In its April bulletin the European Central Bank (ECB) published the results of two surveys it carried out among households and various companies. The results of the surveys carried out by the ECB among households and companies show that, in the euro area in 2008, cash was an important means of payment, and the value of cash transactions was still between 1.5 and 2 times the value of electronic payments at points of sale.

Cash seems to be the most preferred means of payment for transactions below €100, but a considerable number of people (20% of respondents in the countries surveyed) usually pay with cash even for amounts up to €1,000. There are considerable differences in the behaviour of households in the various countries. In countries such as Austria, Italy and Spain, people use cash more often and pay larger amounts with cash. On the other side of the spectrum are France and the Netherlands, where cash is used the least. 

It is not surprising that cash is used most widely in the hotel and restaurant sector, followed by retail and wholesale trade. In these sectors, the largest share of companies’ expenditure is paid in cash. Overall, however, it can be concluded that companies only pay a small share of their expenditure in cash. Both the direct results of the survey and the indirect method of estimating the value of cash used as a store of value suggest that the amount of cash stored in the euro area is significant, compared with the value of banknotes in circulation, albeit remaining small compared with the total value of bank deposits.

The opportunity costs of holding cash, which have been at an all-time low as a result of the low inflation and low interest rates since the introduction of the euro, have contributed to this phenomenon. Although the surveys were held in 2008 and 2009, there are no indications that the use of cash has changed substantially since then, but the share of total transactions made up by electronic payments has probably slightly increased over recent years due to an increase in the number of payment terminals, improvements in infrastructure, and campaigns that promote electronic payments. Looking ahead, for the medium term, it can be expected that cash will remain an important means of payment, with new means of payment having only a moderate impact.

The full results of the study can be found here