Cash is Still King According to FED Report

The Federal Reserve System’s Cash Product Office (CPO) have published their report Cash Continues to Play a Key Role in Consumer Spending: Evidence from the Diary of Consumer Payment Choice, suggesting that cash is still king.

The study shows that the average American consumer had 59 transactions, including purchases and bill payments, with 23 of these 59 payments involving cash. Cash makes up the single largest share of consumer transaction activity with 40 percent, followed by debit at 25 percent, and credit at 17 percent.

Despite all of the hype around new forms of digital P2P transactions, text and mobile payments barely register at less than one half of one percent. Electronic payments account for 7 percent, while checks make up 7 percent. All other payments represent less than 5 percent of monthly transaction activity. 


The study found that consumers choose to use cash more frequently than any other payment instrument, including debit or credit cards for the following reasons:

  1. Cash plays a dominant role for small-value transactions
  2. Cash is the leading payment instrument for specific types of purchases
  3. Cash is the key alternative when other options are not available
  4. Cash is the leading payment alternative for Gen Y
  5. Cash is a primary payment option for lower income segments
  6. Cash can’t be hacked

While the number of cash transactions is high, cash accounts for a relatively small share of total consumer transaction value at 14 percent, with electronic payments making up 27 percent and checks 19 percent. In fact, the average value of a cash transaction is only USD 21, compared with USD 168 for checks and USD 44 for debit cards.

Download the full report here