United States consumers' use of cash declined 3 percent last year and it will continue to drop at the same rate through 2015, according to a new report by Aite Group LLC, a Boston-based consulting firm.

Overall, through 2015, the use of cash will decline by nearly $200 billion, but the drop does not signal the beginning of a cashless society because some age groups are using more cash than others, according to the Aite Impact Note study, "The Less-Cash Society: Forecasting Cash Usage in the United States."

"Despite forecasts of a cashless society, the United States is nowhere near the realization of this vision. In fact, if the use of cash were to decline by 17 percent every five years—what our forecast for 2015 calls for—then the use of cash in the United States wouldn't fall below $1 billion before 2205, roughly 200 years from now," the report found.

The report by Ron Shevlin looked into three areas: person-to-person payments, or P2P, retail payments and bill payments. For P2P payments, consumers will use $101 billion less cash in 2015 than they did in 2010. As a percentage of all P2P spending, cash use will decline from 53 percent to 41 percent. Cash use last year for P2P was $462.5 billion.

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The rate of decline for bill and retail payments will be lower, both at 2 percent per year for the next five years, the study found. As a percentage of all retail spending, cash will decline from 12.6 percent to 9.8 percent. For bill payment, cash use will decline from 5 percent to 3.7 percent, the study estimates. Last year, cash was used in 938 million bill-pay transactions, totaling nearly $217.7 billion. Cash use for retail payments in 2010 was $519.9 billion.

Aite Group reached its conclusions from a number of statistical sources as input for sizing and forecasting. Aite also conducted two studies last year to determine consumers' pay behaviors.

In July, the company surveyed 4,696 U.S. consumers. Respondents were asked which of 28 different types of bills they pay and which payment channels and payment methods they use to pay bills. The payment methods included cash, checks, money orders, debit cards, credit or withdrawal from a bank account.

Last October, Aite polled online 3,190 consumers in the U.S., United Kingdom and Australia about their P2P transaction activity. The survey was conducted among consumers who participate in a research panel.

Aite estimated that U.S. consumer use of cash in 2010 totaled $1.2 trillion from P2P, bill payments and retail purchases. Between 2006 and 2009, ATM transaction volume grew 0.8 percent annually while ATM withdrawals increased nearly 3 percent a year.

Despite the increase in cash in circulation and ATM activity, many consumers are using less cash, but other some groups are using more cash.

This varies by age, the report found. Gen Yers use more cash than they did two years ago. But GenXers, Baby Boomers and senior citizens are likely to use less cash than they did two years ago. GenYers were born in the late 1970s to early 2000. GenXers were born in the late 1960s, 1970s, ending in the 1980s.

A key factor determining cash use is consumer desire to avoid using credit cards. Sixty-two percent of all American consumers agree that they would prefer to pay with cash or check rather than use a credit card, the study found.

Another factor is the growing consumer reliance on debit cards to pay for purchases. The study calls debit card use "an unstoppable train," strongly promoted by banks and other financial institutions.