Cash vs. Credit – Which One is King?

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Physical currency has been around for thousands of years, so it is hard to imagine a world where consumers are making their purchases without it. But that is exactly what is taking place as electronic forms of payment have become increasingly available, convenient and cost-effective due to technological advances in the payments industry and shopping habits of consumers.

According to Digital Transactions, businesses and consumers are avoiding cash payments in favor of electronic payments. And this trend may lead to cash significantly declining in the coming years.

Cash is Becoming Less Popular for Smaller Payments

Research shows that cash transaction rates have fallen while card payments have continued to rise. But one area that this is especially apparent is in the purchase of goods that are $10 or less where market share is steadily being eroded by credit and debit cards.

According to a report in 2014, 65% of rewards cardholders preferred to pay for small purchases with cash, while 11% preferred to use their credit card and 22% their debit card.

In contrast, today, 26% of respondents prefer to use their credit card for small purchases, up from 23% in 2018. Additionally, 31% of rewards cardholders say they will use a debit card for a small purchase, up from 30% in 2018.

“Since 2014 there has been a steady shift away from cash for small purchases, with credit being the largest beneficiary,” says Ted Rossman, industry analyst at “In that time the percentage of respondents using credit cards for small purchases has more than doubled.”

Contactless and Mobile Payments Benefit

Two potential beneficiaries of consumers’ growing preference for using credit and debit cards for small purchases are contactless cards and mobile payments. Both technologies can speed up payments without compromising the security of the transaction or the cardholder data associated with it.

According to Digital Transactions, lack of awareness remains a significant barrier to increased adoption of these technologies. Just 39% of rewards cardholders have made a mobile payment, the survey says, and the usage of mobile payments among U.S. consumers, except for Millennials, is less than 50%.

One factor that could lift awareness and adoption of both technologies is if they are implemented by more public-transportation authorities like New York and Chicago. If consumers’ comfort levels are increased by using these mediums, good chances are other businesses will follow suit.

Learn More About i3 Merchant Solutions’s Cashless Solutions:

Contact us online or call 1-877-875-6114 x3.

Check out i3 Merchant Solutions’s newsroom.

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