The Fed’s cash diary survey collects data on consumer shopping and payment behaviors and is conducted annually. The report said that during the pandemic cash use may have reached its lowest point. The pandemic accelerated the use of digital payments in all industries and has since remained a trend, although cash use has up ticked in the past year.
As the use of cash declines, the use of debit and credit cards increased. While the initial shift to online payments may have been driven by necessity, consumers in 2021/22 may have become accustomed to making and to enjoying the benefits of ordering online and these habits seem to be sticking.
Other forms of payments, like peer-to-peer payments mobile apps have nearly doubled and use of cash dropped below 50%. Only households with incomes less than $25K didn’t change their payments behavior and continue to use cash for most of their transactions.
There is a shift in how consumers are paying. The shift comes as more payments options are made available. The biggest percentage declines of cash use were for those consumers between 18-24 years old, where adoption of new payments technology is higher.
For merchants, this shift in payments means less cash flow, more credit card processing fees, the need to adopt new forms of payments, and invest in new technology.
As you navigate through the current economic and payment changes, you can count on us to help you achieve your goals and continue to succeed in your business.