Even as credit and debit cards become more popular and new payment methods like mobile wallets enter the scene, the world’s largest economy still relies on cash more than any other payment method.
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.
Cash usage has remained relatively steady in the states since 2003, ranging between 14.3 percent and 15.5 percent of the gross domestic product.
But, while cash continues to be the most used payment method in the U.S., its relative importance is decreasing, according to the U.S. Federal Reserve’s Survey of Consumer Payment Choice. Cash usage fell from representing 40 percent of transactions in 2012 to 32 percent in 2015, the study found.
Here are some other key takeaways from the new PYMNTS.com Global Cash Index™ United States Analysis:
- In 2015, Americans spent a total of $2,359 billion in cash and $5,527 billion with cards.
- Cash usage in the U.S. is still higher than in Western European countries. In 2015, cash usage in the U.S. represented 13.1 percent of its GDP, whereas at the same time, it represented 7.7 percent of GDP in Finland, 7.1 percent in France, 7.4 percent in Netherlands, 5.6 percent in Sweden and a mere 4.5 percent in Switzerland.
- We estimate that cash share in the United States will represent 11.7 percent of its GDP in 2020.
The PYMNTS.com Global Cash Index™ United States Analysis also features an interview with Mike Kaplan, senior vice president of business development at cash bill-pay service PayNearMe. PYMNTS recently caught up with Kaplan to find out more about why consumers are consistently choosing cash, even with more options than ever before, and the future of the physical payment method.
He said that despite new payment methods, consumers are eager to pay for even larger transactions, like utility bills, with cash.
“There’s a perception that consumers either can’t or won’t pay their bills in cash. But families earning less than $25,000 use cash for 48 percent of their transactions, and those who earn between $25,000 and $50,000 use it for 33 percent of transactions,” Kaplan said. “So that equates to roughly 45 percent of households who are using cash for at least a third of their transactions, and that’s a huge market, and the lack of services to pay bills with cash is a relatively big problem.”
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About the Index
The PYMNTS.com Global Cash Index™, a Cardtronics collaboration, focuses on the use of cash for making payments and as a payment method that equally plays a role with cards, checks, direct debit and other methods of settling up between consumers and businesses. Unlike most reported estimates of cash, our proprietary data analysis focuses on the use of cash for making payments rather than hoarding.