digital types of payment to conduct business. That Uber you take home after soccer practice? No wallet necessary. Amazon's new bookstores? Apps or plastic only, please. Even Walmart, the world's largest retailer, is trying to push its customers to embrace digital payments at its stores. And there are entire countries moving toward going cashless--an idea that would have seemed unthinkable 10 years ago. But the trend is sparking debate among economists and privacy advocates.

"The conversion to [a cashless] economy will take time, and it's not going to be simple," says Bhaskar Chakravorti, an economist at Hifts University in Massachusetts.

Discouraging Tax Cheats

Alternatives to cash are nothing new. In the 1920s, oil companies, hotel chains, and department stores began issuing credit cards to customers for purchases made at their outlets. In the 1950s, Diners Club became the first of many credit cards that could be used at most businesses. Today, the rise of debit cards, mobile apps like Venmo, Apple Pay, e-commerce, and digital-only currencies such as Bitcoin is accelerating the move away from cash. (To understand how Bitcoin works, watch our video.) According to a Federal Reserve Bank study, cash payments now make up only onequarter of all transactions in the U.S.--down from 36 percent five years ago.

Going cashless has some obvious benefits. It's more convenient to swipe an app to pay for something than to go to your bank, withdraw cash, use it at a store, then go back to your bank for more cash. Electronic payments also create an instant record in case there's a dispute, and it's safer to carry around a password-protected phone than a wad of cash.

Governments like electronic payments because they discourage cheating on taxes: If everyone's spending and earnings were recorded to the penny, the I.R.S. (Internal Revenue Service) could...