NEW REPORT: Cash Holds Firm Against Rising Digital Dollar

Despite the flurry of new payment options – mobile wallets, wire transfers and credit and debit cards, among others – cash is continuing to sit atop U.S. consumers’ wallets. Based on PYMNTS’ most recent research, the narrative that cash is dead or in decline is overhyped.

The role of cash in U.S. economics has remained steady for the past decade, with few changes observed during this time. And based on historical and projected data, PYMNTS forecasts that U.S. cash share will represent 11.2 percent of the nation’s GDP by 2021.

In 2018, cash continues to be the most-used payment method, with consumers choosing it over debit or credit cards for day-to-day purchases.

Small value purchases are the most popular type of transactions that consumers make using cash. According to a Fed spokesperson, about two-thirds of U.S. consumers said they prefer to rely on cash to make payments on purchases valued at $10 or less.

Key Findings in the Global Cash Index: U.S. Edition

The U.S. used over $2.3 trillion in cash in 2015.

Cash share in the U.S. in 2016 accounted for 12.6 percent of the nation’s GDP.

PYMNTS forecasts that U.S. cash share will represent 11.2 percent of the country’s GDP by 2021.

Mobile wallets are, at least so far, not cutting into cash’s influence in the retail market. PYMNTS found the most popular mobile wallet is Walmart Pay, which was only used for 5.9 percent of retail purchases in late 2017.

And as the eCommerce market grows, so too will competition for cash – online sales generated over $360 billion in 2016, and is expected to grow to $638 billion by 2022.

Cash Still Thrives in the Era of Digital Dollars

The availability of newer digital payment solutions could very well have spelled the end for cash. But to date, new payment methods have struggled to unseat cash from the payments throne.

According to the Boston Federal Reserve Bank’s most recent “Diary of Consumer Payment Choice” (DCPC) study, cash was still the most-used payment option in terms of overall volume. The DCPC study found that most consumers pay with cash (31 percent) while other payment methods lag behind, including debit cards (27 percent) and credit cards (18 percent).

In a recent interview with PYMNTS, Claire Greene, payment risk analyst for the Federal Reserve Bank of Atlanta, discussed what the Fed’s DCPC study has revealed about U.S. consumers’ cash preferences and spending habits.

“Consumers rate cash highly for convenience, cost, setup and acceptance for payment,” Greene told PYMNTS. “And research shows that these ratings are a factor in payment instrument choice [for] both adoption and use.”

Download the report for more insights into how and why cash still thrives in the U.S.

About the Index

The Global Cash Index, a Cardtronics collaboration, focuses on the use of cash for making payments and as a payment method that equally plays a role with cards, checks, direct debit and other methods of settling up between consumers and businesses. Unlike most reported estimates of cash, our proprietary data analysis focuses on the use of cash for making payments rather than hoarding.