Mercator: US Consumers Declare Credit Cards King Over Cash, Mobile Payments

For some time now, we’ve been saying cash was king for the US shopper. A new report sent our way from Mercator, however, declares that the king is, well, at least exiled. Cash is no longer king for the US consumer, but now, the credit card has officially taken over. Cash is merely second place now, so the king isn’t really dead, but more on the line of exiled.

The Mercator report found that credit card use is actually up in aggregate, with 62 percent of US households putting them to work in 2018. In 2017, it was 60 percent, showing a clear if small uptick. What’s more, credit cards are being put to use ahead of debit cards at a variety of sources; we’re seeing increased credit card use in brick-and-mortar stores, in online retailers, in online travel sites, digital content like streaming services, and even for bill payments online. These levels are the highest Mercator has seen, the reports note, since they started tracking these numbers back in 2015.

Debit cards still have a place here, however; they’re geared more toward smaller spending. Small purchases, and everyday purchases like groceries and gas are commonly turned to the debit card. In fact, debit cards are only slightly less popular than credit cards for in-store payments, with 36 percent favoring credit and 33 percent favoring debit. The propensity for Generation Z to favor cash, meanwhile, has been reinforced by this study, as credit card use falls off with this generation.

The decline of cash is a bit of a surprise here, especially given that cash has been king for so long with so little apparent threat to its primacy. Yet with the rise of online spending—and there was plenty of that seen just this Christmas—it’s no surprise that a card system is stepping up. Mobile payments are connected to this, of course—most mobile payments systems rely on a card in one way or another—but this is a step removed that many aren’t seeing the point in making.

As ever, mobile payments systems need to offer customers a reason to actually use the system or face irrelevance, at least in the United States. These numbers show customers willing to separate from cash, but to what…that’s the question.