TWO of Spain's largest high-street banks are reported to be in merger talks, potentially resulting in the joint entity being the second-biggest in the country in terms of share capital.
Spain and the Eurozone won't ditch the cash – even though they mostly could
01/03/2020
AS MORE and more European countries dispense with notes and coins, and debit and credit card payments become more widely accepted, one wonders if physical currency could become extinct within a generation. After all, Denmark has floated the idea of stopping minting cash; in the UK, bank transfers are usually free of charge and instant, meaning if you owe someone a tenner you can just dump it in their account – or use PayPal, which is extremely safe and comfortable and only needs both parties to have an email address. It's perfectly possible to go for a full-length holiday in Iceland and never see the currency: you can pay for a chocolate bar with your card. Add to this the increasing number of banks offering mobile phone payment Apps, where you just place your handset above the card machine, or even your SmartWatch, and it does seem the need for money you can hold in your hand is lessening by the year. It could, in fact, go the same way cheque books have in the last 20 years: becoming, if not obsolete, certainly very rare and a lot of hassle.
Or will it?
Why cash costs
In Spain, the main barrier to shops and bars accepting card payments has been the fact that their banks charged so much in commission for these that it was not worth their while unless the transaction was fairly hefty – retailers and restaurateurs were going to lose some of the money they charged for their goods or services. But increasingly, banks are making it easier and cheaper for their commercial clients to take card payments.
And even getting paid in cash still costs. You have to pay security companies to transport the money; employees or owners carrying it in person to the bank put their safety at risk, and could easily lose a whole day's takings in a mugging or if they lose their handbags. Hold-ups at petrol stations and shops can mean having to hand over all you earn that day for the sake of your safety. Staff members run the risk of being accused of theft if the till contents do not add up, or if they are robbed on the way to the bank, and the terror and guilt felt if an employee loses the company money bag whilst transporting the cash is extremely stressful; indeed, less-understanding bosses may even make them pay it back out of their wages.
But some prefer cash – here's why
But cash can still have uses that debit cards and the like do not provide. If you're slipping a note into someone's birthday card, it looks more 'present-like' than scrawling on it that you've put the same amount into their current account. Giving money to homeless people on the streets isn't easy without cash – most don't accept credit cards. (Although many charities advise against this – it does not help to 'cure' homelessness and it is better to give money to shelters so they have enough resources to provide beds, bathroom facilities and hot meals, and food for pets if their charges have them).
Charity boxes at tills habitually fill up from loose change, especially 'brown coins', whilst few customers would think to add an extra amount to a card transaction if asked, and remembering to donate to charities via bank transfer means most do not unless they set up standing orders.
Tipping restaurant staff is easier in cash, to ensure it actually ends up in the waiter's pocket (even then, though, company policy often requires them to put it all in a communal jar so it can be split between them at Christmas, and one school of thought is that tipping waiting staff encourages their bosses to pay them less). Also, fruit machines and lottery shops, for example, only accepting cash guards against those at risk of becoming gambling addicts from spending every cent and losing it all – although this could be addressed by limiting the amounts a person can spend on lottery tickets, and replacing fruit machines with other types of non-lucrative game which appease the competitive edge potential gamblers have without ruining them.
Whilst in more modern nations, even the very elderly know how to use debit cards and to check their bank statements, in those that are less evolved, the relatively-new concept of payment in plastic is too 'technical' for the oldest residents to get a handle on; they simply feel more comfortable counting out notes and coins. In fact, recent reports have shown that high-street bank closure in villages is leaving the elderly feel helpless: many do not understand cashpoint machines and prefer to visit the bank in person to ask for their money.
Also, many argue cash helps prevent one from overspending; it's easy enough to hand over a card at the till, but if you're 20 cents short for those must-have designer shoes you probably couldn't afford anyway, you have no choice but to leave empty-handed – after all, once it's gone, it's gone.
This said, others say cash has a habit of 'disappearing' in their purses, and it's card payments which prevent them spending money like water. Both of these approaches are very personal, sometimes generational, however.
What about Spain?
As recently reported here, debit card use is soaring in Spain, cashpoints are dwindling – only around 50,000 now remain in the country – and are increasingly offering other services, such as mobile phone top-ups, concert tickets, bill payment for annual taxes and fees, balance-checking, taking out loans and other products without having to visit one's branch (helpful, given that most still only open from around 08.00 to 14.00 on weekdays and are shut at weekends and in afternoons) and making transfers.
