One of the most common debates I hear is about the use of cash. Is it growing or declining? There was a recent report from the UK that indicated cash use was surpassed by other forms of payment for the first time ever. I was recently sent a link to a report from the Aite Group that predicts a decline in cash usage over the next four years. Interestingly however the report does conclude that although there will likely be a decline in cash usage in certain demographic groups, there will be an increase with others. What seems to be missing from the report summary is any attribution of cash usage within the underground economy. It seems that most “official” reports on cash usage ignore this significant market sector, either because it is nearly impossible to research or because it is somewhat less than morally/ethically acceptable. Regardless of the reason(s), these untracked and under-reported cash markets are significant enough that they could quite likely account for the negation of similar research.

For the sake of discussion I have reprinted the summary of the report here:

A New Report from the Aite Group

The Less–Cash Society: Forecasting Cash Usage in the United States

Consumers’ Use Of Cash Will Decline By A Total Of 17%, Or 4% Per Year, Between 2010 And 2015, Dropping To Slightly More Than US$1 Trillion.

Boston, January 12, 2011 – A new report from Aite Group sizes and forecasts U.S. consumers’ use of cash. It draws upon two surveys conducted by Aite Group (one of 4,696 U.S. consumers, conducted in August 2010, and one of 1,039 U.S. consumers, conducted in October 2010) to size the use of cash as a payment method in person-to-person (P2P), bill-pay, and retail transactions in the United States.

Cash use, which has been declining in U.S. payments transactions, will continue to do so through 2015. But it is far from vanishing. While 30% of consumers use cash less often than they did two years ago, 20% use it more often. Gen Y is the only generation more likely to use cash more often today than it did two years ago. Consumers’ use of cash will decline by a total of 17%, or 4% per year, between 2010 and 2015, dropping to slightly more than US$1 trillion.

“Despite forecasts of a cashless society, the United States is nowhere near the realization of this vision,” says Ron Shevlin, senior analyst with Aite Group and author of this report. “In fact, if the use of cash were to decline by 17% every five years—our forecast for 2015—the use of cash in the United States wouldn’t fall below US$1 billion before the year 2205, roughly 200 years from now.”