Advances in technology are changing the way people, save, spend, and invest their hard-earned paychecks. Storing money in a bank account and carrying cash are becoming less common than they used to be, and many are using the online payment system PayPal.
Americans with PayPal accounts keep more than twice as much cash in their online accounts than they do in their wallets, according to the Future Of Money study by Logica Research. Consumers are likely to have an average of $485 in their PayPal Holdings Inc. accounts versus $196 in their wallets.
Why do they keep more cash in PayPal? Fifty-five percent said they do so for other payments, while 25 percent said it’s an easier way to track expenses. Twenty-one percent noted they had yet to move the money to another account, while 19 percent said they preferred keeping it there instead of in a bank account.
“It’s likely that the amounts of the purchases they make with their PayPal balances/accounts are higher than the amounts of the purchases for cash,” Lilah Koski, Logica Research founder and chief executive, told Digital Transactions News.
In addition, people are using cash less and less.
“We see from other questions on our survey that use of cash is going down,” Koski said. “Americans predict they will use digital apps for the number-one way they pay five years from now for in-person payments and predict PayPal as number one for online payments five years from now.”
Those surveyed also believe there will be other options available that have yet to be invented.
Logica Research reveals that over 58 percent of Americans currently use PayPal (more than 6.5 million Canadians, or 18 percent, actively use the service). In the United States, 14 percent of online payments come from PayPal. The service currently has 237 million active accounts, and the first quarter of 2018 totalled $2.2 billion in transactions.
The study also found that millennials (27 percent) are more likely than other consumers (18 percent) to put an extra $500 into a PayPal account. Nineteen percent of those surveyed prefer PayPal to a bank account.
Earlier this year, PayPal Canada enabled Canadians to use their PayPal account to pay federal taxes on the Canada Revenue Agency (CRA) website. One of the benefits of using the digital payment solution is that people can pay their taxes without revealing their bank account or credit card details to third parties.
The PayPal platform, which includes Braintree, Venmo and Xoom, enables consumers and merchants to receive money in more than 100 currencies, withdraw funds in 56 currencies and hold balances in their PayPal accounts in 25 currencies.