Humankind's attachment to cash presents unique barriers to a global payments industry bent on building out a fully electronic payments market — mainly because cash comes with unique benefits: It can be anonymous, flexible, self-reported, self-budgeting, and readily available to anyone able to earn an income. And cash acceptance comes with no technical requirments or transaction fees.

"A contemporary portrait of cash as a tender type has to acknowledge the fact that the dynamics of cash usage are more complex than for most other consumer payment forms," said Patricia Hewitt, director of the debit advisory service at Mercator Advisory Group. "This is due to the fact that cash payments take place inside and outside legal and regulatory boundaries in more embedded ways than any other form of tender."

A new Mercator Advisory Group report authored by Hewitt, "Consumers and Cash: A Love Story," examines the relationship between consumers and cash, and also discusses how moving cash transactions to e-money offers one of the few new growth opportunities for retail financial institutions and tightens revenue streams for governments.

Following are a few of the critical aspects of cash payments addressed in the report:

  • the current value of consumer cash payments in the U.S. (and the estimated percentage of all consumer payment volume this figure represents);
  • the knowledge gaps surrounding the cost of acceptance of cash payments;
  • the two distinct cash-using demographic segments and how they will affect product strategies designed to expand into cash transaction categories;
  • the electronic payments stakeholders who must address the needs of managing micropayments and offering benefits of convenience and liquidity that are equivalent to cash.

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