A study published in December 2016 by the International Journal of Central Banking reports that despite electronic payment systems’ integration around the world, customers still prefer to pay with cash. The study found that despite the switch from paper money to “bitcoins,” cash holding and use have not disappeared. Some companies rely on electronic systems exclusively, but this decision could be costing them.
According to the study, cash is the primary payment for customers across seven major countries. Australia, Austria, Canada, France, Germany, the Netherlands, and the United States are all proven to prefer physical money. In the United States alone, 46 percent of transactions rely on cash – and America uses it less than the other six on the list.
Interestingly, France and the U.S. are the only two out of the seven where paper checks are still relevant. Meanwhile, Germans and Austrians carry and use the highest amount of cash. Across the other five countries, the average consumer kept only $30 on them at any time.
Many experts attribute these cash-carrying habits to the fact that paper money is primarily used for multiple small transactions throughout the day. This also explains why it comprises such a small amount of total transaction value in other countries
Benefits of Using Cash
Some people see using cash as an inconvenience, but it affords a lot of benefits for both the individual and society as a whole. Bloomberg reported excerpts from the same study, finding that the value of dollars and euros has more than doubled since 2005. This is largely due to people continuing to carry and spend cash, although some of it may also be due to a demand for currencies in foreign countries.
Another benefit of using cash is that people value their money more. Consumers get a better sense of the “value” of their dollars when they physically have to hand them over during a transaction. This can actually be a key way of learning how to control spending.
The numbers don’t lie. With 46 percent of transactions in America relying on cash, can you really afford not to accept it? The more checkout choices you offer, the more likely it is you’ll draw in more customers and close those deals. Bitcoins and debit cards are interesting, and they may play a bigger part in the future of retail, but for now cash is still king.