Cash Is Still King With Consumers

Especially when making purchases of less than $10.

August 20, 2019

ALEXANDRIA, Va.—Consumers prefer using cash for purchases of less than $10, despite other, more convenient options, according to a new CreditCards.com survey.

In fact, 49% of U.S. adults usually pay with cash, while 35% with debit cards and 16% with credit cards. The results are similar for consumers who have rewards credit cards: 43% said they preferred cash, 31% debit and 26% credit. Although using a contactless card or mobile payment for a small purchase is quick, easy and secure, U.S. consumers evidently aren’t ready to change.

“Contactless cards are very popular abroad but are still in their infancy in the U.S,” said Ted Rossman, industry analyst at CreditCards.com. “I think they’ll catch on here because most retailers can now accept them, and most card issuers are delivering contactless cards to their customers.”

He noted that transit systems in major cities, such as New York and Chicago, now accept payment via contactless cards, a step toward getting consumers to embrace tap-and-go payments.

“Once people see how easy it is to pay with a tap, I think they’ll do the same at grocery stores, fast-food restaurants, pharmacies and other places where people like to get in and out quickly,” Rossman said.

Contactless cards and mobile payments aren’t commonplace. Although contactless cards and mobile payments provide consumers with a fast, secure way to pay, only 39% of respondents with rewards credit cards have used mobile payments, and just 14% have used a contactless card.

Many consumers don’t even own a contactless card. While 10% of rewards card holders reported that they have at least one contactless card, 53% said they don’t own even one and 22% weren’t sure if they had one or not.

Bigger earners use credit cards more frequently than others. For all U.S. adults surveyed (not just those with rewards cards), the more they earned, the more they used credit cards instead of cash. The highest earners (with annual salaries of $80,000 or more) still use cash the most (42%) for small purchases, but they’re more likely than all other income groups to use credit cards (24%).

Among U.S. adults surveyed, 51% of men said they typically use cash to pay for purchases less than $10, compared to 46% of women. Women were more likely than men to use debit cards to pay for small purchases (39% to 32%). Meanwhile, men with rewards credit cards were more than twice as inclined to use contactless cards than women (20% versus 9%), and men also tended to use mobile payments more frequently (44% versus 34%).

Age also plays a role when it comes to preferred payment methods. Millennials lead the way in making mobile payments. Out of those with rewards cards, 61% of millennials have used a mobile payments service, which is significantly more than both Gen Xers and baby boomers (44% and 24%, respectively).

Overall, the majority of respondents chose to use cash or debit because it’s faster and easier. Among those who are rewards credit card holders, 40% said they like to use cash or a debit card for small purchases because it’s easier or quicker than other payment methods. Credit cards also raise additional concerns that cash and debit cards do not. In the survey, 24% of respondents who hold rewards credit cards said it was due to concerns about credit card debt, and 14% said that they don’t like using cards at stores that have credit card minimums or fees for small purchases. Finally, 11% said they had no incentive to use a rewards card.

People also use cash or debit to manage credit card spending. For many shoppers, a debit card or cash just feels safer, and they will continue to use it unless they are convinced otherwise. As for the underuse of mobile or contactless payments, discomfort with technology may explain underuse, the survey reported.

Ultimately, these findings will be key for retail owners as they integrate new technology and methods of payment in an attempt to make their consumers’ experiences faster and more convenient, leading to continued customer loyalty and return. Certainly, as cash maintains its status as king, it won’t be a method falling to the curbside anytime soon.

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