With All the New Ways of Paying – Cash Is Still Popular

According to the Federal Reserve Bank of San Francisco’s 2015 Diary of Consumer Payment Choice, though consumers are using new methods to make payments, cash is still popular. It is interesting to note that cash remains the most frequently used consumer payment option. Based on the Fed study last carried out in 2012, cash was used in almost 1/3 of all transactions.

Cash Doesn’t Lose Its Popularity

Wendy Matheny, a co-author of the study and a manager at the Fed’s Cash Product Office in San Francisco notes that even though Silicon Valley says cash is no longer popular, in fact, consumers still use it. However, the other payment options are showing signs to become more popular than cash.

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Other Payment Options

The 2015 Fed study showed consumers preferred using cash 32% of the time. In 2012, consumers preferred cash more frequently (40%). This is conditioned by that fact that debit, credit, and electronic payments have become more widespread among consumers.

Debit and credit card payments together made up 48% of all transactions in 2015, which is up 6% since 2012. Electronic payments became more popular as well, growing from 7% in 2012 to 11% in 2015.

The study found out that cash was used more for purchases with small value. Electronic payments were used less often but for purchases with larger value and for bill payments as well. On the other hand, though online apps like PayPal and Venmo have grown in popularity, cash has grown 8% since 2012 with regard to gifts and transfer payments.

It’s worth mentioning that younger groups are keen on adopting new technology. Those aged 18-24 tend to use cash more often (38%) as compared to other age groups

Shaun O’Brien, a co-author of the study and a senior policy analyst at the San Francisco Fed’s Cash Product Office believes one of the reasons why cash is still popular is that it works well.

 

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