Cash is still (mostly) king in Eurozone

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Laura Watkins Executive Producer
5min read

People have been predicting the death of cash for years. And depending on who you talk to, the future is either just around the corner or will never quite happen.

A typical Swedish person (who makes three times the number of card transactions than the average of European) can probably imagine that future. But if you talk to anyone in Germany – a company with a historic affinity to cold hard cash – they might look at you funny.

A recent report from the European Central Bank has gathered up data on how households use cash across European countries in the Euro (bear with us, it’s more interesting than it sounds). Surprisingly, it’s the first serious investigation into cash usage since 2008.

Cash is still (mostly) king in Eurozone

For those of you who aren’t interested in a 60-page report, here’s the TL:DR:
  • 79% of all payments at at point of sale devices were made with cash
  • 19% with cards
  • 2% of payments were made with what the report enigmatically calls ‘other payment instruments’.
If you cut it by transaction value instead of number of transactions, things are stacked a bit more in favour of cards. But not by much:
  • 54% of transaction value is made with cash,
  • 39% by card and
  • 7% by those shady ‘other instruments’.
The shift to cash might be happening, but it sure is happening slowly.

Who’s using all this cash?

So who’s to blame/thank for the delay in the ‘inevitable’ shift towards a cashless society? Cash was least used in the Netherlands, Estonia and Finland, where its share in the number of transactions ranged between 45% and 54%, and these are the countries that “cashless” headlines tend to focus on most, along with the rest of Scandinavia, who do not feature in this study as they do not use the Euro. However the countries most reliant on cash were: Greece, Cyprus and Malta which were hitting above 70% of cash usage (in terms of value). Unsurprisingly, it’s the countries that had bank runs during the financial crash which have an aversion for banks and use of bank cards. In terms of volume, the southern European countries are joined by Germany, Austria and Slovenia in their dependence on cash.

Demographic divide

What’s slightly more bizarre is the gender split of cash and card use. Men make more card and cash payments per day than women. Men over 40 are also much more likely to use cash than anyone else. Perhaps more interestingly, the use of cards is lowest for young people between 18 and 24 and people with lower levels of education. On average, they were hitting about 1.6 card payments per week. We can speculate that this is due to a general lack of access, lack of need and perhaps a lack of funds, keeping their transactions down.

What’s going to make people use cards more?

Astonishingly, an average country spends about 0.5-1% of GDP on just managing cash. Counting, bundling, moving it around, keeping it clean, replacing it, and making sure people aren’t forging cash costs a lot. Anyone with an interest in how cash facilitates tax evasion and black market activity should have a read of Rogoff’s “The Curse of Cash”. So what’s going to move the 83% of Italian transactions that are currently cash onto cards? How is Germany going to bring around the people who protested when the government proposed a €5,000 cap on cash transactions? Firstly, card payments have to be as frictionless, fast, and cheap (to the consumer). When asked if they want to add 50p to the cost of that sandwich in the tiny shop in over the road for the privilege of using a card, very few people are going to opt for plastic over cash. Secondly, access to free cards needs to reach 100%. At the moment an impressive 93% of eurozone residents own or can use a payment card. Getting that number to 100% (and ensuring that it’s card ownership rather than card access) is important. Finally, legislation can play a big part. Increasingly, governments are banning high value cash transactions to block black market activity. The Scandinavians have gone one step further by using cash register ‘black boxes’ that send sales data directly to the tax agency. To help quell fears of privacy invasions, there’s also a strong argument for more comprehensive restrictions on how the data from card payments can be used. Despite some pushback, the move towards a cashless society seems inevitable. The more pertinent question is how long it will take, and what companies and governments will position themselves to accelerate and benefit from the move. Benedict Shegog is a research analyst in our Pulse and Research Team. For more information about our research team and the research projects we can deliver, drop us a line. Laura Watkins is Head of Content in the 11Media Team. For more information email or check out 11MediaCo on Twitter.
 Laura Watkins
About the author

Laura Watkins

Heading up the 11:FS media team, Laura leads 11:FS' content creation from the Fintech Insider podcast to video documentary series and live events to make financial services more accessible to everyone.