Plastic replacing cash in US - BAI Research

Plastic replacing cash in US - BAI Research

Consumers' use of cash in the US is declining as they continue to embrace a range of card-based payment options, according to a study conducted by BAI Research and Hitachi Consulting.

Traditional card-based payment methods already have whittled away the base of cheque transactions in the US, and are now impacting consumers' use of cash, says the BAI, with 41% of the 3308 consumers surveyed indicating they use cash less often today than they did two years ago.

"More and more consumers are substituting card-based payments in place of cash," says Ajay Nagarkatte, managing director of BAI Research. "Of those who have reduced their cash use, 97% are shifting to credit, debit, or gift/prepaid cards instead."

Consumers surveyed carry an average of four credit cards in their wallets. However, only 2.2 of those cards are used to make purchases in any given month, with reward programmes a key factor driving use.

Debit cards have also grown in popularity, with signature and PIN debit now accounting for a combined three percent of consumers' in-store payments.

Growth of gift/prepaid cards was not as robust, accounting for only four percent of in-store purchases, the same as in 2005.

Comments: (1)

A Finextra member
A Finextra member 25 February, 2009, 11:25Be the first to give this comment the thumbs up 0 likes

While there is an inevitable move towards card-based payments in the US, they are far from becoming the cashless society that BAI predicts. Level Four conducted research within the UK at the end of last year and found that, with the credit crunch tightening purse strings, consumers prefer using cash over credit cards to manage their budget. This trend is mirrored in the US, with Zogby International stating that 73 per cent of US customers bought gifts with cash last Christmas.

Whilst the move towards cards continues, it is clear that in today's financial climate good old-fashioned cash is still a firm favourite for people looking to maintain a firm grasp on their finances. If it's not in your wallet, you can't spend it...