In a world obsessed with the digital future of money, cash can be a pretty easy thing to overlook. That’s of course, unless one is talking about fighting and winning the war on it.
But for nearly 10 percent of American consumers who use cash as their primary method of payment,cash isn’t irrelevant so much as it is their once and future payments king. And while cash represents only about 14 percent of the transaction value in the U.S., it drives 40 percent of all payments transactions — since cash tends to dominate low-dollar transactions.
That can make cash-related innovation sometimes easy to overlook in a country that is moving forward digitally with great alacrity. Which also makes cash innovation disruptive, when targeted at a pain point that cash-centric consumers have
Although cash continues to be a major form of payment in retail transactions, data on the use of cash are challenging to obtain. Research at the Richmond Fed has exploited a large dataset of cash, check, credit card, and debit card transactions at a nationwide retail chain to examine consumer payment choice based on transaction size and location, day-of-week and day-of-month cycles, and longer-term trends.
The majority (75 percent) of point of sale payments made in the Eurozone are cash transactions, despite the wide availability of digital payment options including mobile, the European Central Bank (ECB) revealed.
While payments innovations may create buzz in the U.S. market, cash remains decidedly low-tech and top of the payments heap. According to PYMNTS research, cash usage in the U.S. has been on a stable course the past few years, hovering between 14 and 15 percent of GDP since 2003.
Studies consistently show the hype of cash decline to be inaccurate and wildly overpromoted. Despite the continued growth in alternative payment options, consumers still rely on cash as their primary payment resource for gifts, food, personal care, automotive, entertainment and transportation services. But, with so many “more convenient” options available, why do people continue to rely on currency?
According to research revealed inside the new PYMNTS.com Global Cash Index™ United States Analysis, while there may be a recent onslaught of payment cards, digital wallets and contactless payments, nothing has come close to replacing cash in the U.S.
Amazon is open for business for cash-only customers — via 10,000 physical locations where a consumer can deposit cash directly into their Amazon balance.
In an announcement made on the company site yesterday, Amazon said the new service allows customers to add “cash to their Amazon Balance at thousands of participating convenience, grocery and drug stores, by purchasing and automatically claiming an Amazon.com Gift Card to your account.”
The global ATM market, valued at $12.5 billion in 2015, will register compound annual growth of 9.8 percent over the next half-dozen years to top $26 billion by 2023, according to research by Global Market Insights Inc.
Developing economies will play a prominent role in growth, thanks to the drive toward financial inclusion in nations such as India.
Additionally, entities such as the U.S. Federal Reserve, reserve banks and the European Union will create standards to reduce fraud, which will boost ATM industry size, according to the report, “ATM Market Size By Solution: Industry Analysis Report, Regional Trends, Application.”
The “expense” and social costs of cash are currently the new arguments for the war on cash. Headlines tout the recent Tufts University study that “cash costs 200 billion a year to the US taxpayer” or a similar British study that asserted cash is more expensive than credit cards for retailers. Certain central banks are using this reason for actively discouraging the use of cash, saying “it is costing the government ‘x%’ in GDP.”
Take control of your money and improve your life.
Join our Withdraw Cash Wednesday campaign and receive timely reminders and tips to take control of your money by using cash.