A recent joint-study carried out by the Dutch Payment Association and De Nederlandsche Bank (DNB) on the use of cash and debit cards in the country in 2016 demonstrated that the share of payments made with debits cards increased since last year. Nevertheless, 45% of transactions are still made in cash.
The rise in card payments may be explained by the arrival of contactless cards, favoured by consumers for their speed and ease of use. Consumers also choose to pay with their smartphone more often than they did before. In addition, the Covenant on the Payment System signed by banks and retailers in 2015 aims to discourage the use of cash by promoting the use of debit card payments. Signatories hope to achieve a ratio of 60% debit card and 40% cash transactions by 2018.
Nevertheless, the study shows that the preference for card payments is not true for all demographic groups. Indeed, young people aged 12-18 years old and seniors over 65 pay the majority of their transactions with paper money. These results are not surprising when we consider that teenagers are usually unbanked and have thus no access to cards. Furthermore, seniors usually prefer to use a tangible payment instrument that they know well and master.
The study indicates that consumers today are free to choose their payment instrument, unlike in the past. Consumers who prefer cards reported using cash when the card terminal was out of order or when cards were not accepted. Conversely, people who prefer paying in cash used a debit card only when they ran out of cash or because it was not accepted by the retailer.
The Dutch National Forum on the Payment System (NFPS) – a platform chaired by the DNB – affirms that cash plays a significant role in the payment landscape for both consumers and businesses and allows for more financial stability and accessibility. In addition, consumers should always be able to choose between payment instruments according to their needs and preferences.