A big focus among innovators these days is payments. We just profiled 10 of the worst things about how we pay for stuff, and what kind of progress is being made to address them.
The San Francisco Fed has just put out its own study breaking down how Americans pay for stuff. It reveals that 40% of all payments involve cash — but just 30% of Americans use cash willingly.
It also shows where and how we should be attacking the cash problem: By changing how we do person-to-person and food transactions, and through something that looks like a debit card.
Cash is by far the most dominant form of payment by absolute transaction volume. Debit cards are next, at 25%. Most large-value payments, meanwhile, occur through online banking and bill pay.
As for the second finding, here are Americans’ payment preferences. Debit cards come out on top at 43%, followed by cash at 30%. Only 22% of Americans like paying for stuff through credit cards.
This is a recent phenomenon.
So when we’re forced to use cash, what’s it for? The Fed tells us: paying our friends, and paying for food.
In general, small-dollar stuff:
So what does this all mean? First, that there is definitely a huge opportunity for someone to crack cash — but it hasn’t happened yet. Second, it’s clear where the problem lies: Small payments, which, paradoxically, are often too expensive or physically impractical for existing payment rails to process. Finally, the study hints that the folks tinkering with payments engineering should look to debit cards and their attributes as a model.
NOW WATCH: Money & Markets videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.