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Newsroom

Never mind what you heard; millennials use cash

Mark Ellis

Dec. 9, 2016 | by atm Atom

You have probably seen headlines declaring something like, "Young Americans Hate Cash." However, the truth is quite the opposite.

Millennials use more cash than anyone else.

According to the Federal Reserve Bank of San Francisco's 2015 Diary of Consumer Payment Choice, released Nov. 3, Americans between the ages of 18 and 24 used cash in 38 percent of all payment transactions last year.

Many "death of cash" stories reference often-unscientific online surveys that rely on participants' preferences and memories.

By contrast, the Federal Reserve Bank collects data for the Diary of Consumer Payment Choice from a carefully selected, nationally representative sample of U.S. consumers who are instructed to record information for every payment transaction made over a three-day period.

In addition to its revelations about cash use by millennials, the Federal Reserve report shows that cash still outstrips every other payment method —  debit, credit, personal check or digital device — with a use rate of 32 percent by Americans as a whole.

Primary uses for cash in the report included person-to-person payments such as gifts and fund transfers, government transactions (75 percent) and nonprofit transactions (40 percent).

Additionally, cash was the primary method of payment in 39 percent of transactions involving food and personal care supplies, vehicle-related expenses, and entertainment and transportation.

The media have paid a great deal of attention to predictions about the end of cash and the promotion of credit, debit and digital transactions.

The further expansion into the payments market by players such as PayPal and mobile apps such as Venmo, along with the introduction of ApplePay, AndroidPay, Samsung Pay and a multitude of other digital wallet-style payment options could be part of what is feeding the tendency to dismiss cash as the relic of a bygone era.

But the fact remains that more than two-thirds (69 percent) of U.S. consumers still carry cash.

The Fed report includes other interesting facts about cash, as well. For instance:

  • cash remains the preferred payment option for low-income Americans (those whose income is less than $25,000 annually);
  • cash is also the top payment instrument for Americans with annual household incomes of $50,000 or less;
  • cash is the second most used form of payment for households with an annual income between $50,000 and $100,000; and
  • cash maintains a solid rate of use (between 23 percent and 25 percent) in households with an annual income of more than $100,000.

The bottom line: Everyone uses cash.

Despite reports — whether from consumers or the media — cash is far from being a dead payment method. It continues to be a healthy part of a growing payments ecosystem and a standby for many when it comes to situations involving smaller payments, emergencies and disasters.

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