The Cashless Society has been in the news this month and for once the media coverage has not been of the 'gung ho' variety we frequently see. After the problems associated with the Visa outage in Europe, it was interesting to note the comments of the Dutch central bank (DNB) following the publication of its Payments Strategy for 2018-2021 report.
The Netherlands has been regarded as being in the vanguard of the cashless movement, an example of which was the announcement of the first cashless Spar Netherlands store in February this year at Hogeschool Utrecht University. In Netherlands Fintech News (27 February) there was talk of Europe 'powering ahead for cashless adoption'.
To put that in context, cash still accounted for 41.4 percent of all payments in the Netherlands in 2017 and last week the DNB expressed concern that vulnerable groups could have limited access to goods and services, concluding that 'paying in cash must remain an option'. This reflects comments expressed by the Riksbank in Sweden, which warned that seniors, the “less educated” and tourists were suffering due to the rise in cashless transactions. The Payments Strategy report acknowledged the need to work on a 'well-functioning cash payments chain' and addresses issues such as local recycling. DNB clearly states that it is not pursuing a cashless payments system and it will continue to support cash as a central tool for Dutch society.
Now I don't know about you, but I certainly paused over the Riksbank comment about cashless impacting tourists. How much of an issue is this for those of us planning a European break this summer? I turned to the most recent ECB report for clarification and was immediately 'calmed' by the findings. For those of us taking cash on holiday, the response seems to be 'no problem'.
According to the ECB figures in 2016 cash was used in 79 percent of all transactions in the euro zone (54 percent by value). That's 129 billion transactions to a value of 1653 billion euros. Indeed, in tourist areas such Greece, Cyprus and Malta the share of cash payments by value is much higher at over 70 percent.
So what about those of us heading for the Costas or the beautiful cities of Valencia and Seville? According to an article in PYMNTS.com (15 January), Spain has 254 billion euro of cash payments. The chief cashier of Banco de Espana explained 'In surveys we produce each year citizens tell us they prefer cash for the convenience and control they have over their spending'. Are things changing? 'More retailers accept other forms of payment but it's not 100 percent '.
Meanwhile in India (The Economic Times 12 June) it has been reported that people are shifting back to cash after the spike in debit card payments at the height of the cash crunch. Again, it seems to be down to consumer choice. According to the Payments Council chair, 'when there was a supply issue with cash, people started using debit cards for regular transactions, and now they are shifting back'.
Payment systems evolution will be dependent on technology changes, regulation and customer adoption. While cash remains an option, the speed of change will reflect consumer choice and (in varying degrees) a continued fondness for notes and coin.
