The digitisation of payment instruments undermines the public nature of money
"The digitisation of payment instruments increases the number of people in a situation of monetary exclusion. Digital payments have now become essential to fully participate in socio-economic activity, although they are not necessarily accessible by all."
Measurement and Use of Cash by Half the World’s Population
The IMF published a paper that analyzes cash usage in 14 advanced and emerging market economies, using two measures; currency in circulation (CIC) and the value of cash withdrawn from ATMs. It finds that, while the CIC metric continues to rise, ATM withdrawals are declining rapidly. The main reason for this is that CIC includes cash used for payments, hoarding, and illegal use while ATM cash is focused much more on the use of cash for payments alone. As well, CIC is not adjusted for the turnover of cash for payments while ATM cash already includes it. The 14 countries in our sample account for half of the world’s population and two-thirds of its GDP.
US: I tried to pay my taxes in cash – here’s what happened
As further evidence of how flakey the "legal tender" concept is, this article documents the great difficulties the author had in paying his income tax in cash to the U.S. Internal revenue Service (IRS). It highlights some of the challenges faced by Americans without bank accounts, likely among the poorest taxpayers, who would either have to follow the arduous process followed by the article's author, or pay fees for various end-arounds.
Congress members introduced legislation in the House and Senate to ban businesses from rejecting cash for in-person retail purchases. They are designed to protect Americans who are unbanked and underbanked and who rely on cash to pay for necessities, as well as to preserve the right of consumers to choose to pay with cash, say the bills’ authors. “Cash is the only option available for millions of Americans to pay for food, housing and other essentials,” Payne said in a June 14 press release regarding the introduction of the Payment Choice Act.
Unmet Payment Needs and a Central Bank Digital Currency
The Bank of Canada (BoC) published a paper that finds that most adult Canadians do not experience gaps in their access to a range of payment methods, and this would probably continue to be the case in a cashless environment. Some people could, however, face difficulties making payments if merchants no longer generally accepted cash. It suggests that addressing unmet payment needs for a minority of consumers by issuing a central bank digital currency (CBDC) could be challenging, because the minority of consumers with unmet payment needs will only be able to benefit from a CBDC if the majority of consumers experience material benefits and therefore drive its use.
Understanding the importance of cash for groups at risk
De Nederlandsche Bank (DNB) published a paper about the payment behavior and preferences of Dutch consumers who encounter difficulties navigating this digital world, particularly individuals within groups at risk. The research focused on people with low digital literacy, disabilities or financial difficulties. Using rich payment diary data it revealed that cash is an important means of payment to many. 7% said they always use cash at points of sale and 28% indicate they cannot do without cash. Cash is especially important for people with low digital literacy, people who are blind or visually impaired, people with limited or no hand function, people with a mild intellectual disability and people who find it difficult to make ends meet on their income.
"America is an odd place when it comes to payments. It seems incredible to me that there is a business case to be built around taking cash and converting into cards at a ball park, but there you go. Interestingly, one of the providers of reverse ATMs in America speculated that in the future there might be no need to dispense a physical card from the machines, instead offering customers “a virtual card on your smartphone”, much as they did in Russia all those years ago!" [David Birch]
What Behaviour Drives Cashless Payments in Africa?
"Within the extant literature, recommendations are for government policy to “invest more in nudging”, that is, to use psychological behavior and habits to influence, for instance, greater use of electronic payment methods or eliminate cash transactions. However, most people in our sample declared no preferred payment method. Instead, they choose according to transaction context in specific situations. These results suggest that authorities should ensure that a wide variety of payment alternatives is available for people to use, including cash, and let them choose. This option is aligned with the position of the leading central banks and the Bank of International Settlements’ recent joint proposal to launch CBDCs shortly. These recommendations thus support a view to managing the downsizing but not the total elimination of the cash management infrastructure."
