Payments

Will mobile payments replace cash?

One ever-looming question for the ATM industry is whether mobile payments will eventually replace cash.

Photo: Adobe Stock

September 1, 2026 by Bradley Cooper — Editor, Connect Media

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The mobile payments industry is a massive piece of the payments ecosystem. With billions of mobile phones in circulation worldwide, including 91% of the American population, it has shown massive growth, with one study reporting the U.S. market alone will reach $19.8 billion by 2035, at a compound annual growth rate of 18.80%. The growth has been driven not just by cell phones, but increasingly by the integration of NFC contactless payments and initiatives from governments.

In light of this growth, one ever-looming question for the ATM industry is whether mobile payments will eventually replace cash.

Cash usage

It is certainly true cash usage has declined. According to the Diary of Consumer Payment Choice in 2023, it dropped by 31% from 2016 to 19% in 2020.

Since then, cash usage in the U.S. has remained mostly steady, with it being the third most preferred payment tool at 16%, right behind debit and credit cards, but above mobile payments, according to the most recent findings from the Diary of Consumer Payment Choice, which is compiled by the Federal Reserve.

Consumers made an average of 47 payments monthly in 2025, and of those, only one was a mobile payment, while six were cash. The payment preferences vary based on age, with consumers aged 55 or older making an average of 10 cash payments a month, 18-to 24-year-olds making two a month. In addition, households that earned less than $25,000 annually made more cash payments.

Even if consumers may not use cash all the time, the vast majority have cash. In fact, 76% of customers reported they carried cash on them, with average cash holdings being 69%.

"More than 80% of participants reported using cash to make at least one payment in the prior 30 days, exceeding the share who reported using credit cards (71%) or debit cards (67%) during the same period. The prevalence of cash use despite its relatively lower number of transactions can be partially explained by consumers' frequent use of cash as a backup payment instrument and as an important payment method among certain demographic groups," the report stated.

In addition, 92% of consumers reported they had no plans to stop using cash in 2025, which was consistent with findings dating back to 2022.

In the U.K., cash usage declined to 8% of payments volume, while mobile payments has exploded. In fact, two-thirds of U.K. residents report using at least one mobile payments wallet. However, at the same time, a study from UK Finance does not expect cash usage to ever fully disappear in the country.

Countries with high cash usage

Another factor to consider is that cash usage varies across the world, and some countries have a much more robust cash culture than others.

In Germany, a total of 45% of payments are made in cash, according to a Yahoo! Travel report. Mexico is even higher at close to 80%, due in large part to its small businesses such as street markets.

India is one of the more interesting cash-heavy countries. Even though it has adopted many digital payments infrastructures such as the Unified Payments Interface, cash remains king, accounting for 70% usage in the country.

"UPI processed 21.7 billion transactions in January 2026 alone, up 28% year on year in volume. Yet that explosive growth is concentrated heavily in urban centers and among smartphone-owning, banked populations," the report noted. "Vast stretches of rural India, along with informal labor markets that make up a huge share of daily economic activity, still run almost entirely on rupee notes and coins, which is why the national average stays firmly on the cash side of the ledger."

Mobile payments challenges

Mobile payments, despite their size, have yet to eclipse cash in the same way as other payment methods. Part of this is due to challenges with mobile payments themselves.

First off, there's the acceptance issue. While 58% of merchants accept contactless payments, that still means there's a large number that do not have the right infrastructure in place, meaning customers have to take a physical card or cash when they travel to an unfamiliar store or place.

Furthermore, a blog from NTT Data Paypoints out, "Onboarding small neighborhood shops and merchants spread across the country at scale requires streamlined onboarding flows with assisted onboarding programs. Their technical capabilities and digital literacy also impact acceptance levels."

The second issue is one of connectivity. In the event of outages at the storefront or data connectivity issues, customers will be unable to pay for goods. This is especially a big problem in rural areas with limited connectivity.

The bottom line

Customers have many different reasons for using cash or mobile payments, such as privacy, convenience, or habit. But the bottom line is they expect to be able to use their payment option of choice where they go.

This means for most businesses it is important to accommodate both contactless payments and cash. In some cases, there is a legal requirement to do so, as a law from New Yorkrequires retailers to accept cash payments or provide a kiosk to convert cash into prepaid cards.

Cash and mobile payments are, in the end,d tools for commerce, and businesses must provide both to meet customer expectations, no matter their age, income status or preference.

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About Bradley Cooper

Bradley Cooper is an experienced editor for Connect Media. He has written across a wide range of beats, ranging from food to digital signage to banking, and is the current editor of ATM Marketplace and Food Truck Operator. His background is in information technology, advertising, and writing. When he’s not crafting a story, you can find him going for a run or spending time with his wife and three sons.

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