Cash Usage in Southern Europe: A Time of Change?

Outman Consulting has published a review of cash usage in Southern Europe, focusing on Italy and Spain. It surveyed 2,000 consumers in Italy and Spain in January 2021 to understand the impact on payments of the pandemic. It found that, for purchases under €10, the preference for using cash had declined from 78% to about 48%. Why and will the change stick?

The review suggests four reasons for Southern Europe’s love of cash:

• The retail structure: 80% of shops are small compared with other countries. This is unusually high. At the other extreme, in Finland, a country with little cash use, 50% of retail sales are accounted for by three chains of shops. Smaller shops cannot necessarily afford the infrastructure needed for digital payments or to carry the fee costs that come with them.

• The shadow economy: Although hard to estimate, the 2020 estimate for Italy was 11.9% of GDP according to the Italian National Statistics Institute (ISTAT). The Spanish figure was estimated to be 11.2% in 2018.

• Population age: 23% of Italians and 19% of Spaniards are over 65 years old. Older people are often more fearful of trying new technology solutions.

• Culture: The report quotes the social anthropologist Geert Hofstede who identified uncertainty aversion as being high in Southern Europe, which may, again, help explain preferences for cash.