Uncertainty, Politics, and Crises: The Case for Cash
A paper by Gerhard Rösl and Franz Seitz recommends that central banks should always be able and willing to provide cash to meet the demand for both transactional and store-of-value motives. Since people tend to increase their cash holdings, especially in times of uncertainty, both as a means of payment and as a store of value, central banks should not restrict their banknote denominations only to lower ones. In addition, a conscientious central bank should stockpile sufficient cash in its vaults to meet unexpected demand during crises. However, cash production and storage costs might seem unnecessarily high at first glance, but the social benefits in uncertain and unstable times unambiguously outweigh the costs. Therefore, those costs might be interpreted as an insurance premium the society pays for unanticipated events. https://mpra.ub.uni-muenchen.de/113784/1/MPRA_paper_113784.pdf
BOE CBDC Consultation Garnered Over 50,000 Responses, Many Privacy Concerns
In his final speech as Deputy Governor for Financial Stability, Jon Cunliffe revealed that the Bank of England (BOE) and HM Treasury (HMT) central bank digital currency (CBDC) consultation paper attracted over 50,000 responses. The majority expressed general, high-level concerns about privacy, programmability and the decline of cash. According to the paper, users of a digital pound would have the same level of privacy that they enjoy today when making electronic payments, and the BOE would not see people's data. Also, neither government nor the BOE would program a digital pound or constrain the uses to which it could be put. It would be for private sector firms to develop and offer, for user consent, payment services involving greater programmability. As regards cash, the government recently legislated to ensure the availability of physical cash to those who prefer to use it and the BOE has made clear that it will provide physical cash as long as there is any demand for it. https://www.bankofengland.co.uk/speech/2023/october/jon-cunliffe-speech-at-the-economics-of-payments-xii-conference
Canadians report a love-hate relationship with cash
According to Payments Canada, while the value of cash used in purchases has declined 41% from 2017-2022, only 13% of Canadians report having gone completely cashless. Of the 87% that still use cash, 31% use cash for day-to-day purchases, and 37% hold on to it for emergencies. While cash is used less often for point-of-sale purchases, the prospect of cashless stores is a concern for 52% of Canadians. And they are divided on the prospects of a central bank digital currency (CBDC), 36% finding it appealing and 30% not. One in four say they would not use a digital Canadian dollar, with 63% who would still use cash if a digital Canadian dollar was introduced.
Cash usage in the United Kingdom has grown for the first time in a decade, according to the British Retail Consortium (BRC) annual Payments Survey, with coins and banknotes accounting for 19% of transactions in 2022, , up from 15% in 2021. It's the first time that the retailer lobby group has recorded any growth in cash uptake since it first began monitoring payments in 2013. Card payments were used for 76% of transactions (83% in 2021), with debit cards accounting for four-fifths of these transactions. https://brc.org.uk/news/corporate-affairs/cost-of-living-drives-return-to-cash/
"The 2022 Federal Reserve Payments Study (FRPS) collected data for the 2021 calendar year. This initial release includes top-line figures for the core noncash payment methods used in the United States by consumers, businesses, and governments, including payments by general-purpose and private-label cards, automated clearinghouse (ACH) transfers, and checks. This release also covers automated teller machine (ATM) cash withdrawals. Wire transfers, used primarily for large financial transactions, are excluded from these data."
"In 2022, Dutch people used their mobile phone or wearable device for contactless payment at points of sale as often as they paid in cash. The share of these new means of payment rose to 21%, while the use of banknotes and coins stabilised at 20% of total payments. Including the contactless variants, debit payments thus stabilised at 80% of all purchases. Young people, the over-65s and people who find it difficult to make ends meet still tend to prefer cash. This has been revealed by a joint study conducted by the Dutch Payments Association (Betaalvereniging Nederland) and De Nederlandsche Bank (DNB)."
UK FCA sets out new rules to maintain access to cash
The U.K. Financial Conduct Authority (FCA) proposed new rules to maintain reasonable access to cash for personal and business customers across the United Kingdom. Under the proposals, designated banks and building societies will need to assess gaps in access to cash. These assessments need to take into account local factors such as demographics and transport. Where firms identify gaps, they will need to act to address these needs, like delivering reasonable additional cash services to fill gaps, and ensuring they do not close cash facilities, including bank branches, until any additional cash services identified are available.
According to a BearingPoint survey across seven European countries, cash is the most used payment method overall with contactless debit cards second. Cash use is significantly higher in Austria (79%) and Germany (71%), but respondents from Switzerland (63%), Ireland (61%), the Netherlands (57%), and France (55%) also show a relatively high level of cash use. Finland has a significantly lower frequency of cash usage at 43%.
