Cash Highlights

FedNotes

With the increase in electronic payments, it has been difficult to determine how personal preferences impact the demand for cash as a payment instrument. By analyzing data on demographics and stated payment preferences, this FedNotes paper provides evidence on the determinants of cash usage for small value payments, and particularly how consumers’ stated payment instrument preference and the amount of the purchase affect their propensity to use cash.


FedNotes

It’s commonplace these days to predict the demise of cash. However, evidence from the Diary of Consumer Payment Choice (DCPC) suggests that consumers choose to use cash more frequently than any other payment instrument, including debit or credit cards. Cash plays a dominant role for small-value transactions, is the leading payment instrument for many types of purchases, and stands as the key alternative when other options are not available. Using the DCPC data, this FedNotes paper explores where, how, and why people use the various payment options and highlights the key and enduring roles cash continues to play in consumer transactions.


FedNotes

Until recently, cash handling has been largely a manual and labor-intensive process. However, this has begun to change with new devices that automate certain back office cash handling functions, such as cash dispensers, recyclers, and smart-safes. Because cash usage remains strong, merchants, banks, and armored carriers are exploring ways to take advantage of these new technologies to automate their cash handling functions. This FedNotes paper provides an overview of cash handling in the financial and merchant environments, along with how these new devices are being used.


The FRBSF Economic Letter on “What’s in Your Wallet? The Future of Cash” addressed factors that are influencing the payment landscape as new technologies have been brought to market. For a deeper look at the research behind this empirical analysis, we invite you to read the working paper on “An Analytical Framework for the Forecasting and Risk Assessment of Demand for FedCash Services.”


Meeting Demand for Currency during a Disaster

When a disaster strikes, causing telecommunication networks or power lines to go down, we know people want to have cash. Watch a video about how the Federal Reserve prepares for business disruptions and provides national support when they occur.