Cash Payment Trends: Where Paper Money Ranks With United States Shoppers
Cash remains a common option at the register, and Federal Reserve research shows who leans on bills and where usage is shifting across the United States.
Cash payments are transactions settled with physical currency, such as coins and banknotes. Unlike card or app-based purchases, a cash payment is completed when the buyer hands over the money and the seller accepts it.
In a typical cash purchase, the buyer presents the amount due, the merchant verifies and counts it, provides change if needed, and completes the sale. Many sellers also provide a receipt, which can help both sides document the transaction even though the payment itself does not create an automatic electronic record.
Non-cash payment methods include debit and credit cards, digital wallets, bank transfers, and checks. Compared with those options, cash is immediate and does not rely on a payment network, but it can be harder to track, store, and use for online purchases or large-dollar transactions.
Examples of cash payments include buying food from a small stand or farmers market, paying for a haircut, leaving a tip, making a small repair payment, paying a babysitter, using coin-operated machines, or purchasing items at a yard sale.
People and businesses still prefer cash in some situations for practical reasons, including privacy, budgeting control, avoiding card processing costs, and serving customers who do not have easy access to banking or digital payment tools.
Using cash has advantages such as immediacy at checkout, fewer payment-related fees for merchants, and reduced exposure of personal financial data. At the same time, it carries drawbacks, including theft or loss risk, the possibility of counterfeit bills, and the lack of built-in traceability unless receipts and logs are maintained.
Key Takeaways: Cash’s Place Among Payment Methods
- Cash ranked third behind debit and credit cards, accounting for 16% of payment preferences.
- This ranking has remained unchanged for six years.
- Debit and credit cards together make up about two-thirds of United States transactions.
- 76% of respondents keep cash as a backup payment method.
- The average amount of cash carried is $69.
Deeper Insight: Who Uses Cash and How Transactions Differ
The Federal Reserve’s study details how people still rely on physical tender even as digital payment options expand. Usage is most pronounced among older adults, lower-income households, and rural residents.
| Demographic Group | Average Monthly Cash Transactions |
|---|---|
| Age 55 and up | 10 |
| Age 18 to 24 | 2 |
| Household income under $25,000 | More often than households making over $150,000 |
| City and suburban shoppers | About 6 |
| Rural consumers | About 9 |
Even as consumers adjust their payment mix, other research shows momentum shifting away from currency at the point of sale.
In 2024, the share of consumers who made a recent October 2024 purchase with cash slipped to 83% from 87% a year earlier, according to a 2025 analysis by the Federal Reserve Bank of Atlanta. Check use also fell to 35%, down from 40% the prior year, the survey said.
As reliance varies, regulators in some jurisdictions require businesses to accept cash as certain merchants adopt card-only or app-based ways to pay.
In March, New York Attorney General Letitia James reminded the public and local merchants of a new state law prohibiting retailers from refusing cash for goods and services. With limited exceptions, penalties can reach $1,000 for an initial offense and $1,500 for each additional violation.
Cash transactions can still be taxable, just like payments made by card or other methods. For businesses, taking payment in currency does not change the underlying obligation to report income and, where applicable, collect and remit sales taxes.
In some cases, large cash payments in a trade or business must be reported to the Internal Revenue Service. Generally, if a business receives more than $10,000 in cash in a single transaction or in related transactions, the business receiving the cash is responsible for reporting it on Form 8300.
In accounting, cash payments are typically recorded using point-of-sale records and supporting documentation such as receipts, register tapes, and cash logs. Businesses often reconcile the cash drawer at the end of a shift, record the cash received against sales or accounts receivable, and document deposits to keep on-hand cash aligned with the books.
For businesses that handle currency regularly, common considerations include secure storage, clear cash-handling policies, routine drawer counts, separation of duties when possible, timely deposits, and procedures for detecting counterfeit bills. Keeping consistent records can also reduce disputes and help support tax reporting requirements.
Beyond equity concerns, cash availability can matter after climate events and natural disasters, advocates note.
Maintaining access to cash can help households and businesses continue basic commerce when routine systems are disrupted.
Jay Zagorsky, a clinical associate professor of markets, public policy and law at Boston University, emphasized that electronic payments can fail during such crises because they depend on computers, power, and telecommunications networks.