The days of physical currency could be numbered, suggests new data from Bank of America (NYSE: BAC).
A survey conducted by the North Carolina-based financial institution showed many people think children under the age of 10 won’t use most types of physical currency—cash, checks or credit cards—in their customary form. Seventy-one percent believe the age group won’t know how to write a check, while 42 percent said they won’t use physical credit cards. However, some experts disagree that paper currency could be wiped away forever.
“The end of cash has been predicted many times and yet it remains,” said Tim Sloane, vice president payments innovation at Mercator Advisory Group. “The connection people make to cash is both physical and psychological and is unlikely to ever be totally displaced.”
Additionally, the survey found person-to-person (P2P) payments are becoming the “new social norm” across many generations.
HOW P2P PAYMENTS WORK
PayPal is one example of a successful P2P service. Users link their bank accounts, debit or credit card accounts to a third-party (in this case, PayPal), and are then able to pay for products online or send money to friends through email or a mobile phone number. Others include Venmo and Zelle, which Sloane said banks will be promoting “later this year.”
Unsurprisingly, millennials (people born in the 1980s and 1990s) use P2P payment methods the most (62 percent), almost doubling the amount Gen Xers (people born in the 1960s and 1970s) use them (34 percent). Bank of America’s data also revealed 2017 to be the year that more people use P2P payment services—baby boomers and Gen Xers were found to be the generations most likely to do so.
“Smartphones are everywhere and baby boomers and Gen Xers are just as easily won over by convenience as millennials, but tend to utilize social media less, and so discover new technology at their own pace,” Sloan explained.
WHY ARE P2P PAYMENTS RISING?
The survey found most people use P2P payment methods because it was more efficient than other methods (68 percent). Another reason people are using P2P more is simply because a friend was using it (48 percent). Only a fraction of surveyees said their decision was related to not wanting to use cash or checks (16 percent).