If you're one of those people who loves to pay in cash, don’t worry – you're in good company. In fact Il Sole 24 points out that, according to the European Central Bank’s estimates, 86% of transactions in Italy are settled in physical currency, with other payment methods only making up the remaining 14%. Yet, the question remains – is cash really still the best option?
Alternative payment methods – cards and more
“Cash or card?” When it comes to alternatives to cash payments, the first thing that usually comes to mind is the bank card. Be it credit, debit, pre-paid or bancomat, bank cards mean we’re able to go shopping, out for dinner and on holiday without having to carry notes or coins in our pockets.
However, as mobile banks and app-based solutions become more popular, there’s also been a rise in alternative payment methods. Equipped with state-of-the-art technology and advanced security systems, digital banking solutions are on the increase, allowing customers to make quick, secure and traceable transactions wherever they are.
Italians and their cash – a true love story
Yet, with so many new, technologically-advanced options to choose from, Italians still continue to play it safe by preferring to pay with traditional methods. Interestingly, according to Agenda Digitale each Italian citizen carried out an average of 50 digital transactions in 2016 – less than half of the European average (117.8).
Additionally, as pointed out by Il Sole 24 Ore, 6 out of 7 Italians still consider a cash transaction to be the most convenient payment method. But, why is this? Well, according to them, cash payments are always accepted, they’re faster and they allow greater control over your personal finances because you can physically see how much money you’re actually spending.
And this tendency to pay in cash isn’t just about convenience. In fact, it also has to do with another factor – the level of computer literacy in the country, which is still pretty low. So much so, that according to the European Commission’s Digital Economy and Society Index (DESI) Report in 2018, Italy is one of the lowest performing countries in the European Union when it comes to the use of internet services.
Limiting the use of cash
With that being said, the European Commission believes that cash is definitely on its way out, recently announcing that it aims to make electronic transactions mandatory in the future – even for the smallest of purchases. The reason behind this is because cash payments are neither traceable or documentable, and can encourage illegal behaviours such as tax evasion, money laundering, corruption and shadow economies.
Thankfully, many European countries are already very close to becoming cashless economies. In Sweden, for example, 59% of consumer transactions are completed via non-cash methods. Similarly in the UK, half of the population typically carry less than £5 in their pockets.
Although Italians may prefer to use cash, the trend towards cashless transactions is slowly becoming more common in Italy – especially when it comes to smaller value payments of less than €25, according to Il Sole 24 Ore. Ultimately, despite the fact that “money is a hit” in Italy (to quote Pink Floyd), things are gradually changing.
And while 2019’s Budget Bill has already limited cash use to €2,999.99, adding several restrictions to ensure the traceability of payments, the International Monetary Fund also claims that the use of coins and banknotes will decrease in the future. This is mainly due to changes in demographics, the costs of different payment methods and advancements in technology. Still though, as Il Sole 24 Ore points out, only time will tell exactly how much the precise effects of a decrease in cash payments will impact each country.
Cash, digital or mobile payments – what should I choose?
Do you still rely on cash for small transactions in your day-to-day? Of course, it’s no problem if you do. However, in this new age of mobile banking, it’s also worthwhile considering alternatives that manage your cash digitally.
At N26, we’ve designed CASH26 precisely for this reason – an option that lets you deposit cash into your N26 account in real time by simply generating a barcode on your app. And here’s the best part: you don’t even need to go to your bank branch. You can do it directly at the supermarket checkout, while you’re already out doing your shopping. Keen to learn more? Find out all the details about CASH26 here.