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The State of Cashless Spending & Payments in 2021

Marc Mezzacca
Updated on: 07/06/21
7 min reads

How Americans go about paying for their shopping in the time of a COVID-19 pandemic

Despite the COVID-19 pandemic, Americans spent a total of $5.6 trillion on shopping in 2020 (Source: US Census Bureau). That’s roughly $17,095 per person on groceries, clothing, home furnishings, appliances, sporting goods, hobby items, and everything in between.

An estimated 14% or $791 billion of that total spending was spent online, equivalent to about $2,398 for every United States resident.

How did Americans pay for all their shopping? Do people still use cash and checks? Or are digital wallets like Apple Pay or apps like Venmo starting to become prevalent? How has the pandemic affected how we pay for our goods and services?

To determine the answers to all these questions and more, CouponFollow surveyed 1,500 Americans in January 2021. Here’s what we found out about the state of cashless and touchless payment methods as we enter the new decade.

Key Findings

COVID-19 changed how Americans pay for shopping

  • 49% are worried about using cash due to the potential risk of COVID-19 transmission
  • 41% started using cashless payments because of COVID

In strange times of the pandemic, Americans are sticking to what we know

  • 62% of Americans used cash for some of their shopping in 2020
  • 91% of Americans carry cash on them at any given time
  • 88% keep some cash saved at home

Phone-based payments show promise for future growth

  • 42% started using apps like Venmo and PayPal more in 2020
  • 32% are increasingly reliant on digital wallets like Apple Pay

Cryptocurrency continues to divide opinions

  • 40% admit knowing nothing about cryptocurrencies like Bitcoin
  • 38% think it’s the future of money
  • 37% believe it’s a bubble or a fad that will pass

Cards, Cash, and Apps: Shopping Payment Methods & Trends

Whether in-person or online, the majority of Americans pay by debit or credit card. Curiously enough, debit cards are more popular than credit cards for in-person shopping, while credit cards are more popular online.

Credit cards being the most common payment method for online purchases is consistent with the findings of Online Shopping & Credit Card Usage Report. While offering a convenient way to pay, credit cards are often associated with debt, as more than a quarter (28%) of shoppers racked up more than $1,000 in credit card balances through online shopping.

Increasingly more Americans paid with mobile apps, cards, and digital wallets in 2020, with cash and checks continuing to fall out of favor.

Our data shows that it’s men (rather than women) who are spearheading the transition to cashless, phone-based payment methods.

Generationally, it’s mostly Zoomers and Millennials that are the driving force behind the rise of cashless, digital, and app-based payments.

And perhaps no wonder. As online retailers expand the list of payment methods they accept, it allows Millennials - America’s most active shoppers - to shop and pay with even greater ease and convenience.

Can’t Touch This: Most Americans Believe in Touchless Payments

What might be causing Americans to change the ways they pay for shopping? In 2020, the answer is likely an obvious one: COVID-19 pandemic.

Which Generation Is Most COVID-Conscious?

Overall, Millennials and Gen Z are more concerned about the pandemic and its potential effect on their finances and payments in general. That said, it’s Gen X that are more likely to switch to touchless payments (44% vs. 42% of Millennials and Gen Z).

While it stands to reason that Baby Boomers are more likely to be at risk for coronavirus infection, they seem to be the least concerned about catching it from cash. They’re also the least likely to switch to touchless payments.

America’s Enduring Commitment to Cash

Not only do 62% of Americans use cash when shopping in person in 2020, as many as 88% keep at least some savings in cash at home, averaging about $1,690 in savings kept at home.

More than nine in 10 (91%) carry cash on them at any given time, with an estimated average of $85.

Cash Cows: Who Has The Most Cash on Hand and at Home?

Whether fueled by pandemic-related concerns or just good old precaution, Americans report keeping a substantial amount of money in their homes.

Men appear to be more cash-rich, claiming to carry an average of $111 on them at any given time, which is 79% more than women carry ($62). Their home-based cash reserves, however, are 2.3 times that of women as men report keeping $2,373 compared to women’s $1,014.

From a generational perspective, Millennials & Gen Z appear to be hoarding cash the most. Their day-to-day cash supplies run at $89 compared to Gen X’s $85 and Baby Boomers’ $77. The cash Millennials & Gen Z said they keep at home is twice the amount of an average Baby Boomer: $1,845 vs. $905.

Old Habits Die Hard: Why Most Americans Always Carry Cash

Why do people carry cash? It gives them a feeling of safety. Two-thirds of respondents (67%) who carry at least some cash noted they like having it in case of an emergency.

Others carry cash because it’s useful for tipping (45%), and to almost a quarter (25%) cash gives a sense of security and makes them feel good about their finances.

