"It's still decades and decades and decades. It's going to take our lifetime and our kids' lifetime before you start to see this work itself out," said Michael Vaughan, chief operating officer at millennial-friendly Venmo — which is owned by PayPal — when he spoke at a Wharton conference earlier this year.
With the rapid disruptions caused by successful Silicon Valley-based mobile payment companies like PayPal and Square, and technology giants Google and Apple making greater efforts to handle purchase transactions through smartphones, it is easy to expect the dollar's obit to appear any day now. But even Amazon, with an increasing hold over consumer spending in an e-commerce environment, and internet transactions growing at an annual rate above 15 percent, it represents a sector with less than 10 percent of all retail transactions. And data from the Federal Reserve Bank of St. Louis shows that U.S. currency in circulation, over $1.6 trillion currently, continues to go in only one direction: up.
Cash in circulation has growth at a 5 percent rate for the past 20-plus years, with the number of notes in circulation doubling to 40 billion between 1996 and 2016. That annual growth rate has ticked up a little higher recently and matches the growth of euro notes in circulation — roughly 6 percent growth, according to the European Central Bank. Cash remains the most frequent method of payment in the United States, representing roughly 31 percent of consumer transactions, more than electronic, credit, debit or checks.
Cash usage is consistent across most U.S. household income levels and increases significant at lower incomes — 30 percent of U.S. households are unbanked or underbanked. In international markets, demand for dollars — specifically $50 and $100 denominations — remains high, according to the Fed.