Consumers use debit cards more often than other payment options at the point of sale, but their use of cash is not far behind.
This level of cash use indicates that consumers are limiting their spending to stay within their budgets, according to data from Javelin Strategy and Research.
Javelin surveyed 4,444 consumers in September and asked how many times in a typical month they use different payment methods when shopping at stores, including debit cards, cash, credit cards, debits to their checking account through the automated clearing house network, prepaid cards, paper checks, store credit cards and retailer gift cards.
Survey participants used debit cards an average of 10.4 times per month and cash 10.3 times per month.
They used credit cards an average of 8.3 times per month and merchant gift cards 1.9 times per month.
Though consumers use debit cards and cash almost as often, their use of debit cards rises as the amount of the purchase increases, Beth Robertson, director of payments research at Javelin, said in an interview.
"The average debit card purchase amount is around $78, while the average for cash is much lower," around $47, she said, adding that purchase amounts are relative to the types of purchases consumers make with cash versus debit.
If the Federal Reserve Board, acting under a mandate of the Durbin amendment to the Dodd-Frank Act, proceeds with its proposal to cap debit card interchange at 12 cents per transaction from today's average of 44 cents, consumers' choice of payment may change, Robertson said.
"If interchange rates change with the Durbin amendment, merchants are going to want to encourage debit use, but banks are going to want to encourage more profitable products like credit cards," Robertson said. "So consumers may experience two different sorts of drivers for using debit."
Changes in the economy also have fueled debit card use, Robertson said. "There was a move by consumers to monitor their exact cash position and use debit more for budgeting," she said.
That trend is unlikely to change anytime soon, Robertson said. "The comfort level is not back for credit cards yet," she said.
Higher-income consumers more likely will be the first to return to using credit cards more often, she said.
