Cash Continues to Play a Key Role in Consumer Spending: Evidence from the Diary of Consumer Payment Choice

This paper explores where, how, and why people use various payment options. It points to the enduring role cash continues to play in consumer transactions whether due to small-value nature of transactions, lack of or limited access to alternative payment options etc. The paper gathers evidence from the Diary of Consumer Payment Choice (DCPC) which was a research conducted in USA in 2012 to study the use of cash and other forms of payment across demographic segments, payments size and location/type of payment. Key findings include:

• Cash is the most used retail payment instrument;
• All income and age groups use cash in roughly equal frequency and it is the dominant instrument for low-value payments (less than USD 10);
• Cash is widely used, even where other payment options are typically available;
• Consumers use cash especially heavily for certain types of everyday expenditures, like food and personal care items;
• Consumers rely heavily on cash as their primary back-up payment instrument in situations where their first choice may not be available. P2P transactions are a good example;
• Consumers who prefer cash are a diverse group;
• Income exerts a strong influence on payment preference;
• Low income consumers use cash heavily when compared to others.