Editor's note: a version of this post was published on Harvard Business Review.
There is a widely held belief that the adage “cash is king” is especially true for those who have very little of it. Indeed, with news of stolen credit card data from the hacked cash registers at Target and of crypto-currencies, such as Bitcoin, enabling criminal activities, it does seem that plain old currency may have its advantages for all of us. And advocates for the poor often argue that cash is the most trustworthy payment instrument. The poor make their earnings in cash and make purchases in stores that deal primarily in cash. Lower income households have fewer connections with formal financial services systems, such as banks, credit cards, digital access or online payment systems. Likewise, for many small businesses, transacting in cash is often the preferred mode. A cash economy would appear to be the most inclusive relative to an economy with cash alternatives involving digital substitutes of varying degrees of sophistication and fee structures.
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