The sense of security provided by cash is strongest with the Baby Boomer generation (71%).

Millennials like cash because it allows them to tip more easily, and curiously enough, having physical cash makes them feel good about their finances more than any other generation (26%).

Gen X, on the other hand, have a preference for cash out of privacy concerns (20%).

Never Gonna Give You Up: Americans’ Attitudes to Cash

One thing Americans mostly agree on about cash is that it’s safe from fraud (65%). The second most common opinion is that handling notes and coins is risky when it comes to COVID transmission (49%).

Almost half (49%) believe that using cash helps them stay out of debt, and 44% find it convenient.

All of which is probably why cash is going to stick around for a while. Only 32% can see themselves giving up cash in the future.

Emergencies, Tipping and Natural Disasters: Reasons Americans Keep Cash at Home

Reasons for keeping cash at home are similar to those for carrying cash: emergencies and tipping. However, nearly one-third (30%) stash some cash at home in case of a natural disaster or mass power outage.

Beyond that, almost one in five are either concerned about another recession (19%) or their own finances (18%). A notable 13% keep cash at home due to not trusting the banks.

Nearly three-in-four (74%) Baby Boomers keep cash at home for emergencies - the highest rate across generations. Gen X are most likely to keep cash for tipping their delivery drivers (42%).

Meanwhile, one in five Millennials and Zoomers are concerned about a potential recession (21%) and feel insecure about their finances because of COVID (20%) - more than any other age group.

Americans’ Views on Touchless Payments

In times of COVID, most Americans seek to minimize contact with others to avoid unnecessary risk of infection. This is why touchless payments like contactless cards, mobile apps like Venmo, or digital wallets like Apple or Android Pay can be a handy alternative to traditional payments, which most often involve touching objects at the point of payment in store.

Most Americans’ opinions broadly align with this view, as 57% believe that shops and retailers should accept touchless payments to help slow down COVID spread.

And yet, there are some reservations about using contactless payment methods. 44% believe that touchless payments are prone to fraud, 30% claim they don’t work reliably, and more than a quarter (27%) find them too slow.

Cryptocurrency: Cryptic For Many, Investment-Only For Some

Cryptocurrency - an emerging virtual financial system - continues to be slow on the uptake. Nearly four in 10 Americans (39%) admit they don’t know anything about cryptocurrencies like Bitcoin, Ethererum, or Ripple.

What’s more concerning for the future proliferation of bitcoin and similar currencies, people seem to have polarized opinions about cryptocurrency.

Whereas 38% think that cryptocurrency is the future of money, almost the same number of people (37%) believe it’s a fad that’s just going to pass, and a further 35% think it’s a bubble.

While 28% think it’s the most secure payment method, 37% believe it’s too risky to use.

Another potential barrier cryptocurrency may face on its way to mass adoption is that it’s still seen by many as primarily an investment vehicle.

Of those that report owning some cryptocurrency, 40% have no intention of spending it on their shopping.

Final Thoughts

It’s tempting to think that all payments will be safe, cashless, and touchless in the future, but that future is still some way away.

Fueled by continually improving technology and helped along by concerns about the risk of COVID transmission, Contactless cards, digital wallets like Apple Pay and Android Pay, and mobile apps like Venmo or PayPal are becoming increasingly popular.

Yet, only 35% are prepared to give up using cash completely. Only 17% would prefer to use digital wallets, e.g., Apple Pay (8%) or mobile apps (9%), to pay for all their purchases.

Cashless payment is also extremely popular for food and grocery delivery. The rise of apps like DoorDash, Ubereats, and Instacart have made it possible for all your food, groceries, and household items to be delivered to your home within 1-2 hours. Although there is typically an additional cost associated with such a quick delivery you can currently use an Instacart promo code to get free delivery on any order over $35.

Cashless payments are on the rise, but in the foreseeable future, the mix of payment methods Americans use when shopping is likely to stay just that – mixed.

Sources & Methodology

For this report, we surveyed 1,500 Americans aged 18 and above, sampled from the total U.S. population of 331,000,000 with a confidence interval of 90% and an average margin of error of 2%.

Our study participants represent a cross-section of the population in terms of gender, age, income, and education. The survey was carried out in January 2021.

Find out more at couponfollow.com/research

Fair Use Statement

Feel free to share this research with whomever you think may benefit from it, but be sure your purposes are noncommercial, and please do provide a citation link back to the research on this page so they have access to our full findings and survey methods if you do so.

about the author

Marc Mezzacca
Marc Mezzacca is CEO of CouponFollow, a consumer savings engine that surfaces popular coupons. He has been in the coupon and deals industry for over a decade with a deep interest in evolving e-commerce technologies.