US consumers say cash and plastic cards remain their top preferred payment methods, citing speed and convenience as the main appeal.
The findings, from Deutsche Bank’s three-part “Future of Payments” study, shows that US consumers believe they are still a long way off from becoming an entirely cashless society.
The study was conducted among 3,600 customers around the world, including the US, and aimed to forecast trends in cash, online, mobile, crypto, and blockchain usage.
Two-thirds of the people surveyed said they had considered increasing cash holdings given the economic uncertainty arising from trade tensions between the US and China, conflict in the Middle East, and the potential effects of Brexit.
A third of Americans named cash as their favourite means of payment, with 11 per cent planning to use even more cash in the next six months. Specifically, over half (53 per cent) of Americans said they want to make sure they always have cash with them. On average, each American holds $47 in cash.
However, while cash is still a popular choice, the coming decade will see digital payments grow at light speed, according Deutsche, leading to the extinction of the plastic card.
“Over the next five years, we expect mobile payments to comprise two-fifths of in-store purchases in the US, quadruple the current level,” Deutsche noted in the study.
The survey quantified mobile payments as transactions which are conducted with a mobile phone in combination with a credit card, an invoice, an electronic wallet, or a cash account. Most people surveyed plan to use a smartphone wallet more in the next six months, while most believe digital wallets will replace traditional wallets within the next five years.
Around 13 per cent of Americans use digital wallets on a weekly basis, according to the sample group participating in the survey, while 53 per cent said they prefer plastic cards.
“The US offers a stunning illustration of how physical payments - cash and plastic cards - are ingrained in the culture,” the report concludes.
Americans say they favour cash and cards because they are faster and convenient, and because most digital wallets offer no rewards and no cashback.
“So, even though the US is arguably the world’s leading payments innovator, card innovations are just starting to take off.”
With a large number of firms involved in the transaction process in the US, including banks, credit card companies and payment processors, the cost of transactions for US merchants can be higher due to numerous processing fees.
Digital wallets and payments systems like PayPal and Apple Pay are also connected to this system, but both are still relatively small compared with firms such as Alipay and WeChat Pay in China.
Scepticism also remains about digital currencies, with currencies such as bitcoin and Facebook’s libra encountering significant regulatory hurdles.
Nevertheless, Deutsche predicts if the growth in blockchain wallet users continues to mirror that of internet users, the number of users could reach 200 million by the end of the decade, quadruple the current level.
Despite this, the survey found cryptocurrencies are proving to be a slow burner in the US, with only 7 per cent of Americans buying or selling cryptocurrencies in the past 12 months, compared to 26 percent of people in China.
In addition, over a fifth (22 percent) of Americans reported concerns about anonymity and traceability when it comes to digital currencies.
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