Cash Is Alive: How Economists Explain Holding and Use of Cash
"Research on holding and use of cash involves many aspects, such as reasons for holding and hoarding cash, transactional demand for cash, cash management, type of spending paid with cash, type of consumer who pays cash, merchant acceptance, how consumers get cash, currency denominations, legal aspects, cash substitutes, and cost of cash. The purpose of this article is to introduce the reader to some of the research economists do on consumer holding and use of cash." https://www.aeaweb.org/content/file?id=15998
The European Central Bank (ECB) published an analysis of the environmental impact of euro banknotes as a means of payment based on the European Commission’s Product Environmental Footprint (PEF) methodology. It accounted for all the activities of a full cash cycle of banknotes, from raw material acquisition and manufacturing to the disposal of euro banknotes. It found that the average annual value of cash payments per euro area citizen in 2019 was 101 micropoints (µPt), equivalent to an driving a standard car for 8 km. https://www.ecb.europa.eu/pub/pubbydate/2023/html/ecb.pefreport202312~81e945e7aa.en.html
"While proponents of central bank digital currencies argue that the technology would boost financial inclusion and efficiency, critics warn that it poses financial, political, and environmental risks. But these concerns are overblown, especially when also weighed against CBDCs’ potential to strengthen monetary policy."
The Swiss National Bank (SNB) published a paper that examines how payment choice affects consumer discretionary spending using a proprietary dataset that links a payment-methods survey, a payment-diary survey and a behavioral survey for a representative sample of 1,138 Swiss consumers. It finds that "present-biased" consumers spend more, the more often they use cashless payment instruments. (Present-based consumers are those that score high on indicators of impulsivity and procrastination.) For consumers with low levels of present bias, we find that spending is unaffected by payment instrument usage. This suggests that designers of instant payment services and central bank digital currency (CBDC) wallets consider offering prepaid payment cards or of mobile-payment applications that allow consumers to manage and restrict their liquidity in a convenient manner.
The Costs of Payment Methods in the Retail Sector (Bundesbank)
Deutsche Bundesbank published a study that quantifies retailer-side resource costs of cash, national debit (girocard), and international card schemes in German brick-and-mortar retail using time-and-motion data and a 268-firm cost survey. The study finds cash cheapest per transaction (0.43 euro) but costly relative to turnover (2.3 percent), while girocard minimizes cost as a share of turnover (0.8 percent) and international debit and credit cards are materially more expensive, driven by higher fee components. Results imply strong scale economies (lower unit costs for larger merchants), structurally higher burdens for small firms and food service, and policy relevance for interchange regulation, instant-credit-transfer-based schemes, and digital euro design as tools to discipline international card pricing and preserve a viable cash infrastructure. [Bundesbank]
The U.S. Federal Reserve Board (FRB) 2026 Diary of Consumer Payment Choice finds U.S. consumer payment patterns broadly stable over the past three years, with cash remaining the third most used instrument after debit and credit cards, which together account for about two-thirds of payments. Consumers average 47 payments per month (16 credit, 15 debit, 6 cash), and 76% carry cash daily while 45% hold additional “store-of-value” cash, underscoring its backup and savings role. Cash use is higher among lower-income, older, and rural consumers, and four in five adults used cash in the past 30 days, with 90% intending to keep using it. [FRB]
Smartphone Instead of Wallet: Mobile Payment is Booming (EHI)
The EHI Retail Institute's "Payment Systems in Retail 2026" reports that mobile payment reached 19.3% of non-cash transactions at German point-of-sale in 2025, up from 12.8% in 2024, representing 9.3% of approximately 20 billion annual transactions. Growth was partly enabled by Apple opening its near-field communication interface to third-party apps following European Commission intervention. Cash fell to 32.3% of turnover; card rose to 65.1%, led by Girocard (40.5%), with international debit cards gaining 2.5 percentage points to 9.4%. The unresolved question is whether continued contactless displacement of cash will prompt regulatory reassessment of legal-tender obligations. [EHI]
The U.S. National Bureau of Economic Research (NBER) published a paper that argues, using multi-source U.S. and cross-country evidence, that cash functions as critical fallback liquidity when electricity outages disable digital payment infrastructure during natural disasters. Event studies across store-level transaction data, card aggregates, and household scanner records show that hurricanes generate persistent outages, shifting spending composition sharply toward cash, while pre-disaster expenditure spikes are credit-financed stockpiling. The finding that payment-system fragility is a first-order attribute of any instrument has direct implications for regulators overseeing cashless transitions, mandatory acceptance rules, and the design of offline-capable central bank digital currencies. [NBER]
Tap a Card, Pay by Phone, but Cash Still Holds its Own (BIS CPMI)
