Cash Use Increases Over Last Year
Fifty-three percent of consumers increased their use of physical cash in the last year, suggesting that cash may still be king.
Cash is once more making a comeback. A recent Harris Poll conducted for the American multi-nation personal finance company Credit Karma indicated that 69 percent of people in Generation Z (born 1997 through 2012) currently use more physical cash than they had been using 12 months earlier. The poll consisted of 2,119 people above the age of 18. A similar scenario was found in the Harris Poll involving consumers in other age groups. People born between 1946 and 1960 had increased their cash “experience” by 37 percent, while 47 percent were increasing their cash footprint if they were born between 1965 and 1980. Overall, the survey indicated that 53 percent of consumers had increased their use of physical cash from their use of cash a year earlier.
A major reason for this shift involves “cash stuffing.” Businesses are increasingly offering three to 10 percent discounts when people pay in cash rather than by electronic payment. Companies that process electronic payments charge fees for these services. The number of businesses willing to absorb these fees may be declining. Many businesses are giving consumers a choice between absorbing these fees or taking a discount when paying using coins and bank notes.
According to Credit Karma, 59 percent of Generation Z who pay with cash say they do so as a way to budget their money. An additional 64 percent say they spend less money when they pay with cash. Credit Karma warned, “More concerning, however, one-in-five (20 percent) say they are using cash more often now because paying with cash feels like free money because there is no digital trace of the transaction. This line of thinking could result in excessive spending among young consumers, which could make it difficult to make ends meet or save for the future.”
Why review cash stuffing in a column written for coin collectors? The use of cash is rising despite a perhaps misguided global push for a cashless society. Once again, this illustrates that, just as when bank notes, checks, credit cards, and debit cards were introduced, electronic payments were another means of making payments. But, just as with the other payment types, they are a supplement, not a replacement for coins.
