Is Spain becoming a cashless society?

As at the end of the first quarter of 2019 – the most recent period for which figures are available – a record 85 million credit and debit cards were known to be in circulation, most of which were the latter, which accounted for 48 million.

This represented an increase of 4.27% on figures for 2018 – a rise never yet seen before, and even in spite of newer methods catching on, such as paying by mobile phone.

The rise in the number of credit cards – 37 million in circulation by the end of the first quarter of 2019 – was lower than some of the historic highs seen in the last 13 years, such as the 52 million in use in 2017.

According to the Bank of Spain, the increase in debit cards and their use is likely to be linked to changes in financial institution practices – new criteria were introduced in January 2018 to comply with a European Union directive on card payments.

Anecdotal evidence points at great changes on the high street in terms of card payment acceptance, with increasing numbers of shops allowing debit card use for even small amounts; until last year, it was mainly only supermarkets which would permit card transactions for purchases of any sum, whilst those shops which did accept cards imposed lower limits ranging from €10 to €30, and many more were ‘cash only’ premises.

A growing number of cafés and bars are now willing to take payment on a debit card just for one coffee – a scenario unheard of two years ago.

Whilst younger generations prefer cashless systems, older Spaniards and residents remain more likely to use cash – and cashpoints are now having to adapt or disappear, the Bank of Spain says.

The very elderly, in Spain, generally prefer to withdraw their cash in person at their local bank and do not trust cashpoints, meaning a relatively narrow ‘age window’ for regular ATM use.

Last year, the number of cashpoints in Spain reduced by 0.94%, to 50,363, as part of the Bank of Spain’s ‘adjustment strategy’ which included a series of branch office closures.

Those that remain are now likely to offer more interactive and personal services, such as applying for loans or insurance policies without the need to go to a branch in person, or simpler operations such as topping up a motorway toll card or public transport card.

Cashpoints increasingly feature ‘contactless’ facilities, meaning cards do not have to be placed inside the machine, removing the risk of their being ‘swallowed up’ by a malfunction and reducing that of cloning, and permitting cash withdrawal even where the magnetic band is damaged.

Some banks are now starting to employ a ‘code’ system, where a number sent to the customer’s mobile phone is keyed into a cashpoint for card-free withdrawal.

Although cashpoints are less used now, when customers do avail themselves of these, they tend to withdraw larger amounts, the Bank of Spain reveals.

Less-frequent but higher withdrawals mean the amount of cash taken out of machines totalled €29 billion in the first quarter of 2019 – a rise of 3.26% on the same period in 2018 – in 217 million operations.

ATM transactions are predicted to end 2019 at an annual low, but with amounts involved similar to or higher than those in recent years.

The average single withdrawal so far this year is €133.40, very similar to 2018, when the average single withdrawal was €133.50.