Allpoint Blog

The Never-ending Study of Cash

Almost as quickly as an ATM dispenses several $20 bills, numerous studies released in the last few months have confirmed that in the United States cash is far from dead or even dying.  In fact, it's alive and occupying space in wallets and pockets all over the country, according to the Federal Reserve.
Study of Cash

For example, let’s take a look at two such studies that were released toward the end of 2016:  Cardtronics’ 2016 Health of Cash study and the State of Cash:  Preliminary Findings from the 2015 Diary of Consumer Payment Choice, a study done by the Cash Product Office of the Federal Reserve. 

Here are some of the findings common to both studies:

  • Cash is the most frequently used form of payment
  • Cash users are a diverse group of people
  • Cash is used in a wide variety of situations
  • Cash dominates small-value payments

Voted Most Popular

First, cash’s popularity was examined by each study but from two different perspectives.  The Cardtronics’ 2016 Health of Cash Study asked about cash use, and 89 percent of respondents reported using cash in the past six months at a brick-and-mortar store.  On the other hand, the Federal Reserve study looked at the number of consumer transactions – including those done online – and found that 32 percent were made with cash, outranking debit and credit cards, checks and other methods such as mobile wallets.

Regardless of the two different perspectives, the conclusions were the same:  cash is the single most popular payment method.

Diverse Users

As far as what age or economic groups prefer cash, conventional wisdom did not apply in either study.  For example, the common assumption was that because millennials and those younger are tech-savvy, they would be all about Apple Pay and Venmo.   On the contrary. 

Cardtronics found that 55 percent of millennials used cash and a digital payment app in the past six months, and that 31 percent reported using cash more frequently now than they did in the previous year.  In the same vein, the Federal Reserve study revealed that “those in the 18 to 24 years category included the largest share of people who prefer cash, at 38 percent.”

On the other end of the spectrum, the Federal Reserve study also found that among those ages 45 and older, at least 30 percent of their payments were made with cash.

Choices, Choices, Choices

Both studies also reported that cash was one of a number of payment methods used that included debit and credit cards, checks and mobile wallets and other digital methods.  Cardtronics found that it’s the ability to choose among this blended mix of payment options that consumers especially embrace.  In our study, 91 percent of consumers said they like the ability to pay with a variety of methods.

The Federal Reserve study picked up on another type of variety:  the merchant category or spending category where consumers use cash.  The categories they looked at were diverse:  from gifts and transfers to people, to purchases for food and personal care items and entertainment and transportation.   

What did the Federal Reserve determine?  “Cash is the most used payment instrument in six of nine merchant categories.”

It’s the Little Things

A fourth area of similar findings between the Cardtronics and Federal Reserve studies is the connection between the use of cash and the dollar value of transactions.

The Cardtronics study found that 80 percent of people use cash for low-expense items and use other forms of payment for more expensive items.   Specifically, 72 percent use cash for purchases under $10 and 54 percent use cash for purchases under $20.  Again, the Federal Reserve had similar findings:  Cash was used for more than 50 percent of purchases under $25, and for more than 60 percent of purchases under $10.

However, the Federal Reserve went even further and examined whether the use of cash for inexpensive purchases was driven by merchants’ non-acceptance of cards or minimum purchase requirements.  Based on information from participants in its study, the Federal Reserve concluded, “Consumers are using cash for small-value transactions out of convenience, not merchant-specific pressures.”

The Bottom Line  

No matter how you measure it or what your perspective is, cash continues to be in play – and to be a big player in today’s blended mix of payment options.  But, despite that fact, one thing is for sure – the payments pundits will keep questioning the status of cash.   

Watch our blog for future reviews of those results.

Tom Pierce
Chief Marketing Officer 

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