A recent survey has confirmed what many have observed in coffee shops and retail stores: for Generation Z, using physical cash is often considered 'cringe'. Despite this social stigma and the rapid acceleration of digital transactions, financial experts and data suggest that paper currency is far from becoming obsolete.
The Social Stigma of Cash
Conducted in September by Cash App, a popular US digital wallet, the survey sheds light on the payment preferences of young consumers. It found that 53% of Gen Z respondents use physical cash only as a last resort. More strikingly, 29% believe that people who pay with cash are 'cringe'.
This sentiment marks a dramatic shift from just a decade ago, when paying with a credit card for small purchases could draw silent judgment from others in line. Today, the impatience has flipped, now directed at those fumbling for coins and notes. This trend is not isolated to a single survey. Data from the Federal Reserve confirms a steady decline in cash preference. In 2024, only 17% of survey respondents preferred cash for in-person transactions, a significant drop from 27% in 2016.
Who Still Uses Cash and Why It Endures
While digital payments become the norm, cash usage persists, particularly among older and lower-income demographics. However, its use is declining even within these groups. The Fed data indicates that only about a quarter of transactions by people earning under $25,000 involve cash. Similarly, cash constitutes just 19% of transactions for people over 55.
So, why will cash never fully disappear? Experts like Bloomberg Opinion columnist Allison Schrager argue that cash, much like gold, satisfies a deep, primal need for security. It serves as a tangible backup in case of systemic failures, such as a crash of the global economic system or a widespread power grid outage that renders digital payments useless. This instinct is reflected in the numbers: on any given day, four out of five Americans still carry some cash, and a overwhelming 90% have no plans to give it up entirely.
Broader Implications for Spending and Policy
The move away from cash has significant implications for consumer behaviour and public policy. The long-held belief is that people spend less when using cash because it creates a physical awareness of money leaving their possession. However, evidence on this is mixed, especially for small, everyday transactions.
The shift also highlights the costs associated with digital payments, such as credit card 'swipe fees' charged to merchants, typically between 2.5% and 3.5%. These fees are often passed on to consumers. While some US lawmakers are targeting these charges, technological innovation may provide its own solutions. The recent passage of the Guiding and Establishing National Innovation for U.S. Stablecoins (Genius) Act could see stablecoins challenging credit cards, especially for those without easy access to credit.
Another potential disruptor is Central Bank Digital Currency (CBDC). Yet, the debate continues to weigh the benefits of electronic payments—like easier spending tracking and reduced risk of physical theft—against the drawbacks, including potential privacy invasions. Ultimately, while Gen Z may find cash awkward, its role as a failsafe in the financial ecosystem ensures its survival for the foreseeable future.
