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Cash Usage and Infrastructure in Spain

Categories : Cash and Crises, Cash is a public good, Cash is the first step of financial inclusion
October 19, 2021
Tags : Cash and Crises, Cash Infrastructure, Europe, Financial inclusion, Spain
Despite the Covid-19 pandemic, most Spanish consumers remain sceptical of digital payments. Several have faced problems paying with cash. Bank desertification in less populated areas has worsened during the pandemic.
Manuel A. Bautista-González

Ph.D. in U.S. History, Columbia University in the City of New York

Post-Doctoral Researcher in Global Correspondent Banking, 1870-2000 – Mexico and South America, University of Oxford

This post is also available in: Spanish

Cash Dominates Retail Payments in Spain

According to the European Central Bank’s Study on the Payment Attitudes of Consumers in the Euro Area (SPACE), Spaniards used cash in 83% of all point-of-sale transactions and 66% of peer-to-peer transactions as of 2019. In the Banco de España (BdE)‘s 2020 cash use survey, only 2.5% of respondents said they no longer used cash due to the (mistaken) fear of infection.

Although cash remains the most widely used and accepted payment instrument in Spain, the Covid-19 pandemic has threatened cash and its users in the country. The accelerated adoption of digital payments has reduced consumers’ willingness to tip, greatly diminishing the earnings of restaurant and hospitality workers. The Spanish government has reduced the limit on cash payments believing it will increase fiscal revenue. The closing of bank branches and ATMs during the pandemic has worsened the country’s already acute bank desertification, with some communities (Valencia, Galicia) offering subsidies to install and operate ATMs.

Cash Advocacy in Spain: Plataforma Denaria

Plataforma Denaria is a new cash advocacy group in Spain. According to its president, Javier Rupérez, it aims “to safeguard the interests of those who see cash as a tool for financial inclusion, to promote consumers’ freedom of choice in payments, and raise awareness of the importance of cash as a critical infrastructure in the economy, especially in crises situations.”

Cash is a “public good that empowers people and groups that would otherwise be excluded. […] Cash must be protected legally,” said Luis Cayo Pérez Bueno, president of the Spanish Committee of Representatives of People with Disabilities (CERMI).

Spanish retailers “defend the absolute freedom of citizens to choose their payment instrument;” which is why they oppose the recently approved “cash restrictions as they limit the growth in consumption [demand given that] citizens massively use [cash] as a payment instrument,” said Javier Millán Astray, general director of the National Association of Large Distribution Firms (ANGED).

Cash Usage during the Covid-19 Pandemic

During its September 2021 launch, Plataforma Denaria published the results of a survey on the need to preserve cash. According to it,

Protecting Free Choice in Payments and the Right to Use Cash

During the Covid-19 pandemic, banks, payment processors, digital platforms, fintech firms, even some governments and central banks have encouraged the accelerated adoption of cashless payments. Nonetheless, these incumbents have not been very successful in dispelling social perceptions regarding the exclusionary nature of digital payments.

Per the Denaria survey, large majorities of Spaniards:

The Spanish Cash Infrastructure

A significant share of respondents to the Denaria survey (41.6%) thought people living in less populated zones had fewer digital payment options than consumers in more populated areas. However, the digital gap shies against the uneven access to the country’s cash infrastructure. Between 2001 and 2018, 63% of Spanish municipalities lost population. Since 2008, bank branches have declined nearly 50% in Spain; ATMs have diminished by 20%.

Bank desertification is acute in less populated areas. A recent study by Diana Posada Restrepo (BdE) explores the geographic distribution of cash infrastructure in Spain. The study employs a database with 68,692 cash access points (bank branches, bank-owned ATMs, and ATMs run by independent operators) active in all Spanish municipalities as of the end of 2020 (see Map 1).

Map 1. Spain: Bank branches and ATMs (red) and independently owned ATMs (blue), 2020

Source: Posada Restrepo (2021): 5.

Map 2. Spain: Percentages of the population living within 5 km (left) and 10 km (right) of a cash access point, 2020

Source: Posada Restrepo (2021): 9.

Posada Restrepo found that by the end of 2020, nearly 1.2 million Spaniards lived in municipalities with no cash access points (Posada Restrepo 2021: 7-8), and at least 2% of the Spanish population lived 5 km away from a cash access point. The provinces of Zamora and Ávila (both in the autonomous community of Castilla y León) have the smallest percentages of the population living within 5 km of a cash access point, with 81% and 85%, respectively (see Map 2).

This post is also available in: Spanish