Why Don’t Millennials Use Cash?

When’s the last time you saw a Millennial pay with cash? Even convenience store purchases of less than $5 are paid with a debit card. Coffee in Starbucks is paid via cell phone. Money is exchanged between friends using PayPal and Venmo.

As I paid a dinner check, my Millennial daughter affectionately quipped, “You old people and your cash!”

My response was, “Everybody likes cash!” I was wrong of course, (and perhaps prejudiced by my South Philly roots, where some businesses are still “cash only” for one reason or another).

When’s the last time you saw a Millennial pay with cash? Even convenience store purchases of less than $5 are paid with a debit card. Coffee in Starbucks is paid via cell phone. Money is exchanged between friends using PayPal and Venmo.

Many of the Millennials I give birthday gifts to prefer gift cards to specific retailers, like Home Depot or Banana Republic, rather than cash that they can spend anywhere.

A survey by TD Bank of 1,300 Americans, reported in ABA Bank Marketing last month, found that 25 percent of Americans either currently use or have used a reloadable prepaid card in the past two to three years. But among Millennials (ages 18 to 34), this proportion jumps to 33 percent. According to FICO, more than one-third of Millennials are expected to use a mobile wallet in 2015. (Opens as a PDF)

Professor Bernardo Batiz-Lazo of Bangor University, Wales, speculates that Millennials’ predisposition for non-cash transactions could eventually result in the demise of ATMs. His blog post reprinted by Newstex last month states:

“Perhaps the biggest issue shaping ATMs in the near future will concern the choices of Millennials, those for whom the Internet, mobile phones and plastic cards are a fact of life, checks are unknown and cash is quaint. They challenge financial institutions and their business models to do more, faster because they have easier and faster access to better technology than offered by the banks’ legacy systems through the multitude of apps on their smartphones, wearables, tablets and elsewhere. Left to their own devices, Millennials could spell the end of the ATM by 2035 or thereafter.”

Now of course the use of electronic payment methods is not limited to just Millennials. Boomers and Silents are also moving away from cash transactions, but Millennials are certainly leading the charge. If your business requires a minimum purchase to use a card, you’re probably losing customers among the largest demographic group. Millennials represent 24.6 percent of the population vs. 23.3 percent for the Baby Boomers.

I’m waiting to see the first panhandler with a card reader. Let me know if you spot one.

Author: Chuck McLeester

Chuck McLeester's blog explores issues about marketing and marketing measurement. He is a marketing strategist and analyst with experience in healthcare, pharmaceuticals, financial services, pet products, travel/hospitality, publishing and other categories. He spent several years as a client-side direct marketer and 25 years on the agency side developing expertise in direct, digital, and relationship marketing. Now he consults with marketers and advertising agencies to create measurable marketing programs.

11 thoughts on “Why Don’t Millennials Use Cash?”

  1. I think Millennials don’t use cash for the same reason they provide every detail of their lives online, they trust where us boomers were suspicious of “the man.” We don’t like using a card for every transaction because it is trackable and traceable. It may be for a non-threatening reason such as marketing but our generation was always distrusting of providing too much information and very protective of our privacy. The Millennials will change once they get burned, which will happen eventually!

  2. As a “millennial” I am always curious to read articles that analyze why we supposedly do certain things. Maybe I am an odd one out of the bunch (its possible) but I actually love using cash and prefer it most often, especially for small transactions but I find myself never carrying any. That isn’t because I feel debt cards or credit cards or apps are superior, but simply because of one HUGE factor. Almost all paychecks are auto-deposited into back accounts now. So you never need to go to the bank unless you specifically need cash. So if you have access to everything and don’t need to make the trip to go get your money or have access to it then why would you? If we still received paper checks that we had to hand deliver to the bank I guarantee I would take some cash out with me every time. But since we receive our pay electronically already then we just never need cash unless going someplace that requires it. The world is set up that way now, so its not that we don’t like using cash, its just that its not needed often now that everything can be done without it. Which is why i think a lot more young people are in debt early since cards get charged on and you can’t physically see the money disappear out of your wallet. Its a lot easier to spend more when your debt is a number on a screen you log into, not hard cash that when its gone, its gone.

  3. My MBA Thesis entitled “Bank Market Segmentation: Age group prediction of cash using behavior” seems apropos.
    I found, in a survey of 6500 Saving and Loan depositors from 1976 that cash was the preferred method of payment for those under 25 (no ability to obtain credit card, debit cards weren’t popular yet, since ATMs were only just being deployed) and those over 60 (who grew up during the depression and therefore were frugal, and cautious, with financial activities.)

    My thesis was used by both IBM and Dieboldt in their research for ATM development, funny that ATMs may already be on death row, about 40 years from their infancy.

  4. Our cash is nothing but fiat money today, and using nothing but cards is insane. Do you really trust the “too big to fail” banks? Not only are you trusting them to keep your balance correct, but to prevent fraud which is impossible in a digital world. Do you also trust them not to do a bail in if need be just to keep the Ponzi scheme going? The bankers are the biggest crooks on the planet. They create money out of nothing, charge you interest on it; and then take your property if you default.

  5. I use a credit card just for the cash back. No need to use cash anymore.
    Though… you hear about people using their credit cards and getting their info stolen. And, what happens when all these electronics/computers crash? Then what happens?
    Though, I like using my CC, I think cash is a better choice. But… the cash back!!!!! ahhh
    Oh, and I bet some day you’ll see some panhandlers with a cell phone with a Square hooked up to it so they can accept credit cards. ha

  6. I don’t get the cash back, are they really this clueless? Do they all pay off their credit cards each month? I doubt that, but they can’t figure out it still cost more to use a credit card? I bet most of them hate the evil banking industry too. And people wonder why the country is going down the tubes.

  7. Sure was, you know how us millennials are. Also, thanks for pointing out an obvious fact… not sure why you felt that made any sense to tell me – as I was defending the use of cash…….

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