Last year, banks and financial regulators on Capitol Hill went head-to-head over swipes fees, the amount of money banks charge businesses each time they accept a debit card purchase. While swipe fees did end up being reduced by only a fraction of what had initially been proposed, banks are still whining about the pennies they are no longer bringing in. Thus, shoppers are receiving mixed messages from retailers and financial institutions about whether to use their debit card, credit card, or cash.

Many would obviously want you to pay cash, as every cent of what you hand over goes straight to their cash register, but that’s not a reasonable expectation for bigger-ticket purchases.

And while a lot of consumers chose debit cards over high-interest credit cards in the wake of the financial downturn, most major banks have stripped any of the attractive perks once associated with those cards (frequent flier miles, rewards points) and have begun piling on fees and penalties in order to make up for the money they’re losing from the reduced swipe fees.

Still, a new report from Javelin Strategy & Research finds that 73% of U.S. consumers are satisfied with using their debit cards, but the banks would rather have you using credit cards, which often charge the highest per-purchase fees to retailers and also earn double-digit interest on customers’ unpaid balances, in addition to any fees.

“Consumers love their debit cards, but the majority would choose different payment options if they were charged a fee for using debit,” said Beth Robertson, Director of Payments Research at Javelin. “Our data shows that if [financial institutions] implemented debit card fees, 32% of consumers would choose cash as their payment option, 25% would pay with a credit card and 26% would switch to another bank that didn’t charge for debit cards. Banks should improve their messaging and educate consumers about new regulations so consumers can understand the effects of their payments choices.”

Also of interest from the Javelin study is that cash is the most frequently used payment option, 79% of respondents saying they had made cash purchase within the past seven days.

Of course, it doesn’t give the average amount of each cash transaction, meaning that while nearly 4 out of 5 people are still using cash on occasion, they may only be using it to spend $1.00 on a Coke at the newsstand outside their office.

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