Key Points

• Despite growth in digital payment, cash continues to be a preferred payment method for many and remains a crucial part of the payment ecosystem.

• Studies show that cash usage is driven by cultural preferences and factors such as inclusivity, financial management, and privacy concerns—and is popular across all age groups, including young consumers.

•  Successful payment solutions must accommodate both cash and digital methods to meet diverse needs and protect retail brands, and smarter cash management is important for businesses in light of cash’s enduring popularity.

"Cash Will Go Away"

When a vast array of digital payment schemes emerged to supplement ubiquitous credit and debit card usage, there was an expectation by some that we were witnessing the end of cash. A precipitous decline in the use of cash would soon follow, they predicted. Digital would dominate.

But despite enormous amounts of spending in an effort to promote payment alternatives and incentivize electronic payment, cash remains strong and is proving remarkably resilient. Several new studies make the point that cash is—and will remain—the preferred payment method of many, as well as a vital and enduring part of the payment ecosystem.  

What Did They Get Wrong?

In addition to vested interests predicting cash’s replacement, the sense that physical cash might soon be relegated to history was surely driven by an "appeal to novelty" (or "argumentum ad novitatem"), which refers to the fallacy of believing that something new is automatically better, without critically considering its actual quality or merit.

This “new is better” narrative clearly took shape as new ways to make payments came online and gained attention, with some predicting that the only barrier to cash’s complete irrelevance was a digital divide, and that once tools were available to all, no one would need—or want—to make cash payments. But academic analysis of real-world preferences reveal the irrationality of this narrative. Cash is used—not only by people who must rely on it—but by people who choose it, researchers have discovered

“Findings establish that cash remains a significant part of the payments ecosystem, even among people with both cards and accounts,” according to a recent study of data collected in the EU ("Is there a digital divide in payments? Understanding why cash remains important for so many," Economic Bulletin Articles, European Central Bank, vol. 2., 2024).

The results are in line with the cash and retail payments strategies of the Eurosystem, which emphasise the need for a balanced approach that accommodates both the enduring role of cash and digital innovation.

But Why?

Another new study took aim at learning exactly why cash remains so popular with people (“'Why Won’t Cash Just Die?' Cashless Strategies are Killing Customer Relationships," Paycomplete/Sapio Research, 2024).  Results from the global survey of 5,000 consumers dispelled myths that have arisen alongside predictions of the demise of cash.

Myth: People only care about the convenience of payment options. The reality is that people like cash not only for themselves, but for the good of society. The study found that 59% of people believe that the ability to pay with cash supports inclusivity for all members of the community, and 62% believe physical cash is critical for helping children develop financial management skills and track their spending. “It’s time to challenge the view that consumer behaviour and values are only driven by convenience, self-interest, and an obsession with their mobile phones,” the research insists. “Loyalty and community are strong drivers of cash use. Many of the reasons why consumers value cash are surprisingly emotional.”

Myth. Cash is a “boomer thing.” The study upends the notion that cash is a relic enjoyed only by older consumers, and that young people want nothing to do with it. The study found that cash is the first choice of payment method among nearly one-third (29%) of young consumers (18-24 years old). Preference for cash was higher for this age group than for other age groups.

Myth. People have “gotten past” privacy concerns. Half of all consumers still say they’re uncomfortable with the amount of data that organizations can access about their shopping choices and nearly half (46%) are moderately or extremely concerned about businesses collecting their data from card payments.

Perhaps the most important finding, however, indicates the significant harm that brands are risking if they enact measures that seem to discriminate against cash.

• 89% of consumers consider the ability to pay in cash important for their customer satisfaction.

• 47% think that organizations that don’t accept cash are putting profits ahead of their customers’ satisfaction.

• 47% of consumers have abandoned in-store purchases when the option to pay with cash is not available, which also stirs negative emotions including disappointment (31%) and anger (17%).

This report explodes long-held assumptions about cash users, including surprisingly strong usage among younger consumers. It challenges the wisdom of cashless strategies and exposes hidden consumer perspectives that could dramatically change how consumers perceive brands. — 2024 Report on Global Survey of 5,000 consumers

Perhaps Not-So Surprising?

That cash remains popular, even in countries with high digital payment adoption, is due to a multitude of reasons, including cultural, practical (budgeting, no transaction fees, immediate settlement) and for reasons of trust and security.  So resilient is cash that even fintech experts now warn providers of the need to respect the role of cash in society, even as they promote alternatives (“The Cash Paradox in Digital Economies: Understanding Cultural Preferences in Payment Methods," Aurionpro Fintech, Dec. 6, 2024).

“The future of payments likely lies not in complete digitization, but in understanding and accommodating the complex relationship people have with different payment methods,” they write. “Rather than attempting to completely replace cash, successful digital payment solutions often work alongside traditional methods, creating a seamless ecosystem that meets diverse user needs and preferences.”

Convenient, anonymous, trusted, tangible, ubiquitous—it’s easy to see why the habit of paying cash persists. While it’s increasingly necessary for businesses to accept additional forms of payment, these clearly need to be additive to cash—not a replacement.

Because cash isn’t going to disappear, smarter management of it is critical for retail operators. It’s why many leading security companies are expanding their value by offering end-to-end retail cash management solutions to meet client needs. “It’s about supporting [retail security professionals] so they can go to their business partners with more benefits than just securing cash and a provisional credit at the end of the day. It’s about creating other benefits that put them in a position to help drive consistency in the business,” explained a vice president of business development at a leading global security firm.

Broadly, a business that adopts more efficient cash handling technology and processes reduces the costs of cash management, can increase levels of customer service, and benefits from a more transparent monitoring of cash payment flows, including enhanced use of working capital, better business decisions, reduced bank fees, less risk, and improved compliance.