The global pandemic saw both a considerable acceleration in the growth of digital payments and a significant pullback in cash use. For years, many experts have suggested that cash is on its way out and won’t soon have a place in modern society. However, as it turns out, reports of cash’s death may have been greatly exaggerated. While digital payments continue to surge, new data from the Federal Reserve and NMI shows that cash remains a vital part of everyday consumer transactions.
Peter Galvin, Chief Growth and Marketing Officer at NMI, recently sat down with ATM Marketplace to discuss the results of recent NMI research on consumer preferences. He provides insights into why cash remains a highly relevant payment option amid the explosive rise of digital payments.
Cash Is Still Ubiquitous – And On the Rise
NMI’s recent Payments Innovation Pulse report revealed some unexpected insights into how consumers use cash in 2023 – especially the youngest and most digitally native ones. "One key data point our…report revealed is that 97% percent of consumers use cash because it meets all their payment needs,” Galvin told ATM Marketplace. “Cash is their number one most-used payment method for in-store, in-person purchases."
Far from being obsolete, the NMI study discovered that 81% of consumers reported using cash for in-store purchases in the last six months. Furthermore, a surprising one-third of respondents described cash as the "most convenient and fastest payment method" – an honor most industry insiders assumed had long been secured by digital payments. Maybe most surprising, Galvin pointed out that “69% of U.S. Gen Zers use cash more now than last year, and 23% of them say they use it for the majority of purchases."
Overall, the data shows that while digital payments continue to grow (and are unquestionably the future of the industry), the universality and simplicity of cash still hold a strong appeal for many consumers, including the most tech-savvy. As a result, cash continues to be a core part of a comprehensive payment strategy for retailers and businesses.
The Ongoing Push Toward a Cashless Society
Despite consumers doing their best to keep cash alive, according to some groups like the Payment Choice Alliance, some banks and businesses are hoping to pull the plug. In places like the United States and the United Kingdom, many banks are already reducing the number of branches and ATMs to reduce costs, making access to cash harder.
While some places, like New York, have laws requiring cash as a payment option to protect the underbanked, the overall trend is moving towards digital-first checkout experiences.
Galvin emphasized that balance is key. The right payment partner can make it easy for businesses to offer an ideal mix of old and new to maximize convenience for all customers, regardless of their preferences. “Merchants can partner with a payments provider, like an independent software vendor or an independent sales organization, to deliver innovative payment solutions while still including more traditional methods."
For more insights into the resurgence of cash and its continuing relevance for consumers and merchants alike, read the full ATM Marketplace article here.