Who loves cash? The paradox of youth

By : Scott Millar

June 18, 2014 10:05 PM

Mobile and other alternative payment methods may grab the headlines, but cash remains our favorite.


Young people in particular are often thought to be driving the move away from paper notes to a ‘cashless society.’


Generation Y, Millennials, call them what you like, they are pushing the payment buttons on their smartphones, tablets and online. Certainly younger people are more likely to be fast adopters of anything that’s new and different; so you are forgiven if you are thinking they would be dropping cash faster than a high roller in Las Vegas.


Not so, it would seem, as young consumers in the US like using cash more than older people do, according to a research paper prepared for the Federal Reserve. Evidence from the Diary of Consumer Payment Choice studyshows people in all age groups list cash as their most frequently used payment method. Forty per cent of those in the 18 to 24-year-old range actually say they like cash above all other payment methods–the highest percentage of any age group.


As the authors note, this is "contrary to conventional wisdom.” But just why do young people, hooked up to the internet 24 hours a day and ready to embrace whatever new technology appears on the market, like cash the most?


There are a couple of economic points around earnings and the range of traditional banking services available to younger people. “It is possible that a segment of younger consumers prefer cash because they have limited access to banking and other financial products and services, in part due to typically lower incomes in early adulthood,” say the report authors.


It’s worth noting that in terms of what people prefer, debit cards win every time, scoring around 50 per cent in each age range except in the 65 and older bracket. The important difference is the presence of credit cards–just seven per cent of 18 to 24-year-olds prefer credit cards versus 33 per cent in the 65+ range. As people get older the ease of plastic and the financial security to pay off bills each month becomes key.


Cash remains hugely popular with young people but seems to fall out of favor as they get older. Rather than being down to disruptive technology, new alternative payment methods and the like, it seems the migration away from cash is generational–people tend to earn more as they get older and it becomes more convenient to use a credit card. It’s also economic; the wealthier people are the more likely they are to use credit cards over cash for larger payments.


Learn more about NCR Financial Services.

Scott Millar

Global Solutions Marketing Manager

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Based out of NCR’s R&D Centre in Dundee, UK, Scott Millar is responsible for establishing the marketing strategies and enhancing the strength and market share of the NCR Financial Hardware Portfolio. Here, Scott shares his insights.