It’s too early to dig a grave for paper money, but new research from BAI and Hitachi Consulting suggest cash is increasingly loosing out to automated payment modes like PIN and SIG debit.

The joint “2008 Study of Consumer Payment Preferences” shows PIN and SIG debit account for 37 percent of consumer payments, with cash coming in at 29 percent. And PIN debit wins out over SIG debit by a 45 percent to 35 percent count. The study, sponsored by firms that should be happy about the results, such as MasterCard, Metavante, First Data and PULSE, also said 41 percent of consumers say they use cash less often today than two years ago.

Chris Allen, a director at Hitachi Consulting, says card-based payments have done much to erode the base of paper transactions, a trend that’s likely to be enhanced by the emergence of contactless and mobile payments. “The use of electronic bill payment has jumped dramatically,” he says, noting online bill payment has increased from 24 percent in 2005 to 43 percent in 2008. The news isn’t all rosy for card firms, as the research paints a very competitive picture for the card industry: the average consumer carries four credit cards, but only uses two in a given month; and 75 percent of consumers’ Mastercard and Visa cards come from 10 issuers.

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