NEW YORK (TheStreet) -- Could cash be making a comeback?
Credit and debit cards have largely taken the place of cash as the payment vehicle of choice for American consumers, but the past few months have seen security breaches giving consumers second thoughts about the safety of their debit and credit cards.
That concern has led to shoppers leaning more on cash instead of credit and debit cards for their purchases.
"Retailers have seen the cash tender increasing the last couple of years and even more after the recent credit card breaches," said Lee Jurgens, board chair for the Merchant Advisory Group, a payments industry advocacy organization.
After serious breaches at major retailers such as Target
, Michael's Stores
and Neiman Marcus
, Americans are shying away from plastic, and that may be upsetting the buyer-seller payment dynamic. Retailers may be forced to handle more cash at a time when they've de-emphasized cash and changed their payment systems to reflect more card users.
"Many consumers like to use cash because it's anonymous and carries little risk, but for retailers it can be very time consuming to manage and reconcile," says Shelley Bosler, a senior vice president at Balance Innovations
, a payment services vendor for retailers. "Increased usage of cash among consumers makes it all the more important for retailers to optimize cash processing policies at both the corporate and store levels."
Skepticism among shoppers is the big reason stores are seeing more cash used for purchases.
Balance Innovations has issued a survey of 1,488 U.S. shoppers in which 32% of respondents say they are "turning to cash" after losing confidence n credit and debit cards. Only 30% of Americans aged 50 to 64 years old, a demographic viewed as having the most household income and spending capacity, are "very confident" about the safety of their credit cards.
Yet even younger consumers say they are using more cash in 2014 -- 46%, according to the survey.
The only way for banks -- which provide the payment cards -- and retailers to change that equation is to improve the safety of consumer card purchases. With the Target data breach still very much on the minds of consumers, that is not an easy proposition.
In the meantime, cash once again is an in-demand currency.