Looking at Consumers’ Diaries to Understand Payments

Credit: Federal Reserve

The Federal Reserve reads people’s diaries every October to understand what is happening to the U.S. payments landscape.

Their annual report, 2025 Findings from the Diary of Consumer Payment Choice, reveal that a lot of conventional wisdom about payments preferences are correct, but there are still some interesting data points.

The Fed asks people to keep a diary for three days in October that covers all the payments they make and how much cash they have on their person and how much they keep stashed against emergencies.

The 2025 report covers the diary period for 2024. It found that the average number of payments a person made per month was 48, up from 46 in 2023. It will be interesting to see whether the number of payments continued to climb in 2025, or if inflation cools consumer spending at all.

As one might expect, younger people (18-24) were more likely to use their mobile phones to pay for things, and less likely to use cash.

But what is interesting is that the average number of cash payments has held steady at 7 payments per month since 2021. Cash is a smaller portion of over all payments, but it still has a baseline.

What is interesting, though is that cash use remains steady at places like grocery stores, convenience stores, and restaurants. The Fed doesn’t get into why, but I suspect it is because all demographics and income levels need to get groceries and want to go out to eat. So, the floor is maintained over time by older people and lower-income shoppers. But as demographics shift, cash use may continue to fall below the apparent floor.

The Fed is doing an observational study here, so it is hard to see correlations with inflation and other macroeconomic factors, but as we interpret this data, the big picture is worth keeping in mind.

Here’s an example, the report points out that the average amount of cash that people kept stashed somewhere rose in 2020 to $299 but actually peaked in 2022 at $418. My guess is that the Delta and Omicron waves of Covid, combined with extra money from relief programs, led people to keep more cash on hand in case the world got disrupted again. The number was down to $306 by 2024, but that could have been a combination of people relaxing and wanting to spend again.

It will be interesting to see what happened in 2025 as consumers dealt with inflation and more economic uncertainty. Multi-factor analysis on this kind of thing is tough. But here are some factors that I think will influence consumer payment choice:

1. Inflation
2. Expectations about the economy
3. Employment levels

Another factor that I think will matter is merchant behavior. Are businesses offering incentives to steer payments?
If a cap on credit card rates does come into effect, will a loss in rewards affect shoppers’ payments choices? I suspect it would.  If a cap also led to fewer people getting credit, that could have a dramatic effect on the payments mix – thought we might not see that until later in 2026 or even 2027.

Companies with the resources might want to create their own diary to see how their customers are interacting with the tools they offer and what they use when they go outside the confines of the product suite.
When the new report comes out, we’ll come back to compare the results and see what trends we can spot in the data and what might be driving them.

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Ben Jackson is the Chief Operating Officer of the Innovative Payments Association, a leading trade association representing companies in payments. With over two decades of industry experience, Ben is dedicated to providing valuable information, advocacy, and support to help members improve financial outcomes for consumers, businesses, and government agencies.