Europe faced with the reduction in the supply of hard currencies


For many people riding the digital wave, cash may already be a thing of the past.

In many parts of Europe, for example, consumer preferences for card and mobile wallet payments have far outstripped physical banknotes, especially in the northern part of the continent.

In a recent PYMNTS report looking at how people use and are impacted by digital technologies, respondents in France, the Netherlands and the UK – three of the six European countries surveyed – said they use cash or checks in just 12.6%, 18.1%, and 19.1% of in-store transactions, respectively.

Read the PYMNTS report: Benchmarking digital transformation

And in the case of the Nordic countries, often seen as world leaders in digital payments and innovation, those numbers are even lower.

According to a report by the Swedish Central Bank, the number of people who said they used cash as their most recent method of payment fell from 39% to 9% between 2010 and 2020.

Swedes’ growing preference for cashless payments can also be seen in the country’s adoption of the Swish mobile payment system, used by 95% of all Swedish adults. As the company’s CEO, Urban Höglund, told PYMNTS, “Today it has become an infrastructure in Sweden.”

Watch the interview with the CEO of Swish: Nordic consumers ask local merchants to improve their mobile commerce experience

But while moving towards a post-physical monetary system might be the expected trajectory for a country in its development, countries like Sweden that have tried to eliminate cash from daily commerce are finding that it can be difficult to get consumers to let go. deep-rooted habits.

Preventing “cashless” in Sweden

In 2020, the Swedish government stepped in to ensure the country still had an adequate cash distribution system when cash use fell to an alarming level, by passing a law to protect access people to cash services.

The law became necessary after banks began taking ATMs out of service and closing deposit-taking branches across the country, an issue that first hit the national political agenda following a movement of rural groups and consumer associations known as Kontantupproretliterally translated as “Cash Uprising”.

The Kontantupproret emerged in 2015 in response to the rapid disappearance of cash services in Sweden, which meant that many people had to travel miles to deposit or withdraw money.

See also: Is Sweden proof that there are too many digital payment successes out there?

The Kontantupproret website highlights some of the difficulties Sweden’s most isolated communities face in accessing cash payment services, especially in the country’s arctic regions, where unreliable internet coverage reinforces the system’s importance. cash payment.

The group’s website details the case of a man with Asperger’s syndrome who said he struggled to save and manage his finances without the tangible aspect of physical money. When he wanted to deposit his saved money, he had to travel from Norrköping to Stockholm, a nearly two-hour drive.

Following the government’s decision, today banks holding more than SEK 70 billion ($6.61 billion) in deposits are required to offer treasury services across the Scandinavian country or risk being be fined by the Swedish Financial Supervisory Authority.

Smooth transition to cashless?

Sweden is not alone in facing the challenges of transitioning to a cashless economy. In Germany, one of the most developed economies in Europe, cash is still king.

As PYMNTS reported, according to the German Money and Bond Services Association, cash accounts for 75% of all retail transactions in the country, with the average German carrying around €107 in their wallet and more than €1,360 in bank vaults.

Read more: In Germany, hard cash remains the way to pay

Even though the use of cash as a percentage of transactions has declined in the region, particularly in the wake of the pandemic, other regulators may soon follow Sweden’s lead in taking a proactive stance to ensure that banks meet the needs of cash-dependent customers.

In the Netherlands, one option being discussed is public financing of cash provisioning, Gijs Boudewijn, chief executive of the Dutch Payments Association (DPA), told PYMNTS in a recent interview.

Related: Benchmarking EU digital engagement: the Netherlands

He said the DPA was in discussions with relevant stakeholders on how best to ensure cash is “available to those who really, really need it while minimizing the cost of remaining cash infrastructure”.

See also: Dutch Payments Association Chief Executive Says ‘Positive Friction’ Will Protect BNPL Users

So, while major trends point towards a cashless future in Europe, the preferences of cash-hungry consumers must be taken into account to ensure a smooth transition from physical currency.

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About: More than half of utilities and consumer finance companies have the ability to digitally process all monthly bill payments. The kicker? Only 12% of them do. The Digital Payments Edge, a collaboration between PYMNTS and ACI Worldwide, surveyed 207 billing and collections professionals at these companies to find out why going digital remains elusive.

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