High-value transactions increasingly entrusted to digital payment systems

Over the last two decades, European transactions have increasingly moved toward digital payments. But new research shows that while high-value transactions are increasingly dominated by digital, cash remains king when it comes to everyday purchases.

The Covid-19 pandemic sped up a long-term shift away from cash. As people opted to avoid contaminating and exchanging physical cash, the UK Finance report found that cash was used to make 12% of all payments in the UK in 2023, down by 2% on the previous year. Meanwhile, the study forecast that cash could make up just 6% of payments in 2033.

However, while some people predict that the UK will be completely cashless by 2040, the Bank of England has gone on record to say it’s unlikely that cash will “die out any time soon”. Threadneedle Street claims this is largely thanks to the new polymer notes that have entered circulation, that are harder to counterfeit and are resistant to dirt and moisture, allowing cash to hold its own against digital currency.

Whatever the outcome, however, the UK is significantly further along the road to going cashless than many of its European counterparts. According to a study from zeb – a consulting firm with offices across the continent – the European payments landscape is “evolving at an unprecedented pace”, but even as technological advances enable the shift to digital payments to accelerate, they are still not the majority.

Across 11 European countries, the study found that 55% of transactions involved digital forms – the largest portion of 41% coming from payment cards. But the largest singular mode for transactions across the continent was still cash, at 45%. At the same time, this average was calculated using Sweden as one of the studies. Unlike the others, becoming a cashless society had (until recently) been on the government’s agenda – pushing it ahead of many other countries in the shift, and skewing the continent’s average.

In fact, only the Netherlands matches Sweden’s determination to go cashless. The other 10 countries featured all have cash use of at least 35% of transactions. In the case of Croatia, Romania, Italy and Spain, that is in excess of 50% - with Croatia highest at 67%.

Some areas of cash usage are steadily declining even in those markets though. And while that might not point to a cashless society, it does suggest that cash may have had its day when it comes to a certain kind of transaction. In terms of the value by payment instrument, digital methods punch far above their weight, considering their volume of use.

According to Zeb, the total value of cash transactions across Germany, France, Italy, Spain, the Netherlands, Poland, Sweden, Austria, Romania, Croatia and Slovenia averages out at just 10%. Meanwhile, credit transfers account for 56% of value across the continent – and this rises above 60% in the cases of Germany, Slovenia, the Netherlands and Poland. Poland sees 79% of value attributed to credit transfers. 

Younger generations are driving this trend, too. Over 60% of Europeans aged 18–35 rely on mobile wallets for their daily transactions. According to Zeb, the growing adoption of innovative account-to-account (A2A) solutions and digital payment platforms here still suggests “a steady shift toward more efficient and integrated payment systems across the region” – even if cash remains king for now.