ATM machines, according to the Bank of Spain, are mainly now used for large withdrawals – operations are far fewer, but amounts withdrawn are much larger.
In the last decade, Spain has gone from over 50% of shops, nearly 100% of bars and a small number of restaurants only accepting cash, and those which do take cards setting a minimum payment figure of between €10 and €30, to almost 100% of shops and restaurants and a steadily-rising number of bars taking card payments for even small amounts, sometimes even for a few cents.
This is in part due to European Union directives on card use, and in part due to a law introduced in Spain in the last few years requiring all establishments to allow card payments for any amount over €30, and before it shrank to a minority party from Spain's third-largest political outfit, the centre-right Ciudadanos was considering reducing this legal minimum to €10 – partly in a bid to combat tax avoidance.
In all cases, if a shop accepts card payments at any other time of the year, they are required by law to also do so during the sales – they cannot insist on cash only when they slash their prices.
But is Spain really becoming a cashless society, as we reported in August 2019?
It's not just Spain – the entire Eurozone prefers cash
According to the Central European Bank (BCE), although the facilities are mostly there for allowing Spain to ditch the coins and notes, old habits die hard: a whopping 87% of people in Spain still use cash for their daily purchases.
In fact, in the Eurozone as a whole, 79% of transactions are still made in cash, and 54% of the total amount spent per year is in notes and coins.
Malta (fourth picture) is the most 'cash-only' society in the common-currency zone – a huge number of shops, bars and restaurants still do not accept any other method of payment for any amount of money, meaning 92% of transactions are carried out using notes and coins, largely because there is no alternative, and 74% of the total amount spent per year is done without getting out the plastic.
Cyprus and Greece are not far behind – 88% of payments are made in cash in each; in Greece, 75% of the total expenditure per year is in notes and coins, and in Cyprus, 72%.
Spain is fourth-highest, with 87% of transactions made in cash, although with 68% of total expenditure made without using cards or mobile phone Apps, it's below the Eurozone average in this sense.
And in fact, even in some of the most advanced Eurozone countries, electronic payments are slow to catch on, barely exceeding half: Only The Netherlands registered more euro transactions without cash than with, the latter coming to 45%, whilst in France and Luxembourg, 68% and 64% of purchases were made in notes and coins.
This said, the total amount spent per year in cash rather than on plastic was very much in a minority – over a quarter, but less than a third: 27% in The Netherlands, 28% in France and 30% in Luxembourg.
Even in Germany, 80% of payments are in cash, only slightly behind Portugal's 81%, and Italy was just behind Spain at 86%.
And in these three countries, total expenditure in cash made up over half the total: Italy's 68% was the same as Spain's; Portugal's cash total was 52%, and Germany's was higher at 55%.
So even though it may seem at first that the nearly nine in 10 Spaniards who prefer cash are 'behind the times', the truth is that notes and coins continue to be overwhelmingly the most popular method of payment in all countries that use the euro, and its rate of use very similar.
...only for payments of less than €20, though
But it often depends upon how much you're paying, says the BCE.
The average transaction in cash across the Eurozone is €12.38, whilst the total average transaction using any type of payment method is €18.10.
And around two-thirds of all payments were for amounts under €15, of which 88% were made in cash.
On the other hand, payments exceeding €50 were made by card or other electronic means in 92% of cases, and barely 2% of transactions for €100 or more were made in cash.
Throughout the Eurozone, nearly half – 49% - said the method they opted for was determined by how much they actually had to pay, with about a third of the total saying they paid cash for anything under €20.
Those who never use plastic or electronic methods for any type of payment – preferring notes and coins for every transaction – totalled 23%, whilst those who avoided cash at all costs unless there was no alternative, paying for everything by card, totalled 27%.
Anecdotal evidence shows that many, even the latter, use cash for single-figure amounts because they do not realise they can use their cards and are reluctant to ask, and that some of the latter 27% even choose retailers and cafés entirely on the basis that they accept plastic.
It makes sense for even the smallest amounts to be accepted by card, since, if a person is 20 cents short for a coffee, they will not be able to stop at a café, whereas if they can use their card, they will, potentially increasing trade.
Also, with acceptance of electronic payments being fairly recent, many customers who have not been to a given shop or bar for a few years may not realise they are now no longer cash-only.
Establishments which accept card or mobile phone payments are advised to make this clear in signs on the door, including any lower limits they set for these.
But for those who have forgotten what a euro coin looks like and are in no hurry to remind themselves, they can take comfort from the fact that all major supermarkets and chain stores in Spain will take card payments for any transaction of one cent upwards, petrol stations typically for €5 or more, and most pharmacies for any amount.
