The number of U.S. adults who report using cash primarily for purchases has fallen sharply over the past five years as online shopping has grown and new payment options have taken hold. which makes it easy to use without cash.

A Gallup Survey of 1,013 U.S. adults in July showed that 13% of respondents say they make all or most of their purchases with cash, up from 28% of respondents five years ago. Sixty percent of respondents said they use little or no cash when transacting, up from 32% five years ago.

“Compared to five years ago, a lot has changed, and the pandemic has a lot to do with how people buy things,” said Jeffrey Jones, editor at Gallup. Results of the The Gallup poll was released on August 25. It was only the second time the polling firm had asked people about cash usage, the first time in 2016.

The data matches trends seen in a recent Federal Reserve payments study, which also showed a decline in cash transactions since 2016. Federal Reserve Payments Study, released last December, saw an increase in payments processed on general purpose credit and debit card networks. These networks include the non-prepaid and prepaid debit card networks, the clearing house automated transfer system, and check clearing.

The Fed said debit cards, ACH and checks are the backbone of non-cash payments, but the COVID-19 pandemic has changed some behaviors and spawned new payment technologies as people were buying more at home or at work.

Some of these new payment methods included in-person contactless card payments, digital wallets, and peer-to-peer payment services such as Zelle, PayPal, and Venmo. “Buy now, pay later” payment services have also increased the ease with which people can pay for goods online, as buyers can pay for goods in interest-free installments.

Echoing the Fed study, Gallup survey results said the increase in cashless transactions is the result of increased online shopping during the pandemic and the rise of digital wallets, but also from more merchants accepting electronic payment, an increase in self-checkouts in grocery stores and large retail stores, and mobile payment options that allow people to pay for their purchases at using their smartphone.

Demographic breakdown

Middle- and upper-income Americans, defined as people with annual household incomes between $40,000 and $99,999, are more likely to use cash sparingly, if at all, with the survey showing that 73% of this group primarily use non-cash options for purchases. For people earning $100,000 or more, only 5% say they use cash for all or most of their purchases.

Low-income respondents, those earning $40,000 or less, are more likely to use cash primarily, with 22% of these Americans sticking to physical cash.

Age also affects who is likely to use cash versus electronic payments, as younger respondents opt for non-cash options. Only 11% of 18-29 year olds say they mainly use cash, compared to 37% of people in this group responding the same way five years ago.

While it’s no surprise that a younger demographic has chosen electronic payments over cash compared to an older generation, the current survey’s rate of decline compared to five years ago has caught Jones’ attention.

The rate of change in cash use for younger age groups was much larger, a drop of 26 percentage points, while for other age groups the rate of change from five years was about the same, down 15 percentage points, Gallup said. .

“It could reflect the fact that some of these people weren’t even adults five years ago (for the first survey),” Jones said.

A cashless society

An unchanged statistic in the survey was the belief of 64% of survey respondents that it is likely or very likely that the United States will become a cashless society within respondents’ lifetimes. Five years ago, this figure was 62%.

The speed at which the pandemic has advanced non-cash payments could make a cashless society a reality sooner rather than later, and technology will play a role. Jones noted that the Fed study showed that mobile app payments constituted 3% of all non-cash transactions.

This figure is small, but it could increase if people feel comfortable giving their payment information to digital payment systems offered by tech giants Apple and Google, among others. Since most people carry their phones with them all the time, it’s handy to be able to tap it at a store checkout, especially in stores that don’t have a cashier, he said. .

“There could be even more technologies that we are not even aware of yet that could facilitate the transition from cash and other more traditional forms of payment to these simple, smartphone-based electronic payment methods” , did he declare. said.