American consumers overwhelmingly favor using credit and debit cards over any other method of payment. In the Total Systems Services2016 U.S. Consumer Payment Study, 75% of respondents cited one of those two methods as their "most preferred payment form." In a distant third place was cash, which was selected by 11% of consumers.

While it is not surprising credit and debit cards garner the most support among American consumers, what is mildly surprising is the consistent support cash gets. Far from dropping out of the race as more digital and mobile payment options become available, cash has steadily ranked as a preferred payment option for several years, steadfastly holding onto its double-digit support mark. As the study puts it, "The resiliency of cash is also interesting."

Cash in an open lockbox.

Cash is still king for many consumers. Image source: Pixabay.

It is this last segment of people that Amazon (AMZN 0.95%) hopes to capture with its latest program, Amazon Cash. Using this program, Amazon customers can print out a bar code from their home computer or save one in their smartphone, bring the bar code to a participating location, and pay cash that will be deposited in their Amazon account. The bar code is reusable and once money is applied to the account, it cannot be withdrawn for other uses. Participating retail locations currently include CVS, Sheetz, Speedway, Kum & Go, and SpartanNash Co's VG's Grocery and Family Fare grocery stores.

Why does an online retailer need cash checkout options?

At Amazon's 2016 annual shareholder meeting, Amazon CEO Jeff Bezos said, "Our goal with Amazon Prime, make no mistake, is to make sure that if you are not a Prime member, you are being irresponsible." This is Amazon's latest example of proving to potential customers that there is no excuse for not joining Amazon Prime. logo.

Image source: Inc.

Of course, until now, customers could still use Amazon without linking a bank or card account. All consumers had to do was fund an account through gift cards either purchased online or at retail locations.

Amazon's move is not particularly unique as it's practically a copycat of PayPal Holdings Inc's (PYPL -0.35%) My Cash Card. Under that program, consumers visit a participating retail location, purchase a My Cash Card using cash, and then input the card number into their PayPal account via an online or mobile portal. Hmm, sound familiar?

But imitation is the sincerest form of flattery and, in business, it can pay handsomely to incorporate competitors' features and services into your own platforms. After all, there's no extra credit for originality in capitalism. 

Who does the program target?

While a sizable segment of U.S. consumers still prefer cash, most of this population represents lower-income households. For instance, according to the Total Systems Services' consumer report, 23% of U.S. households making less than $25,000 favored cash. That percentage fell to only 6% of U.S. households with over $75,000 in annual income and a minuscule 1% for households making over $100,000.

Seen charitably, Amazon Cash is a program designed to reach out to include these disadvantaged families so they can partake in the advantages of being an Amazon customer. Of course, not all potential new customers would have to come from lower-income brackets. This program should also appeal to the 1% of households of upper-income families that still prefer cash over other forms of payments.

There are also other possibilities Amazon shareholders might want to consider. In much of the rest of the world, cash is still used far more than other forms of payments. According to Mastercard, 85% of all transactions across the world are negotiated with the local form of currency. It is not hard to imagine Amazon looking for a way to grow its international business by experimenting with different ways cash might be used to add funds to an existing or new account.

None of this should suggest success is guaranteed. For many of its customers, the appeal of using Amazon is to avoid going to the store in the first place! If trips to the store are required, this convenience is lost.

It also stands to reason that customers who do not trust the giant online retailer with their bank account information might not be eager to deposit non-refundable cash in Amazon accounts. And, of course, online commerce will naturally appeal far more to customers who automatically link their accounts to their debit and credit cards.

Yet the investment in this program is minimal for Amazon. Amazon Cash's barcode system simply piggy-backs on Amazon's existing use of gift cards to fund accounts. For various reasons, a surprisingly formidable segment of the U.S. population still favors cash payments over all other methods. If Amazon can capture even a small portion of this demographic as future Prime members the effort will have been worthwhile. If these efforts later prove fruitful in wooing international customers as well, then Amazon might really have unlocked a driver for future growth.