American cash usage on the wane - Aite

US consumers' use of notes and coins is set to fall by around 17% by 2015 but the cashless society is still a long way off, according to research from Aite.

The research group predicts a four per cent a year decline in Americans' use of cash between 2010 and 2015, leaving the value of payments at just over $1 trillion.

Based on two surveys conducted last year, Aite says 30% of consumers are using less cash than they did two years ago but this is partly offset by 20% who claim to be using it more.

Young 'Gen Y' respondents, often associated with new technology, are actually the only generation using old fashioned notes and coins more than they did in 2008.

Ron Shevlin, senior analyst, Aite, says: "Despite forecasts of a cashless society, the United States is nowhere near the realisation of this vision. In fact, if the use of cash were to decline by 17% every five years - our forecast for 2015 - the use of cash in the United States wouldn't fall below US$1 billion before the year 2205, roughly 200 years from now."

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Comments: (1)

A Finextra member 14 January, 2011, 16:51

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Unfortunately, I can't say I'm surprised by these findings. Despite its cost to the wider economy, cash is still essentially free for consumers, and with rulings such as the recent Durbin Amendment, I think we're moving further and further away from the concept of a cashless society.

The Durbin amendment will significantly reduce interchange fees, which are an important source of revenue for banks and, in turn, banks will need to look elsewhere to make their retail banking arms pay. As a result, banks will no longer be able to continue offering debit card products and the like for free, or at a very low cost (as many consumers are accustomed to today). We're bound to see an increase in charges being passed on to the consumer for electronic payment methods in the form of banking fees, which will inevitably drive people to use lower-cost alternatives - such as cash - instead. So one could even say that the Durbin Amendment indirectly encourages a "Cash-based Society" rather than a "Cash-less Society". Probably not quite what was intended!