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Cashless vs. Cash

Cashless vs. Cash

​​​​Much ado about nothing? WSBI-ESBG's Bruggink explains.

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The following is a digest of an article first published in Issue 57, 2018 of the Keesing Journal of Documents & Identity as per the following details: Diederik Bruggink, 'Cashless versus cash, much ado about nothing'. Keesing Journal of Documents & Identity, copyright 2018, and is reprinted by permission of the publisher. All rights reserved.


​BRUSSELS, 30 October 2018

Cashless transactions are on the increase – let there be no doubt about that. Is this increase in electronic transactions a signpost of a move to cashless societies or “less cash" societies? Or is there still a demand for cash in day-to-day life?

To answer these questions Bruggink assesses how cashless transactions and cash usage compare in the EU by digging into data related to the European Union. He notes that to do this, it requires first to analyse cashless transactions across the European Union. He provides an explanation follows related to the success of contactless transactions in the United Kingdom as being driven by public transport. Subsequently, some facts and figures related to cash are analysed followed by conclusions drawn.

After analysing the data in the article, Bruggink draws four main conclusions:

  • ​The number of cashless transactions is increasing in Europe, but not to the detriment of cash.

  • The growth in cashless transactions will most likely come from contactless card payments. Given the specifics of contactless payments, these may replace some low­value cash transactions. Once there is a solid case for using contactless card payments, such as in London's public transport system, contactless card transactions will flourish. Besides, and that may be worth a separate article, what will happen when instant payments become the new normal? Will these become as popular at points of sale as contactless payments?

  • Cash is not only used for transactions, but is also an important store of value, both within the euro area as outside of it. This is illustrated by the sharp surge in demand for €500 notes in October 2008 following the collapse of Lehman Brothers. This function of cash is not challenged by digital payments.

  • Although preferences for cashless transactions or cash may shift and differ between countries, both payment types serve specific needs for specific clients and hence should be part of a healthy payment product mix. A debate on which payment method trumps the other is much ado about nothing for the time being.​

>> See the full article

Digitalisation; Payments; Payments innovation; Innovation Hub; Innovation