Plastic and electronic payment methods are increasingly threatening to topple greenbacks.
Currency’s reign as the payment instrument of choice in the United States may be coming to a close as plastic and electronic payment options threaten to topple greenbacks. With 40% of Americans admitting they only carry $20 or less in cash at any given time, the days of paper beating out plastic aren’t over, but they’re dwindling.
That 40% figure comes from a study conducted by Bankrate last year that concluded the use of cash as an everyday payment option of choice is on the decline. That study, in fact, showed that about 9% of Americans don’t use paper at all, opting instead for a variety of payment options that have emerged in recent years.
The trend away from cash was also evidenced in the Diary of Consumer Payment Choice study conducted in October 2012 by the Boston, Richmond and San Francisco Federal Reserve Banks. The banks found that cash is still the most commonly used payment option with 23 out of 59 transactions involving currency. The catch, however, lies in the value of those transactions. Cash, it seems, is most frequently used for buys around $10 or under, such as a morning cup of coffee.
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Bankrate’s 2014 study offered other eye-opening insights into Americans’ wallets. Researchers found that more than two-third of consumers say they carry $50 or less on a regular basis. They also found that of those who earn $75,000 or more, only about 6% say they carry more than $250 in cash on a regular basis. The number, however, is up from the 2% figure for the overall population.
Cash’s decline for all but relatively small purchases is attributed to a number of factors, including security and the ease of which other payment methods can be used. While credit and debit cards have long provided an alternative to cash, other options such as Apple Pay, PayPal and Google Wallet have come onto the scene in recent years.
It is estimated that about 14% of American households have linked their credit cards to Apple Pay, enabling point-of-purchase payments straight from their smartphones. Some 173 million people actively use PayPal, which enables an alternative to traditional cash or credit purchases. That option is commonly used to help make online transactions and peer-to-peer transfers more secure.
While the cash value of cash transactions is on the decline courtesy of plastic and electronic options, experts don’t believe paper is going to disappear entirely any time soon. Even so, when the question of what’s in person’s wallet arises, chances are the answer won’t be cash or at least not a lot of it.
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