The BIS Committee on Payments and Market Infrastructures (CPMI) published a brief that argues that rapid growth in digital and fast payments coexists with a plateau, rather than collapse, in cash usage across major economies. Cashless transactions per capita continue to rise, led by credit transfers and fast payments in emerging markets and card use in advanced economies, while average ticket sizes fall as systems are used for smaller‑value retail payments. This supports policies enhancing fast payment infrastructure and maintaining resilient cash access, with implications for ATM/branch networks, financial inclusion, and the calibration of legal tender and cash services frameworks. Open questions remain around the causal impact of reduced access points on cash demand and how far digitalization will structurally displace cash holdings versus transactional use. (BIS CPMI)
Cash Use in Australia: What the 2025 CPS Tells Us (RBA)
The Reserve Bank of Australia (RBA) reported that cash use in Australia has stabilized following a multi-decade decline, according to the 2025 Consumer Payments Survey (CPS), a triennial diary-based study of 1,200 respondents. Cash accounted for approximately 15% of payments by number in 2025 (up from 13% in 2022), with roughly half of Australians using cash in a typical week; the share of high cash users held steady at around 7%. The stabilization is consequential for policy because one-third of respondents reported they would face hardship or major inconvenience if cash became difficult to access, with disproportionate reliance among older adults, lower-income households, persons with disability, and remote communities—groups for whom policy mandates (e.g., the January 2026 grocery and fuel cash-acceptance requirement) and branch-closure moratoria are directly relevant. The concurrent decline in perceived convenience of cash access, driven by contraction in bank branches and bank-owned ATMs, raises the open question of whether infrastructure reduction will ultimately erode the behavioral stabilization the CPS currently records. (RBA)
New Recommendations for Public Payment Preparedness (Riksbank)
Sveriges Riksbank issued new recommendations on “public payment preparedness,” urging households to see themselves as part of Sweden’s total defence and to maintain multiple means of payment so essential purchases can continue during disruptions, crises or war in an increasingly digitalized environment. It advises adults to hold at least SEK 1,000 in cash at home (in mixed denominations) for roughly a week’s essential spending and to use cash periodically so cash infrastructure remains robust, to have at least two payment cards linked to different card networks (e.g. Visa and Mastercard), to ensure access to a mobile payment service such as Swish that relies on different infrastructure than cards, and to keep physical payment cards and PINs accessible even if mobile wallets are normally used. The recommendations feed into the Riksbank’s broader work on national payment contingency and will also feature in the Payments Report 2026, due on March 12, 2026. [Riksbank]
Europe is Rediscovering the Virtues of Cash (The Economist)
The Economist published an article that discusses how Europe, particularly Scandinavia, rapidly embraced cashless payments over the past decade, with Sweden leading the way at 90% digital transactions. However, European authorities are now reversing course and mandating that businesses must continue accepting cash. The shift comes from concerns about excluding elderly and poor populations who struggle with digital payments, as well as worries about system resilience—Spain's power cuts last spring left people unable to buy necessities, and there are fears about dependence on American payment companies like Visa and potential foreign sabotage. While cash usage had fallen dramatically (from 79% of eurozone transactions in 2016 to 52% in 2024), the EU now recognizes that physical money provides crucial backup when digital systems fail. [Source: The Economist]
H.R.3074 - 119th Congress: Common Cents Act (Congress.gov)
The Common Cents Act is proposed legislation introduced in 2025 that seeks to eliminate the production of the penny and mandates that cash transactions be rounded to the nearest five cents. The act aims to address the financial inefficiencies associated with minting pennies, as their production costs exceed their actual value. [Source: Congress.gov]
2024 Survey and Diary of US Consumer Payment Choice (Atlanta Fed)
The 2024 Survey and Diary of Consumer Payment Choice found that US consumers are making more payments—averaging 48 monthly, up 6% from 2023—and the average monthly payment value rose 28% to $6,867. The use of paper-based payments (cash and checks) continues to decline, with just 14% of payments made in cash and a drop in consumers using checks. Payment cards remain dominant: two-thirds of all payments were made by card, credit cards are the most used for one-third of transactions, and mobile payment adoption is steady—70% used a mobile phone for payments in the past year, and mobile’s share of transactions increased to 32%. Most payments were in-person, except for bills, which remain heavily remote and digital. Fraud rates for checks and cards remained low, with mild declines in reported card fraud. About 8% of consumers reported owning crypto, mainly as an investment. The findings illustrate a continued, gradual shift toward digital and card-based payments, declining cash and check preference, and steady or increasing adoption of new payment technologies and channels.
