73% of purchases still made with cash; pandemic affects payment behaviour

Cash remains the most-used payment instrument, according to the Study on the payment attitudes of consumers in the euro area (SPACE) released today by the ECB. Last year euro area consumers used cash for 73% of their point-of-sale and person-to-person retail transactions, while 24% were made by card. A separate survey about the impact of the coronavirus pandemic revealed that the current health crisis has slightly accelerated the trend of decline in the use of cash.

Banka Slovenije finds the trends in Slovenia to be very similar. Similarly to the euro area overall, the use of cash by Slovenian consumers has declined slightly in recent years (by 6 percentage points), while by contrast the use of payment cards has increased slightly (by 5 percentage points).

Comparing the results of the SPACE study with a similar study from 2016 (SUCH) shows consumer behaviour in the euro area to be slowly changing. Cash is still the predominant payment instrument for everyday payments, accounting for 73% of transactions (79% in 2016). The analysis also shows the share of payments made by card to have risen from 19% to 24% over three years. Contactless payments accounted for 38% of all card transactions in 2019 (compared with just 6% in 2016).

Figure 1: Breakdown of total number of consumer transactions in Slovenia by payment instrument

Source: Study on the payment attitudes of consumers in the euro area (SPACE)

The figures for Slovenia are similar to those for the euro area overall: cash accounts for 73% of the total number, and card payments for 24%. Slovenia too has seen a fall in the share of cash payments relative to 2016 (from 79%), and a rise in the share of card payments (from 19%).

Almost half (48%) of consumer transactions in the euro area were conducted in local shops for day-to-day retail purchases (shops, supermarkets, street markets), and 19% in restaurants, bars, cafés and hotels.

Cash accounts for more than 60% of all payments in value terms

A similar trend is revealed by analysis of the use of payment instruments in terms of total transaction value. In the euro area cash accounted for 54% of total transaction value in 2016, but for 48% in 2019. There was no significant change in the share accounted for by card payments (which increased from 39% to 41%).

The developments in Slovenia in this comparison were slightly different. Consumers were still using cash for a significantly higher share of total value in 2019 (63%, down from 68% in 2016), while card payments accounted for 31% of total transaction value. These figures rank Slovenia as one of the countries with an above-average level of cash use.

Figure 2: Breakdown of total transaction value by payment instrument

Source: Study on the payment attitudes of consumers in the euro area (SPACE)

Large differences between countries

The study also showed that there are considerable differences in the payment behaviour and habits of consumers in individual euro area countries. The highest use of cash in terms of the number of transactions is in Malta (88%), while the lowest is in Finland (35%). There were considerable differences in payment behaviour not only between countries, but also between different segments within the same population (according to income, qualifications and age group).

Cash will remain an important means of payment

Some 54% of the respondents said that it is important or very important to them to have cash as a payment option in the future (the figure for Slovenia was 44%). Many also use cash as a store of value for precautionary reasons (e.g. as a safeguard against events such as electronic payment outages or crises), since 34% of the respondents stated that they stored cash at home or in a safe place (the figure for Slovenia is the same). This last aspect, the use of cash as a store of value, has recently gained in importance. The study from 2016 showed that 24% of euro area consumers thought that way, and 33% in Slovenia.

Pandemic speeding up current trends

The results of an additional survey (conducted in July of this year) confirmed the impact of the pandemic on the use of means of payment in the euro area. Just under 50% of consumers have used cash to approximately the same degree during the pandemic, while 40% of the respondents stated that they have used cash (much) less often since the start of the pandemic. Of these, 87% predict that they will use cash less even after the end of the pandemic.

The main reason cited by respondents for the diminishing use of cash was that electronic payments became more convenient during the pandemic (e.g. the rise in the limit before the user of a contactless card is required to enter their PIN). This view was expressed by 45% of the respondents. The second-ranked reason was concerns over the transmission of the virus via cash (38% of respondents). Just 23% of respondents in Slovenia aired concerns over transmission via cash.

There were similar findings from analysis published by Banka Slovenije in June: demand for cash rose sharply during the first wave of the epidemic, mainly for store-of-value purposes, but gradually returned to its pre-crisis level after the first wave.