Europe is facing a declining supply of hard currency
For many people riding the digital wave, cash can already be a thing of the past.
In many parts of Europe, for example, consumers’ preferences for card and mobile wallet payments have far exceeded physical notes, especially in the northern continent.
In a recent PYMNTS report examining how people use and are affected by digital technology, respondents in France, the Netherlands and the UK – three of the six European countries surveyed – reported using cash or checks in just 12.6%, 18, 1% and 19.1% of transactions in store respectively.
Read the PYMNTS report: Benchmarking the digital transformation
And when it comes to the Nordic countries, which are often considered to be global leaders in digital payments and innovation, these figures are even lower.
According to a report from the Riksbank, the number of people who reported using cash as their latest payment method decreased from 39% to 9% between 2010 and 2020.
The Swedes’ growing preference for cashless payments can also be observed in the country’s introduction of Swish mobile payment systems, which are used by 95% of all Swedish adults. As the company’s CEO, Urban Höglund, told PYMNTS, “Today it has become an infrastructure in Sweden.”
See Swish CEO Interview: Nordic consumers demand that local retailers improve the mobile shopping experience
But while the transition to a post-physical monetary system may be the expected path that a country would take in its development, countries like Sweden that have tried to eliminate cash from daily trade realize that it can be a challenge to get consumers to let go. of deep-rooted habits.
Prevent cashlessness in Sweden
In 2020, the Swedish government stepped in to ensure that the country still had an adequate system for cash distribution when cash use fell to an alarming low and passed a law intended to protect people’s access to cash services.
That law became necessary after banks began withdrawing ATMs from service and closing deposit branches up and down the country, an issue that first hit the national political agenda after a movement of rural groups and consumer organizations called The cash uprisingliterally translated as “Cash Uprising”.
The cash uprising emerged in 2015 as a response to Sweden’s rapidly disappearing cash services, which meant that many people traveled miles to deposit or withdraw cash.
See also: Is Sweden proof that there is one thing that is too much digital payment success?
The cash uprising’s website highlights some of the difficulties that Sweden’s more isolated societies face in gaining access to cash services, especially in the country’s Arctic regions, where unreliable internet coverage anchors the importance of the cash system.
The group’s website details a fall by a man with Asperger’s syndrome who reported having difficulty saving and managing his finances without the obvious aspect of physical money. Once he wanted to deposit his saved cash, he had to travel from Norrköping to Stockholm – a nearly two-hour drive.
As a result of the government’s move, banks that hold more than SEK 70 billion (USD 6.61 billion) in deposits are currently mandated to offer cash services throughout the Scandinavian country or risk being fined by the Swedish Financial Supervisory Authority.
Smooth transition to cashless?
Sweden is not alone when it comes to challenges in the transition to a cashless economy. In Germany, one of Europe’s most developed economies, cash is still king.
As PYMNTS reported, according to the German Association of Money and Bond Services, cash accounts for 75% of all retail transactions in the country, with the average German having around € 107 in his wallet and more than € 1,360 in bank vaults.
Read more: In Germany, Cold Hard Cash is still the way to pay
Although cash use as a proportion of transactions has decreased throughout the region, especially in the wake of the pandemic, other supervisory authorities may soon follow Sweden’s lead when taking a proactive stance to ensure that banks meet the needs of cash – dependent customers.
In the Netherlands, an option that is being discussed is public funding for the cash supply, Gijs Boudewijn, general manager of the Dutch Payments Association (DPA), told PYMNTS in a recent interview.
Related: Benchmarking of EU digital engagement: the Netherlands
He said DPA was in discussions with relevant stakeholders on how best to ensure that cash is “available to those who really, really need it, while minimizing the cost of the remaining cash infrastructure.”
See also: Dutch Payments Association GM says “positive friction” will protect BNPL users
So even if major trends point to a cashless future in Europe, the preferences of cash-heavy consumers should be taken into account to ensure a smooth transition away from physical currency.
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