Over the last few years, the rise of new and innovative digital payments has meant that the concept of a ‘cashless society’ is a more realistic prospect than ever before. The likes of NFC contactless cards and mobile digital wallets offer consumers a convenient way of completing even the smallest-value transactions and, for some people, could make notes and coins obsolete sooner rather than later.
But some questions remain about whether this type of environment will truly be accepted by consumers. For many people, the feeling of having physical cash in their hands is still preferable to digital alternatives. It’s accepted everywhere, gives many people a better insight into how much they’re spending and for some is viewed as more secure than non-cash alternatives.
So is the cashless society now a realistic prospect, or will people continue to hold on to the tried and trusted payment method?
Consumers expecting to reduce cash use
A recent survey by ING shows that people across many countries expect to see their use of cash decline in the coming years. The bank questioned nearly 15,000 people across 13 European countries, as well as the US and Australia, to gauge public opinions on the future of payments and found that overall, the use of cash is falling.
In Europe, 54 percent of people say they use physical cash much less now than 12 months ago, while nearly four-fifths of these consumers (78 percent) expect to continue this trend in the coming years.
One in five people (21 percent) in Europe added they rarely carry cash today, while a third (34 percent) would choose to go completely cashless if it were a practical option for them.
Enthusiasm varies across countries
However, while the decline of cash was a common trend across the surveyed countries, there were some notable variations in their attitude to a cashless society. The nations where cash is considered least essential are France and the US, where 35 and 34 percent of people respectively stated they rarely used cash. In Germany, by contrast, this figure was just ten percent.
Consumers in Turkey were found to be the most likely to use cash on a regular basis, with 92 percent of people stating they had made a cash payment within the last three days. At the other end of the scale, only 60 percent of those in the Netherlands used cash in the preceding three days, with 17 percent of Dutch respondents saying they hadn’t used cash in at least a month.
But despite the fact Turkey was the most frequent user of cash, people in this country are also the most enthusiastic towards the idea of a cashless society, with 42 percent of respondents saying they would go cashless if they could. By contrast, just 21 percent of Brits agreed with this.
Where cash will hold on
Perhaps unsurprisingly, ING’s survey found that as the value of transactions rises, so does the preference for using non-cash payment methods. For payments between €1 and €10 (or the local currency equivalent), 88 percent of people in Europe favor cash. This drops to around half for transactions between €11 and €50, and just 12 percent for payments above €100. Just six percent of respondents said their payment habits would be affected if the largest-denomination banknote was taken out of circulation – as will happen in the eurozone next year, when the €500 note is withdrawn.
Everyday payments such as lunch and transport are likely to be holdouts for cash, with two-thirds of respondents (67 percent) favoring cash for coffee or snacks, and 57 percent for taxis or public transport.
While the survey suggested completely cashless societies are still a long way off, acceptance of this will only grow as more people are given the option to avoid cash. As editor of the report Fleur Doidge and ING senior economist Ian Bright wrote: “Living comfortably without physical cash was considered the stuff of science fiction only a few decades ago. Today it is a realistic proposition.”