What would your reaction be if you were told that in Europe, more than half of all transactions in shops take place in cash? I was surprised because I was convinced that the spread of digital methods had already overtaken the oldest payment method. However, this is not the case because the European Central Bank‘s two-yearly space study on consumer habits in countries using the euro says so. According to the bank’s surveys, 52% of all shop transactions between September 2003 and June 2024 were made in cash. A high figure, but down from the 59% recorded in 2022, and even more so when compared to the 79% recorded during the same study in 2016.

Digital payments are growing despite grey areas

The signal is clear, as the trend calculated on a sample of 50,000 consumers in the Old Continent sees digital methods outnumbering cash. However, the numbers also say that a large segment of people are accustomed to paying cash. Perhaps this is because they live in scenarios where moonlighting, paid in cash, of course, continues to exist, or perhaps because there are those who wish to avoid having their money tracked. The two hypotheses are closely linked.

An example in this sense comes from Italy, where the percentage of those who prefer cash payments reaches 62%, well above the European average. However, even in Italy, something is changing, as just two years ago, cash transactions accounted for 71%.

Also favouring the preference of the latter option, not only in Italy, are the commissions charged by banks on digital payments. That, especially on smaller amounts, weighs on consumers but also on the sellers of the goods, who are forced to raise the final price of the products. To overcome this obstacle, in Italy, the Ministry of the Economy has reached an agreement with credit institutions to reduce the costs of transactions below 10 euros; a first step, small but useful also in terms of image to show that an attempt is being made to change course.

As for Europe, one in two people prefer to pay by credit card or smartphone: 55% of consumers use digital methods in shops, while only 22% still prefer cash, according to ECB data. Online payments are growing the most, accounting (36%) for more than a third of the total value of transactions. This is a significant increase compared to the 28% recorded in 2022, a sign that the qualms over digital purchases are now forgotten even by the older age groups, bound by habit and trust to pay in cash. Inevitably, interest in and use of cryptocurrencies is also growing, owned by 9% of Eurozone residents (in 2022 it was 4%).

Although they are perceived almost entirely as an investment tool and not as a payment instrument (as is the case in El Salvador, which adopted Bitcoin as its official currency in 2021), the interest in virtual currencies remains an aspect that should not be underestimated.

Why Europe wants the digital euro

Moreover, the interest of the European institutions also revolves around a digital currency because the intention is to create the digital euro and make it the official currency of the EU member states. A great challenge for a different goal than cryptocurrencies (it should be made clear right away), which aims to provide an effective tool for payments in shops and transactions between private individuals. This is not to replace the digital methods already in use but to flank them in order to increase the use of digital solutions in all segments of the population.

However, the project is only at the beginning and, given the resistance in various countries, it is not certain that it will be successful. In any case, the road will not be short. I personally hope that one day, we will be able to choose between a smartphone, credit card, cash or digital euro to pay for dinner. Maybe this is just a wish; maybe technology is already ready to surprise us.