The total number of payments in the USA made using cash fell from just over one in four in 2019 (26%) to under one in five in 2020 (19%) before increasing slightly to 20% in 2021, the Federal Reserve reports.
The Reserve’s 2021 Diary of Consumer Payment Choice[1] also reveals “a statistically significant decline” in the number of consumers who cited cash as their preferred payment method for in-person transactions from 23% in 2019 to 19% in 2021, an overall decrease of eight percentage points from 27% in 2016.
At the same time, the proportion of payments made using a credit or debit card increased from 54% in 2019 to 55% in 2020 and 57% in 2021, with the percentage of consumers citing credit and debit cards as their preferred payment method reaching 32% and 44%, respectively, in 2021.
“Consumers reduced their shares of cash use across all ages by a statistically significant amount compared with 2019,” the researchers say.
“Consumers younger than 45 used cash for less than 20% of payments; older consumers used cash for more than 20%.”
The Reserve also found, however, that cash use remained higher in lower income households, saying that “in 2021, the share of cash use for consumers in households making less than US$25,000 was approximately three times higher (36%) than that of those living in households making more than US$150,000 (11%).”
Payment behaviour
According to the report, the overall decrease in cash use in the USA during the pandemic is due to the following factors:
- Consumers shopped less in person resulting in a lower share of in-person payments overall and fewer opportunities to use cash in 2020 and 2021 compared with
