The growing adoption of digital payments is changing how frequently consumers carry and use cash. As mobile apps and online services increasingly integrate payments directly into everyday activities, consumers can complete purchases without reaching for their wallets. Ride-sharing services, entertainment bookings, and other digitally enabled transactions are making electronic payments a routine part of the customer experience.
Despite these changes, cash remains an important component of the payments ecosystem. Research into consumer cash usage reveals that many Americans are carrying smaller amounts of physical currency and relying more heavily on electronic payment methods. However, the declining need to carry cash regularly does not eliminate the importance of convenient cash access, particularly for unexpected purchases, person-to-person transactions, and emergencies.
How Digital Payments Are Changing Consumer Cash Usage
The widening prevalence of integrating the transaction into the experience, such as with using the Lyft ride service, or when remotely prestaging a transaction, such as buying movie tickets in advance with Fandango, the practicality of being purely cash and carry is more difficult. Electronic payment is the sole way of conducting these commercial endeavors. If the transaction aspect of an “event” has already been taken care of, or is being handled in the context of the situation, the opportunities to use cash are been limited, leading to less need to carry cash.
Overall, 50 percent of respondents said they carry cash with them less than half of the time they are out. When they do carry it, 76 percent say they keep less than $50 on hand and nearly half say they keep less than $20.
Why Cash Access Remains Important in a Digital Payments Economy
But cash will still fill a vital role as it acts as a hedge against the unforeseen opportunity or the emergency. Electronic payment availability is not ubiquitous. And there are situations where folks conduct person to person transactions with people they have just met where cash may be preferred. If folks are carrying less cash, as the study indicates, being able to access cash when needed will be important to these same people. Please see our upcoming 2017 ATM Benchmark report for further discussion.
Changing consumer cash usage patterns reflect the increasing convenience of digital payments. As more businesses integrate payment capabilities directly into their services, consumers have fewer reasons to carry substantial amounts of physical currency. Transactions that previously required cash or an in-person payment can now be completed electronically before a service is delivered.
The survey findings suggest that consumers are becoming more comfortable carrying little or no cash during their daily activities. However, carrying less cash does not necessarily mean consumers are abandoning physical currency altogether. Instead, cash is increasingly serving a more situational role, particularly when electronic payments are unavailable or impractical.
This shift creates important considerations for financial institutions and ATM operators. Consumers who carry smaller amounts of cash may still need reliable access to withdrawals when unexpected circumstances arise. Maintaining convenient ATM access can help ensure that consumers have payment options when digital transactions are not possible.
As electronic payments become more deeply integrated into everyday commerce, the relationship between cash usage and cash access continues to evolve. Although consumers may rely less frequently on physical currency, the ability to obtain cash quickly and conveniently remains an important part of a flexible and dependable payments system.
Overview by Joseph Walent, Associate Director, Customer Interactions Advisory Service at Mercator Advisory Group
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