Currency notes and coins are still ruling the roost and reign supreme in business transactions in Europe, despite the fact that there is a huge buzz around digital currencies like bitcoin these days.
According to the conclusions of a European Central Bank study, last year, nearly 79 percent of all transactions in the euro zone was made by cash – both notes and coins. Currency notes of higher denominations – those of 200 euros ($237) and 500 euros value, had been possessed by 20 percent of the people surveyed in the year before the survey was carried out. Additionally, some currency notes had also been stacked away at the homes of about a quarter of consumers as a measure of precaution.
The results “challenge the perception that cash is rapidly being replaced by cashless means of payment”, the study also notes.
However, the picture is not the same across the 19 member states. About 80 percent of all the transactions that takes place at the point of purchase was done by cash in the year in regions and countries of southern Europe, Germany, Austria and Slovenia. However, when the survey was conducted among the consumers of the Netherlands, Estonia and Finland, that percentage dropped down to 45 to 54 percent pf the overall transactions.
Awareness about their own habits of making payments is not present in many consumers, the study also found. Card and not cash was identified as their modes of payments by a large section of respondents when they were asked about their preferred payment method.
That may be because nearly two-thirds of all transactions are below 15 euros, the report said. Purchases of coffee and lottery tickets don’t stick in the mind as much as, say, a new pair of shoes. People have a tendency to forget or ignore the smaller regular payments that they make and tend to recollect or remember the large seldom made payments that they made.
The manner in which things can change is exposed by the experience of some countries. For example, for the tech-savvy Netherlands, payments through contactless cards made up about 10 percent of all payments made while the same was just 1 percent in across the euro area in 2016. The technology of contactless payments is provided with a great potential because of the small size of the payments made through that mode – more than 81percent of all forms of contactless payments were valued at 25 euros or less, say the authors of the study.
With respect to the use of cash for payments of smaller values could be significantly impacted by this rend of contactless payments. This is emphasized by the importance accorded to speed of transaction by both forms of respondents – those who prefer cash and those who prefer cards.
The location of the nearest cash dispenser is an important question for those respondents who prefer physical money though. According to the survey, the levels of satisfaction with respect to finding out ATMs easily which allowed for easy cash withdrawal was highest in tiny Cyprus and Malta, while such levels of satisfaction was relatively low in countries like Latvia and Lithuania, the survey also found.
(Adapted from Bloomberg)