Pandemic Payment Trends Continuing, Fed Finds

US consumers are continuing to increase their use of credit cards and decrease their use of cash, in line with a trend that emerged in the early weeks of the Covid-19 pandemic.

Data from the Federal Reserve’s FedCash Services also found that, while the use of cash had declined slightly in the past 12 months to a share of 18% of all payments, the average amount of cash held had risen slightly to $73.

In-person and person-to-person purchases have remained steady with an 81% share of all payments, the Fed’s report showed.

Longer term, the Fed’s data shows a clear trend away from cash and towards card payments. Cash use has declined from 31% of all payments in 2016 to 18% in 2022, while credit card use increased from 18% to 31% in the same period. Debit card use has remained steady, going from 27% in 2016 to 29% in 2022.

In contrast, mobile payments made up less than 1% of all payments, according to the Fed’s data. This had reached around 3% in 2020 at the height of the pandemic, but has not maintained its position.

Kathleen Young, executive vice president of the Federal Reserve Bank of San Francisco and chief of FedCash Services, said: “We found that some of the major payment trends that started early in the Covid-19 public health emergency have continued into the pandemic’s later stages.

“Consumers have continued to use credit cards — the most used payment method in 2022 — more often. Nonetheless, cash accounted for approximately 20% of all consumer payments since 2020, and this enduring demand indicates that there are consumers who need or choose to use cash, underscoring the need for a strong and resilient payments system.”