Related Topics
AS MORE and more European countries dispense with notes and coins, and debit and credit card payments become more widely accepted, one wonders if physical currency could become extinct within a generation. After all, Denmark has floated the idea of stopping minting cash; in the UK, bank transfers are usually free of charge and instant, meaning if you owe someone a tenner you can just dump it in their account – or use PayPal, which is extremely safe and comfortable and only needs both parties to have an email address. It's perfectly possible to go for a full-length holiday in Iceland and never see the currency: you can pay for a chocolate bar with your card. Add to this the increasing number of banks offering mobile phone payment Apps, where you just place your handset above the card machine, or even your SmartWatch, and it does seem the need for money you can hold in your hand is lessening by the year. It could, in fact, go the same way cheque books have in the last 20 years: becoming, if not obsolete, certainly very rare and a lot of hassle.
Or will it?
Why cash costs
In Spain, the main barrier to shops and bars accepting card payments has been the fact that their banks charged so much in commission for these that it was not worth their while unless the transaction was fairly hefty – retailers and restaurateurs were going to lose some of the money they charged for their goods or services. But increasingly, banks are making it easier and cheaper for their commercial clients to take card payments.
And even getting paid in cash still costs. You have to pay security companies to transport the money; employees or owners carrying it in person to the bank put their safety at risk, and could easily lose a whole day's takings in a mugging or if they lose their handbags. Hold-ups at petrol stations and shops can mean having to hand over all you earn that day for the sake of your safety. Staff members run the risk of being accused of theft if the till contents do not add up, or if they are robbed on the way to the bank, and the terror and guilt felt if an employee loses the company money bag whilst transporting the cash is extremely stressful; indeed, less-understanding bosses may even make them pay it back out of their wages.
But some prefer cash – here's why
But cash can still have uses that debit cards and the like do not provide. If you're slipping a note into someone's birthday card, it looks more 'present-like' than scrawling on it that you've put the same amount into their current account. Giving money to homeless people on the streets isn't easy without cash – most don't accept credit cards. (Although many charities advise against this – it does not help to 'cure' homelessness and it is better to give money to shelters so they have enough resources to provide beds, bathroom facilities and hot meals, and food for pets if their charges have them).
Charity boxes at tills habitually fill up from loose change, especially 'brown coins', whilst few customers would think to add an extra amount to a card transaction if asked, and remembering to donate to charities via bank transfer means most do not unless they set up standing orders.
Tipping restaurant staff is easier in cash, to ensure it actually ends up in the waiter's pocket (even then, though, company policy often requires them to put it all in a communal jar so it can be split between them at Christmas, and one school of thought is that tipping waiting staff encourages their bosses to pay them less). Also, fruit machines and lottery shops, for example, only accepting cash guards against those at risk of becoming gambling addicts from spending every cent and losing it all – although this could be addressed by limiting the amounts a person can spend on lottery tickets, and replacing fruit machines with other types of non-lucrative game which appease the competitive edge potential gamblers have without ruining them.
Whilst in more modern nations, even the very elderly know how to use debit cards and to check their bank statements, in those that are less evolved, the relatively-new concept of payment in plastic is too 'technical' for the oldest residents to get a handle on; they simply feel more comfortable counting out notes and coins. In fact, recent reports have shown that high-street bank closure in villages is leaving the elderly feel helpless: many do not understand cashpoint machines and prefer to visit the bank in person to ask for their money.
Also, many argue cash helps prevent one from overspending; it's easy enough to hand over a card at the till, but if you're 20 cents short for those must-have designer shoes you probably couldn't afford anyway, you have no choice but to leave empty-handed – after all, once it's gone, it's gone.
This said, others say cash has a habit of 'disappearing' in their purses, and it's card payments which prevent them spending money like water. Both of these approaches are very personal, sometimes generational, however.
What about Spain?
As recently reported here, debit card use is soaring in Spain, cashpoints are dwindling – only around 50,000 now remain in the country – and are increasingly offering other services, such as mobile phone top-ups, concert tickets, bill payment for annual taxes and fees, balance-checking, taking out loans and other products without having to visit one's branch (helpful, given that most still only open from around 08.00 to 14.00 on weekdays and are shut at weekends and in afternoons) and making transfers.
ATM machines, according to the Bank of Spain, are mainly now used for large withdrawals – operations are far fewer, but amounts withdrawn are much larger.
