The latest findings from the Federal Reserve’s Cash Product Office published in The Diary of Consumer Payment Choice indicate that cash still has its place among payment options. Cash usage overall is down by seven percent from the previous year, but overall payments made by consumers also were down.

Perhaps the most important finding to consider is that payments under $25, known as small-value payments, were down by 26 percent. Historically, this is the category where cash was used the most. This makes one wonder how these trends will turn as more individuals are vaccinated and return to stores and restaurants. Logic seems to indicate that as consumers return to stores and restaurants, small-value payments will increase, which will positively impact cash usage.

Banks and credit unions alike saw an increase in ATM usage during the pandemic as customers withdrew at a greater rate than before. This trend has stuck and led to consumers having more cash. The Diary of Consumer Payment Choice reported that the average amount of cash held by consumers increased to $74, up from $54 the previous year.

The Diary of Consumer Payment Choice stated: “As economic conditions evolve to a post-pandemic state consumers may decide to hold elevated levels of cash as they continue to shift more and more payments to online platforms. Or perhaps the return to in-person shopping may bring a sense of normalcy and with it an increase in cash use for small-value payments, such as a morning coffee, a quick run to the grocery store or drink with friends after work. Regardless of how the payments landscape evolves it is important to note that consumers continue to use cash, though at a lower rate, even amid a pandemic.”

It appears – yet again – cash continues to provide a sense of security, privacy and an option for the unbanked and underbanked that make up approximately 22 percent of adults.

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