Celebrating Success – Professor Darren Duxbury

Congratulations to Darren Duxbury and his co authors whose paper entitled “Behavioral drivers of intentions to use cash: UK survey evidence” has been published in Financial Innovation.

Abstract

Accurately forecasting the declining use of cash as a payment method, driven in part by financial innovation in payment technologies and associated social change, is important for central banks and the cash industry. To better inform such forecasts, we are the first to examine behavioral traits as exogenous drivers of payment intentions, including mental budgeting, money fungibility and loss aversion, along with trait habit and financial literacy. Using data from a survey of 2,801 UK adults we find compelling evidence these behavioral traits and financial sophistication shape cash payment intentions, with the unique influence of mental budgeting and money fungibility subsumed by other behavioral traits. We present strong evidence of a dynamic shift in how the behavioral drivers explain intentions to pay as transaction sizes increase. While trait habits form, payment intention shifts in response to exogenous shocks demonstrate payment habits are not immune to change.

The paper is published open access and available at https://doi.org/10.1186/s40854-026-00919-8

Layperson summary

This research is a collaborative academic-industry project developed with the National Westminster Bank to examine the behavioral drivers behind why people still intend to use cash despite the rapid rise of digital payment technologies like contactless cards and mobile apps. The study was motivated by the dramatic decline in UK cash use—which fell from 61% of all transactions in 2007 to just 14% in 2022 and is predicted to fall further to 7% by 2032—and the need for central banks and the banking industry to accurately forecast future cash demand.  To better understand payment trends, we conducted a large-scale survey of 2,801 UK adults to see how behavioral traits—such as mental budgeting, fungibility of money and attitude toward loss, along with trait habit and financial literacy—influence payment method intentions.  Our focus on behavioral traits, with measures exogenous to payment decisions, differentiates our work from other research where measures are derived from behavior endogenous to payment decisions and payment habits.  We also examine payment intentions conditional on transaction size and how intentions change in response to exogenous shocks.

We find compelling evidence that behavioral traits and financial literacy shape payment intentions, above and beyond the influence of sociodemographic characteristics. Individuals with high loss aversion will likely feel the pain more when spending in cash and so intend to use non-cash methods. A higher propensity to use non-cash methods is more the result of a cognitive and deliberative process than automaticity or habit. Also, more financially literate individuals intend to make a greater proportion of non-cash payments than participants who score low on financial literacy.  There is strong evidence of a shift in how behavioral traits explain intentions to pay as transaction sizes change: as transaction values increase, affective feelings toward a particular payment method matter less, while financial acumen plays a growing role.  Furthermore, while payment intention habits might form, evidence of shifts in response to exogenous shocks associated with economic circumstances and security breaches demonstrate such habits are not immune to change, with many individuals indicating a movement back towards cash in response to such shocks.

From a policy perspective, these insights suggest that the decline of cash is not just a simple technological transition but a complex behavioral shift that might reverse in response to external shocks. For example, the study shows that major events like a financial crisis or a digital security breach can cause people to suddenly revert to using cash for a sense of safety and control. This indicates that the “cashless society” may be further off than some models predict, and policymakers should use these behavioral insights to ensure that vulnerable groups who rely on cash are not left behind as the financial infrastructure evolves. While the convenience of digital payments is undeniable, maintaining robust access to cash is not just about financial inclusion for vulnerable groups, but a matter of fundamental resilience for the entire economy when technology fails, as the power outages impacting Spain and Portugal in late April 2025 demonstrate.