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ROCKVILLE, Md. — Even in the digital age of virtual wallets, ecommerce, mobile payments and online banking, cash is still king, a new report from market research firm Packaged Facts found.
According to U.S. Consumer Payments Outlook Through 2020, 79 percent of consumers made monthly cash payments despite the wide range of plastic and virtual alternatives in 2016.
The report found that a wide variety of Americans prefer cash, and even those who prefer another payment option still use cash frequently. Interestingly, tech-trendy millennials comprised the largest share of consumers who prefer cash at 36 percent. Nearly a quarter of every other age group selected cash as their primary preference.
Among the primary motivations for using cash include: debt management, privacy and security, as well as avoiding payment/card fees. Conversely, less than 10 percent of Americans use cash because they cannot qualify for credit.
Cash is often favored for its versatility and convenience, especially for specific uses like person-to-person monetary transfers and small-venue transactions. The average value of cash holdings, or the amount of cash a person is carrying with them, has also grown, Packaged Facts found.
According to Packaged Facts’ latest report, cash is among the most used payment for:
- Gifts and transfers to people;
- Government and non-profit purchases;
- Food and personal care supplies; and
- Auto- and vehicle-related purchases.
“Even more so than checks, cash is confined to the physical world. Consumers do not use cash for online or automatic bill payments or online non-bill payments,” stated David Sprinkle, research director for Packaged Facts. “It may be faster to swipe or tap a card. It’s arguably easier to press a button on your cellphone or keyboard. But cold hard cash still has its place, and it’s an important one that consumers not only use but also trust.”
Despite these figures, cash is facing two notable challenges. The first is that consumers are making fewer small dollar payments with cash. The market research firm estimates that cash is used for more than 50 percent of transactions that are under $25 and for more than 60 of purchases that are less than $10. The second is credit cards. When asked what payment instrument they preferred if their primary option was unavailable, 55 percent of people who prefer checks, debit cards or credit cards chose cash.
Packaged Facts’ U.S. Consumer Payments Outlook Through 2020 emphasizes a 2007-2016 survey trending of consumer payment usage and behavior, segmented by payment instrument, method and demographics. More information on the report is available here.