Barely €5 in cash in the average Spanish purse as 63.4% prefer cards

TWO-THIRDS of Spanish residents now pay for everything they can by card or mobile phone, and seven in 10 carry less than €5 in their purses, according to the most recent Bank of Spain survey.

Already, as a result of the pandemic, by July last year, card and mobile phone payments had overtaken cash for first time ever, with the latter relegated to 45.5% of transactions – and yet, seven months previously, around 87% of the population used notes and coins as their default method.

With physical money being discouraged when Covid-19 hit Spain for the first time and the entire nation went into full lockdown on March 16, 2020, the way people pay in shops and bars is yet another dramatic about-turn in everyday culture the virus has caused, along with working from home, Zoom meetings with family and friends, and companies and public sector offices no longer insisting customers attend in person to be able to serve them.

The Bank of Spain's 'national survey on use of cash in 2020' differs from previous market research conducted, insofar as it asked traders as well as the general public about their attitudes to different payment methods.

Traders now prefer cards – even small retailers

In keeping with the study last July, over 54% - the same number as back then – say they preferred to pay with a debit card, although the actual figure of those whose cash transactions are only a minority is much higher: A total of 36.6% used notes and coins wherever and whenever they could.

Similar research by the Bank of Spain in 2014 put this figure at nearly 80%.

Large retailers, department stores, supermarkets and hypermarkets have been accepting non-cash payments now for 20 years or more, and smaller businesses taking cards for high amounts, but it is only recently, according to the report, that traders of all sizes have been expressing a preference for card transactions, even for very low amounts of money. 

Pre-pandemic, it was typical to see signs on shop doors or above the till stating a minimum spend for card payments – normally anything from €10 to €25 – and even as some bars or retailers began pointedly stating they accepted cards for any amount, even a few cents, anecdotal evidence showed the public tended to 'feel a bit silly' spending much less than €10 or €15, and certainly less than €5, using plastic.

According to the Bank of Spain, bars, restaurants, small shops, cafés, department stores and other major national or international retail chains operating on the high street, and the public in general, all coincide now that paying and being paid with plastic is 'much faster and more comfortable'.

As for mobile phone payments, the number of establishments now accepting these has risen by around 50% since the start of the pandemic.

Cash use by age

The largest age group for cash use is actually the youngest – those between 18 and 24 years old – with the 65-and-over segment second, the survey shows.

Whilst 53% of the latter prefers cash, a total of 60.3% of the youngest adults also do so.

This could, however, be due to many of the under-25s not having a regular income, perhaps still being at college or working odd jobs whilst trying to settle into a career, so they may not even have bank accounts and their spending may, in many cases, be through cash allowances given to them by their parents.

The fact that the total who prefer cash to cards halves for the 25-34 age group – to 30.8% - may bear this out.

And preference for coins and notes declines steadily until the 60s: Only 27.5% of those aged 35 to 44 use cash whenever possible, falling to 25.1% among the 45-54 age group, and slightly higher for the 55-64 segment at 25.3%.

The huge difference between the 55-64 community and those aged 65-plus may also be due to the vast variation in age in the top bracket: The habits of a person of 65, especially if they are not yet on a retirement pension, are likely to be a world away from those of a person in their 90s; indeed, previous research has found that a high number of the very elderly do not trust, or do not know how to use, cashpoints, and withdraw their money over the counter at their local branch.

Compared with the working-age population, the number of those aged 65-plus who said they would never go to the counter rather than the cashpoint was low – 58.3% - with the 18-24 age group at the opposite end, and of whom 92.8% said they would never go to a branch and speak to a human to request a withdrawal rather than using an ATM.

Figures for those aged from mid-20s to retirement were very similar – those who do not request cash over the counter and instead only go to cashpoints range from 89.4% of the 25-34 group and 87.8% of the 55-64 community, to 86.6% of those aged 35-44 and 83.8% of people between 45 and 54.

How the pandemic has changed spending methods

The Bank of Spain survey says 2.5% of the population stopped using cash when Covid hit the country, for 'hygiene reasons' – so as not to catch the virus from handling coins and notes someone else had touched, or oblige anyone else to handle them after they had touched them.

Lockdown between mid-March and late June led to a spectacular decline in cash use, and although only a small percentage said they had ceased to use it altogether, around 61.2% of the population said that since then they have paid with notes and coins as little as possible.

These six in 10 cited hygiene, and also the fact that more and more retailers and other traders had been accepting and even encouraging card and phone payments instead of cash and making it easier to do so – nearly half of all establishments, large and small, urged their customers to pay by card or phone for any amount, even where, in the past, these same establishments may not have accepted either at all or only for a relatively high minimum sum.

Overall, 69.1% of the public, and 61.3% of traders, say they have changed their habits or practices in terms of making or accepting payments, and believe they will continue this way in the longer-term future.

Not worth stealing anyone's purse these days

Once, and only recently, finding out your purse had been stolen from your pocket or handbag was a financial disaster, but since early 2020, it is now likely to upset you because you quite liked the purse, or your driving licence or ID card was in it and replacing them would be a hassle.

Debit and credit cards would be inside it, too, but these can be blocked in seconds by a phone call, a mobile phone banking App, or going onto one's bank website, and many banks have lenient policies about stolen cards – waiving payment in full or in part for the legitimate owner where a thief has made a transaction in their name.

An increasing number of banks have warning systems in place, which might include sending a text message to the cardholder if an unusual transaction has been made, or money spent outside the country. 

And if a pickpocket is just looking for easy money and does not have the skills to clone cards or hack PIN numbers, the contents of the average stolen purse would probably not even cover their bus fare home.

The Bank of Spain reports that over 70% of the general public has fewer than five coins in their purses, and that these typically total under €5.

And high-denomination notes are becoming more and more rare - €500 notes are less likely to be minted by the Central European Bank (BCE) in a bid to combat money laundering, and €200 notes were only occasionally spotted even 10 or 20 years ago.

Back then, in the first decade or so of the 21st century, it was reasonably common to see €100 notes, but most of the public admits they have not seen one now in many years.

Among everyone surveyed – individuals, and traders large and small who may be more likely to deal in big sums of cash which could include high-denomination notes – a total of 89.4% said they had not had a €200 or €500 note in their hand in more than a year.

They were not asked to go farther back in time than a year, but given that these are very difficult to use, they are also less likely to be seen by the ordinary public.

Many establishments have long had signs up warning they cannot guarantee having sufficient change for payments made with €500 or €200 notes, and as at the end of 2020, a total of 56.6% of retailers and restaurateurs said they refused all payments with notes of a higher denomination than €100.

This much-reduced use of cash and the tendency for purse contents to be measured in coins and well below double figures seems to be the reason behind traders and society alike failing to check bank notes are genuine.

According to the study, only 10.9% of individuals check notes for authenticity all the time, 51.5% never do, and 15.5% only do so sometimes.

If their bank notes nearly always come from a cash machine, are quickly dissolved into coins, and are typically very low denominations which are less likely to be forged, the habit of holding a note up to the light upon receipt will almost certainly have dwindled.

And even traders do not check in many cases – 14% never do and 15.5% only sometimes – perhaps because payment by cash is far less frequent and tends to involve small amounts, typically below €15, or mainly in coins.

But in general, it is far more difficult to get forged banknotes past a trader than an individual, given that 70.2% say they always make sure these are genuine when they receive them.