Although electronic payments are gaining market share, millions of Americans still use cash for a variety of reasons. While some have no alternative, others find it cheaper, more secure, or more private. A new study by Tufts University, based on a survey responses from 1,000 Americans, estimates that the use of cash costs about $200 billion annually. This includes $55 billion in higher costs to businesses and $101 billion in missed tax revenue from off-the-books transactions.
The cost of using cash amounts to about $1,739 a year for the average U.S. family -- and even more for poorer and unbanked Americans; consumers without a bank account pay an average of $3.66 more a month than those with a bank account. There is also a cost in time to get cash. The average American spends 28 minutes each month (5.6 hours a year) going to the bank or ATM, not counting time spent waiting in line.
African Americans were more than twice as likely as other racial groups to pay for access to cash. Retirees were found less likely to pay. Consumers who receive their wages on a payroll card pay average costs of more than four times as others in the survey. Americans in households with incomes in the range of $20,000 to $100,000 a year said they usually have less than $100 in cash. While U.S. consumers under age 35 have median cash balances roughly half the size of those over 55, they also pay more in fees.
The National Consumer Law Center believes that it is important to give all people access to electronic payments, but staff attorney Lauren Saunders says that not all new payment systems are superior to cash.