The boom of digital payment instruments that we are witnessing in recent years led some to question the current role of cash. In the US, the payments landscape is actively monitored by the Federal Reserve through the « Diary of Consumer Payment Choice », an annual survey of US consumers’ payment behaviours.
The results of 2015 study demonstrate that cash remains the preferred payment method, especially for small-value transactions. Furthermore, consumers who make the greatest use of banknotes are a heterogeneous group in which all age categories are represented, the most significant one being the 18-24 year olds. Indeed, 38% of them prefer cash.
Wendy Matheny, manager of market analysis with the Federal Reserve’s Cash Product Office (CPO), explains that the most surprising finding was that millennials show a preference for banknotes over P2P payment apps when transferring money to relatives. A recent experiment carried out in Ireland reached the same result, showing that even consumers that are used to digital products rely more on traditional money in specific circumstances.
According to the survey, 89% of US consumers carry banknotes regularly. The majority of people using other means of payment admitted keeping cash as a backup, for instance if their credit card is declined. About 39.5 billion US banknotes are currently circulating worldwide, and the demand for cash is expected to continue growing over the coming years.
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