According to the Pew Research Center, the number of Americans who do not make purchases using cash is up five percent since 2015 with 29 percent of adults in the United States saying they make no cash purchases during a typical week.
“You’re seeing it disappear,” said Tedd Huff, vice president of product at Nuvei, a payment technology network that promotes entrepreneurship. “Payment is becoming invisible.”
The decline of cash comes with the increase in credit cards and debit cards, however, according to Huff, mobile payments are starting to gain serious traction in the United States.
While many think of mobile payments as the “tap and go” of Apple Pay, Google Pay and Samsung Pay in reality it encompasses a lot more – shopping online, ordering food on an app, ridesharing, etc.
“The types of mobile payments have increased,” Huff said. “[Tap and go is] starting to get some traction but the place where the most traction has happened is the in-browser payments. Going to [websites] where you’re able to actually make the payment while in the app or within the web browser really is where mobile payment has happened.”
According to Pew, Americans under the age of 50 are more likely to say they don’t worry about having cash on them.
Millennials’ adoption of digital payments could be thanks to the rise of apps such as Venmo, PayPal, Cash App and other payment platforms that allow people to pay their friends digitally.
“We’ve continued to gain momentum and looking to the future, the new generation of people going into the workforce is even more itching to do things digitally,” said PayPal Corporate Communications lead manager Amanda Coffee. “Venmo is kind of the crown jewel of the PayPal portfolio and there’s a lot of active users and you can often see payments as something that’s fun and interactive and social.”
On the other side, businesses and events – Shake Shack NYC, airline concessions and the Super Bowl for example – are starting to ban cash, only allowing consumers to pay using cards or mobile payments.
According to Huff, cash can end up costing businesses more than credit cards, mobile payments, and checks because of the safeguards that are required to process cash.
“All of the risks that go along with it are much, much higher so the safeguards you have to put in place offset any savings you would have from cash,” Huff said. “[Cash] is really hard to track and it’s very easy for people to steal. A lot of the businesses are looking at [being cashless] as a way to reduce their risk and reduce their expenses because with credit cards and other electronic forms of payment they have a fixed expense.”
Coffee said that while the use of cash is shrinking because it’s not as convenient or safe, 80 percent of transactions are still made in cash.
“When people ask us who’s our competition, I’ll often say it’s cash,” she said. “It’s still largely a cash economy.”
While cash is still the largest transaction form, with Generation Z becoming adults, the growth of mobile payments has no sign of slowing down.
“It’s not a mobile payment experience to them, it is just a payment experience,” Huff said. “The mobile payments that we have today are most likely not going to be the ones that we have in two to three [years] and definitely not the same ones we have in the next five to ten years. We’re just at the very, very beginning. I wouldn’t even say that mobile payments have gotten into the toddler stage yet. I think we’re still an infant with mobile payments.”