Privacy fears and fees keep Gen Z from going fully cashless

By Vriti Gothi

More than half of Americans are now ready to abandon paper cash entirely, signalling a major cultural and financial shift toward digital transactions. Yet, younger generations, particularly Gen Z, are proving to be unexpected holdouts, expressing deep concerns around privacy, data security, and hidden fees that continue to make cash a preferred fallback.

These insights come from A Cashless Country and the Future of Banks Consumer Perspectives, the first report in the Interledger Foundation’s (ILF) three-part Future of Digital Finance Series. The study explores how consumers across the United States are redefining what it means to bank, save, and pay in an increasingly digital-first economy.

While 51% of respondents said they were open to a cashless lifestyle, the same percentage of Gen Z consumers said they were not ready to give up cash, citing a lack of trust in how their data would be used and concerns over the fees attached to digital payments. Despite growing acceptance of digital payment methods, 56% of Americans still pay with cash at least once a week, reflecting deeply ingrained habits that digital platforms must match in both convenience and cost.

The findings also reveal shifting perceptions around what qualifies as a “bank.” Only 56% of Gen Z participants identified JPMorgan Chase as a bank, while half categorised Cash App as one, despite its lack of FDIC insurance. Awareness of deposit protection was notably lower among Gen Z, with only 56% knowing that traditional banks provide FDIC insurance compared to 80% of Baby Boomers. This suggests that digital payment platforms are not only gaining traction but are also reshaping consumer understanding of banking itself.

Urban consumers and higher-income groups were found to be more comfortable with the idea of a cashless society. 58% of people in urban areas said they were ready to go fully digital, compared to just 40% in rural regions. Similarly, 56% of respondents earning over $150,000 a year were open to giving up cash, versus 42% of those earning less than $50,000.

Briana Marbury, President & CEO of the Interledger Foundation, said, “Consumers’ willingness to move away from cash and the blurring lines between traditional banks and digital payments providers reveal the need for safe and affordable digital payments infrastructure across the US. By paying attention to preferences, concerns and openness to change, it’s clear that there’s room in the market for open payments solutions that meet consumers’ evolving digital banking and payments needs.”

The growing acceptance of digital payments—and the simultaneous anxiety around them highlights a critical moment for the U.S. FinTech ecosystem. As digital wallets and neobanks rise in popularity, financial institutions and payment providers will need to focus on building transparency, strengthening data security, and ensuring inclusivity. The transition to a cashless economy will depend as much on trust as it does on technology.