Malta, Spain and Cyprus have emerged as Europe’s most cash-reliant countries in a new study conducted by the European Central Bank (ECB). In Malta, 88 percent of transactions are cash-based, with Spain and Cyprus tied at 83 percent, and Portugal in a close third on 81 percent.
The ECB report—Study on the Payment Attitudes of Consumers in the Euro area (SPACE)—explores the latest trends in consumer payment preferences, aiming to keep the ECB current and providing ‘reliable, efficient and inclusive retail payments’ for everyone. On all these measures, cash is unrivalled, a fact reflected in the continued strength of cash payments despite the rise of cashless options.
73 percent of transactions across Europe are conducted in cash, with cards the most popular cashless payment option, accounting for 24 percent. In terms of transaction value, cash leads with 48 percent, followed by cards at 41 percent. The study noted a decline in ease of access to cash, with 89 percent of respondents saying they found it satisfactory compared to 94 percent in 2016. Fortunately, this is being addressed by a new ECB strategy to safeguard the future of cash and ensure it is accessible to all.
As well as withdrawing cash to use in the short term, the study reveals people are storing cash at home or in safety deposit boxes.
Cash can be used as a store of value without requiring the involvement of financial intermediaries and payment systems. It also has the advantage of being the most liquid asset and widely accepted by merchants.
Overall, 34 percent of respondents reported keeping cash reserves at home, with Malta and Cyprus once again leading, and Slovakians and Estonians also more inclined to store cash. People aged 18 to 24 were more likely to keep cash reserves than those aged 25 and over, and people in urban areas reporting slightly higher personal cash stores than those in rural areas.
Addressing the ECB’s goals in conducting the study, in terms of reliability, cash is king. It does not require electricity, depend on the internet, or suffer from downtime—the same cannot be said of any cashless alternative.
For efficiency, cash is both the quickest and most cost-efficient form of payment. According to a 2019 Deutsche Bundesbank study, the average cash payment takes 22 seconds compared with roughly 29 seconds for PIN-based card payments and up to 38 seconds for card and signature transactions. The study also showed cash payments cost merchants an average of 24 cents, compared with 33 cents for girocard payments and 34 cents for direct debit. Credit card payments cost upwards of 97 cents.
Cash is also the most inclusive payment option. For the 1.7 billion people around the world who lack bank accounts—and millions more who lack good access to banks—cash is absolutely essential. It is universal, can be used and accepted by anyone. Also, crucially, it allows payments to be made privately, and this is a rare commodity in an increasingly digital age.