Choice Matters - European Commission emphasises the status of cash as Legal Tender

In several countries, retailers have been refusing cash in the name of covid-19, causing governments and political representatives to introduce payment protection laws, as we have recently seen in the United States. Following suit, the European Commission has now laid down important tenets for the ubiquitous acceptance and accessibility of cash in the EU in its Retail Payments Strategy for the EU.

The Retail Payments strategy contains clear recommendations for retailers with regard to cash, namely that “it should be a rule to accept euro banknotes as a means of payment for retail transactions”. The ECB has issued statements in the past couple of months already, confirming that the risk of cash transmitting covid-19 is almost nil. There is no excuse left for merchants to not accept cash! The Commission also points out that cash is the only form of payment that works without any intermediaries, thus making it the only form of payment independent of its issuer.

Key points from the European Commission’s case for cash:

1. Though non-acceptance of cash has increased due to myths surrounding the transmission of covid, as a legal tender, euro banknotes and coins should be accepted by retailers as per the Commission Recommendation of 2010
2. It should be a rule to accept euro banknotes as a means of payment for retail transactions, and cash payments should only be declined on the basis of “good faith” only, i.e. “if the retailer has no change available”
3. Cash is still used for 78% of all transactions in the euro area despite the increased use of cashless payment methods
4. Consumer associations have expressed concern of a tangible risk to payment choice as more services are digitalised, risking the social isolation and financial exclusion of “about 30 million adults in the EU who do not have a bank account”
5. While the covid-19 pandemic “has reduced the number of cash based transactions during lockdown”, holdings of cash have risen across Europe, including the UK

Europe, along with the United States, United Kingdom, Canada and many other countries around the world, has seen cash withdrawals and cash in circulation increase following the outbreak of covid-19. This obvious propensity for cash in so many countries supports the European Commission’s pro-cash argument which seeks to ensure that choice in payment continues to be offered to consumers in the EU at retail stores during the covid-19 period and beyond.