In the last decade, Spain has gone from over 50% of shops, nearly 100% of bars and a small number of restaurants only accepting cash, and those which do take cards setting a minimum payment figure of between €10 and €30, to almost 100% of shops and restaurants and a steadily-rising number of bars taking card payments for even small amounts, sometimes even for a few cents.
This is in part due to European Union directives on card use, and in part due to a law introduced in Spain in the last few years requiring all establishments to allow card payments for any amount over €30, and before it shrank to a minority party from Spain's third-largest political outfit, the centre-right Ciudadanos was considering reducing this legal minimum to €10 – partly in a bid to combat tax avoidance.
In all cases, if a shop accepts card payments at any other time of the year, they are required by law to also do so during the sales – they cannot insist on cash only when they slash their prices.
But is Spain really becoming a cashless society, as we reported in August 2019?
It's not just Spain – the entire Eurozone prefers cash
According to the Central European Bank (BCE), although the facilities are mostly there for allowing Spain to ditch the coins and notes, old habits die hard: a whopping 87% of people in Spain still use cash for their daily purchases.
In fact, in the Eurozone as a whole, 79% of transactions are still made in cash, and 54% of the total amount spent per year is in notes and coins.
Malta (fourth picture) is the most 'cash-only' society in the common-currency zone – a huge number of shops, bars and restaurants still do not accept any other method of payment for any amount of money, meaning 92% of transactions are carried out using notes and coins, largely because there is no alternative, and 74% of the total amount spent per year is done without getting out the plastic.
Cyprus and Greece are not far behind – 88% of payments are made in cash in each; in Greece, 75% of the total expenditure per year is in notes and coins, and in Cyprus, 72%.
Spain is fourth-highest, with 87% of transactions made in cash, although with 68% of total expenditure made without using cards or mobile phone Apps, it's below the Eurozone average in this sense.
And in fact, even in some of the most advanced Eurozone countries, electronic payments are slow to catch on, barely exceeding half: Only The Netherlands registered more euro transactions without cash than with, the latter coming to 45%, whilst in France and Luxembourg, 68% and 64% of purchases were made in notes and coins.
This said, the total amount spent per year in cash rather than on plastic was very much in a minority – over a quarter, but less than a third: 27% in The Netherlands, 28% in France and 30% in Luxembourg.
Even in Germany, 80% of payments are in cash, only slightly behind Portugal's 81%, and Italy was just behind Spain at 86%.
And in these three countries, total expenditure in cash made up over half the total: Italy's 68% was the same as Spain's; Portugal's cash total was 52%, and Germany's was higher at 55%.
So even though it may seem at first that the nearly nine in 10 Spaniards who prefer cash are 'behind the times', the truth is that notes and coins continue to be overwhelmingly the most popular method of payment in all countries that use the euro, and its rate of use very similar.
...only for payments of less than €20, though
But it often depends upon how much you're paying, says the BCE.
The average transaction in cash across the Eurozone is €12.38, whilst the total average transaction using any type of payment method is €18.10.
And around two-thirds of all payments were for amounts under €15, of which 88% were made in cash.
On the other hand, payments exceeding €50 were made by card or other electronic means in 92% of cases, and barely 2% of transactions for €100 or more were made in cash.
Throughout the Eurozone, nearly half – 49% - said the method they opted for was determined by how much they actually had to pay, with about a third of the total saying they paid cash for anything under €20.
Those who never use plastic or electronic methods for any type of payment – preferring notes and coins for every transaction – totalled 23%, whilst those who avoided cash at all costs unless there was no alternative, paying for everything by card, totalled 27%.
Anecdotal evidence shows that many, even the latter, use cash for single-figure amounts because they do not realise they can use their cards and are reluctant to ask, and that some of the latter 27% even choose retailers and cafés entirely on the basis that they accept plastic.
It makes sense for even the smallest amounts to be accepted by card, since, if a person is 20 cents short for a coffee, they will not be able to stop at a café, whereas if they can use their card, they will, potentially increasing trade.
Also, with acceptance of electronic payments being fairly recent, many customers who have not been to a given shop or bar for a few years may not realise they are now no longer cash-only.
Establishments which accept card or mobile phone payments are advised to make this clear in signs on the door, including any lower limits they set for these.
But for those who have forgotten what a euro coin looks like and are in no hurry to remind themselves, they can take comfort from the fact that all major supermarkets and chain stores in Spain will take card payments for any transaction of one cent upwards, petrol stations typically for €5 or more, and most pharmacies for any amount.
Related Topics
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