The notion that “cash is king” when it comes to how we pay for things and like to be paid ourselves has outlived its time, new PYMNTs research shows.
How We Will Pay 2020, a study conducted by PYMNTS and Visa, found that cash usage is a fraction of what it used to be given the modern, digitally connected economy. The report, which surveyed more than 9,500 U.S. consumers, also found that the pandemic has only accelerated cash’s decline, as consumers have shown a growing preference for touchless commerce.
A staggering 80 percent of respondents said they were interested in new digital experiences because they could reduce perceived COVID-19 exposure through such things as contactless commerce and avoiding cash. The study also found that the typical U.S. consumer currently goes to an ATM to get cash fewer than four times a year.
The findings, based on surveys conducted over seven days in August, represent stark findings on how cash’s historic dominance in commerce has all but disappeared.
In fact, the only exception the study found is tipping, which many consumers still do with cash. Some 48 percent of consumers said tipping was actually the main reason they still carry cash. However, the number of consumers who carry greenbacks now is 11 percent lower than 2018.
Merchants Take Note
Consumer preference for cashless transactions shouldn’t be lost on merchants, who would ignore the trend at their own peril.
In fact, a PYMNTS study found that more than a third of consumers making buying decisions factor in what payment options a merchant offers. For example, 33 percent of retail shoppers favor contactless card technologies for their in-store purchases.
And cash comes in only third place among payment methods favored by those open to trying new connected commerce experiences, like stores equipped with sensors to ring up purchases as customers take things off of shelves.
Just 21 percent of such consumers said they would use cash for such connected commerce, compared to 51.6 percent who would use credit cards and 45.5 percent who would employ debit cards.
Surprisingly, a higher share of bridge millennials (23.1 percent) favor cash for such transactions, but only 18 percent of “superconnected” consumers feel the same way.
The Way Forward
The permanence of some of these shifts is impossible to predict, particularly as consumers gradually feel more comfortable re-engaging in the physical world.
However, the How We Will Pay report concludes that at least one trend appears to be long-lasting: Consumer dependence on connected devices and tools that enable cashless payments is here to stay.
From restaurants to retailers to service providers, the days of simply accepting cash or credit cards are over.
While adapting to the digital shift had previously been something for merchants to consider, the pandemic’s many ramifications have made it a top priority for all retailers.
If letting go of cash is a survival mechanism for merchants, then delivering the personalized and seamless transactions that consumers now expect across all channels appears to be a move worth making.