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#Banknote Solutions

How core values shape our relationship with cash

Interview
5 Mins.

What drives our choices when it comes to using cash versus other forms of payment? For Dr Julia Pitters, professor at IU International University of Applied Sciences and head of its Business Psychology programme, many influences come into play when we make that decision today: they range from the sense of trust and security that make cash so appealing (especially during periods of uncertainty) through to concerns surrounding the privacy and control of digital payments – an aspect that seems to resonate strongly with Gen Z. Our in-depth interview with Dr Pitters explores the core values influencing the financial behaviour, regional differences, and psychological factors that reveal how societal shifts over decades have impacted cash usage.

If you had to define the core values that influence financial behaviour, particularly the use of cash, what would they be?

Core values that shape how people handle money and use cash are deeply tied to societal and personal views on what’s desirable and appropriate. These values guide decision-making, how we assess situations, and how we justify our actions.

Unlike immediate needs driven by current circumstances, values are ingrained and passed down through generations, shaping long-term behaviour and preferences. They range from “traditional vs secular-rational” to “survival vs self-expression values”, all reflected in how we use cash.

Photo of Prof. Dr. Pitters

As Professor of Business Psychology at IU International University of Applied Sciences, Julia Pitters is a renowned authority on the psychology of finance and consumer behaviour. After completing her doctorate on the psychology of tax at the University of Vienna, Pitters became an assistant professor at Webster University in St Louis, Missouri, before joining a Silicon Valley fintech company to apply her expertise to financial markets. She speaks widely on the psychology of cash and payments, and is a partner at social, economic, and political trends analysis firm Pitters Trendexpert. 

Evolving attitudes to cash

In your research, have you noticed that these values have shifted over recent decades in relation to how cash is used?

Absolutely. In notably progressive countries like Sweden, there’s a clear trend towards embracing innovation and technology, which correlates with reduced cash usage. Sweden’s history of progressiveness, dating back to it being the first in Europe to introduce paper money in 1661, shows a longstanding openness to new systems – and that has extended in modern times to digital payments.

Conversely, countries with traditional values maintain a higher reliance on cash. For example, in Germany, despite technological advancements, there’s still a strong preference for cash due to values related to privacy and security. Globally, there has been a shift from traditional to secular-rational values and from survival to self-expression values. That is closely linked to socioeconomic development, where increased wealth, education, and longevity allow societies to focus more on individual freedoms and less on survival needs.

Are there significant regional differences that persist?

Definitely. For instance, countries in sub-Saharan Africa and the Islamic world generally hold stronger traditional and survival values compared with Western societies, which lean more towards secular and self-expression values. Traditional values often correlate with higher cash usage due to the preference for established, tangible forms of transaction.

In contrast, societies embracing secular-rational and self-expression values, associated with higher technological adoption and trust in digital systems, tend to use less cash. And that is not to forget how significant global events, such as economic crises, pandemics, and political upheavals, can temporarily shift value priorities. For example, during economic downturns, there may be a temporary resurgence in survival values.

“Many people prefer cash because it offers a tangible sense of security and control.“
Dr Julia Pitters
Professor of Business Psychology, IU International University of Applied Sciences

The psychology behind payment choices

Despite these very high-level shifts, are there any psychological factors that significantly impact individuals’ preferences for using cash versus digital payment systems?

Trust and perceived security are major psychological factors that influence payment preferences. Many people prefer cash because it offers a tangible sense of security and control, especially in uncertain times. This is evident during economic crises when cash usage spikes as people revert to familiar, reliable methods of stored value. The physical act of using cash also helps some individuals manage their spending better.

Because it provides a more concrete sense of expenditure?

Exactly. Moreover, the anonymity associated with cash transactions appeals to those concerned about data privacy. That is something that is evident in representative surveys of German citizens, for example. In contrast, for Swedes data privacy isn’t such a big issue; trust in the Swedish state is high, and transparency is well-established.

A smartphone with various app icons on the screen, a credit card, and a 50 euro banknote

Generational shift in attitudes to cash

Another finding is that as countries advance technologically, there is a shift towards electronic payment methods and away from cash. The availability and use of ATMs and the proliferation of mobile payment options decrease the public reliance on cash. Is that something you also observed while analysing the cash behaviours of different generational groups, such as Gen Z?

Firstly, the impact of ATMs can be mixed. While they provide easier access to cash, they also facilitate more frequent, smaller withdrawals, which could maintain cash-usage levels.

Secondly, Gen Z does indeed show distinct values compared with previous generations. They are, of course, digital natives who are more comfortable with technology and often prioritise convenience and speed. Consequently, they show a stronger inclination towards digital payments and are less attached to cash. However, values like self-expression and environmental consciousness are prominent among them, which could influence their payment choices.

On the other hand, the value of self-determination is crucial for Gen Z, and cash supports this value by offering privacy and control over personal data. In times of crisis, the psychological security provided by cash might still hold relevance if they understand its importance. So, it’s crucial to educate Gen Z about the benefits and importance of cash to ensure that this new generation sees it as a practical and viable option.

How can this education be effectively put in place?

Show and tell! If younger generations no longer use or see their parents using cash, the concept will disappear for them. Gen Z might not consider cash an option if it’s not part of their everyday life. So, you have to meet them where they are.

From a marketing perspective, you could identify various target groups and address them differently. For example, one could run a different cash advertisement campaign on TikTok with arguments tailored to younger people compared with something like a traditional poster in a bank that extols the benefits of cash. You only have to look at trends like ‘cash-stuffing’ on TikTok to see how social media can be a powerful tool for making cash appealing to Gen Z.

“One-size-fits-all campaigns won’t work, because cash affects everyone differently.“
Dr Julia Pitters
Professor of Business Psychology, IU International University of Applied Sciences

Promoting the plus points of cash

So, if promoted correctly, such trends can help educate younger generations about the practicality of using cash?

Yes, campaigns that emphasise the self-determination and privacy aspects of cash might resonate well with younger audiences. Such campaigns and educational efforts should demonstrate the practical benefits of cash, such as its reliability in emergency situations and its role in budgeting and spending control.

A person scanning a QR code on their smartphone in a bus

And I assume such campaigns and initiatives would be most effective if they were adapted for different regions, countries, ages, and genders?

Absolutely. You must identify your target groups and how to reach them best. One-size-fits-all campaigns won’t work, because cash affects everyone differently. We need targeted approaches.

Just take the significant differences between older and younger people worldwide. A young Nigerian is less conservative than an older Nigerian. This pattern holds across different countries and reflects generational shifts in values. In contrast, older generations, accustomed to cash and wary of digital security risks, tend to stick to traditional methods.

Additionally, societal trends like the increasing digitalisation of services and the global push towards cashless economies drive the overall shift towards digital payments, even if at different paces for different age groups. That is not to forget economic factors and financial literacy that significantly affect cash reliance.

In economically developed countries with high financial literacy, people are more likely to use digital payments due to their familiarity with banking systems and trust in electronic transactions. Conversely, in regions with lower financial literacy and less access to banking services, cash remains a critical medium for daily transactions. Financial inclusion efforts in these areas are essential to bridge the gap and promote the benefits of digital payments.

Key takeaways

  • Core values shape when and where people use cash rather than other forms of payment.
  • Different regions, societies, and age groups have contrasting attitudes to the use of cash.
  • Marketing the advantages of cash will ensure that new generations see it as a practical and viable option.
     

Published: 14/01/2025

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