U.S. Consumer Cash Use, 2012 and 2015: An Introduction to the Diary of Consumer Payment Choice
2017 • No. 17–6
By Claire Greene, Shaun O’Brien, and Scott Schuh
Given the proliferation of electronic payment networks and the commonly held theory that “cash is dying” in the United States, the authors of this paper set out to report estimates of cash use between 2012 and 2015. They also sought to explain methodological differences between two measures of consumer cash payment use and to offer an estimate of the difference that attempts to harmonize the data.
The authors analyzed estimates of the number and value of cash and noncash payments from the 2015 Diary of Consumer Payment Choice (DCPC), which was sponsored by the Federal Reserve Banks of Boston, Richmond, and San Francisco. They used both the DCPC and the Federal Reserve Bank of Boston’s Survey of Consumer Payment Choice (SCPC) to compare results for 2015 with results from 2012, focusing on consumer use of cash.
- Contrary to popular belief, cash is alive and well. Debit cards, cash, and credit cards account for most consumer payments by number.
- SCPC and DCPC estimates of the volume shares of cash use in 2015 are quite different, perhaps due to respondents’ recording payment activity differently in the two survey questionnaires. The 2015 SCPC estimates that just over one quarter of consumer payments by number—that is, volume share—are in cash; the 2015 DCPC estimates that one third of consumer payments are in cash.
- Because of major changes in survey methodology and economic conditions between the two years, comparing DCPC raw data from 2012 with data from 2015 is unlikely to result in an accurate estimate of the actual change in cash share. The raw data indicate that cash volume was 8.2 percentage points lower in 2015 than in 2012.
- Counterfactual simulations controlling for survey and economic changes, however, suggest that the cash volume share declined much less: approximately 2 to 5 percentage points due to changes in consumer preferences between 2012 and 2015.
- Estimates of consumer payment choice(s) from the DCPC for 2016 and beyond should be more comparable with the 2015 DCPC estimates because of fewer changes in survey methodology.
- However, more effort is needed to develop more reliable structural models of consumer payment choice(s) that can be estimated with SCPC and DCPC data. Until such models exist, it will be more difficult to identify separate cyclical and trend components from the DCPC data than from the SCPC data. Jointly interpreting consumer choice(s) of the number and value of payments will also remain a challenge.
U.S. consumer cash payments averaged 26 percent of all U.S. consumer payments by number (volume share) from 2008 to 2015, according to the Survey of Consumer Payment Choice (SCPC), and were essentially unchanged between 2012 and 2015. New estimates from the Diary of Consumer Payment Choice (DCPC) show that the volume share of consumer cash payments is higher than estimated in the SCPC and suggest that the cash volume share was 8 percentage points lower in 2015 than in 2012. The DCPC most likely does not provide an accurate estimate of the actual change in the cash volume share, however, due to changes in survey methodology. Counterfactual simulations controlling for survey and economic changes suggest the cash volume share declined approximately 2 to 5 percentage points due to changes in consumer preferences between 2012 and 2015.