Paris: Cash and Payments

Traveling to Continental Europe

While I often carried a lot of coins and even had coinA coin is a small, flat, round piece of metal alloy (or combination of metals) used primarily as legal tender. Issued by government, they are standardised in weight and composition and are produced at ‘mints’. More jars at home in New York City and Mexico City, I held nearly the same amount in Oxford. In May, I took the Eurostar to Paris to attend a conference on the history and present of U.S. capitalism. Without thinking, I carried those British coins and some U.S. dollars and quarter-dollar coins I held in my travel bag.

I did not regret it. ExchangeThe Eurosystem comprises the European Central Bank and the national central banks of those countries that have adopted the euro. More dealers at St. Pancras International accepted U.S. and British banknotes and coins for euros. Most bureaus de changeThis is the action by which certain banknotes and/or coins are exchanged for the same amount in banknotes/coins of a different face value, or unit value. See Exchange. More in the Americas refuse to accept foreign coins and accept U.S. bills lower than USD50 at a lower exchange rateThe rate at which one currency will be exchanged for another. More.

This reminded me of Sasha Zackariya’s book Leading Travel and Tourism Retail. How Businesses Can Sustainably Capture New Profits in Shopping Tourists, about how cashMoney in physical form such as banknotes and coins. More is vital in international tourism: “Having cash in their wallet encourages customers to spend it in surrounding shops immediately” (Zackariya 2023: 53).

Paris

I had been to Paris once, for four days, during a month-long European stay in the summer of 2006. I did not have a bank account then. I bought American Express traveler checks in Mexico. I exchanged most of them for euros at a savings bank (Sparkasse) in Herchen, a small town near Köln where a friend lived.

In 2006, I visited the Louvre, saw the Tour Eiffel, and walked around the city. I remember I paid for most of my expenses using cash. My parents had given me a debit card for emergencies. I only used it to pay for an extra suitcase while boarding my flight from Charles de Gaulle to Mexico City via Washington Dulles.

This time, I mostly paid using paymentA transfer of funds which discharges an obligation on the part of a payer vis-à-vis a payee. More cards from Wise and Revolut in my mobile wallet. But cash remained indispensable. My U.S. colleagues agreed to pay using Venmo for drinks after the conference. Having lost access to Venmo after I moved from New York City to Mexico City in December 2020, I settled my debts with euroThe name of the European single currency adopted by the European Council at the meeting held in Madrid on 15-16 December 1995. See ECU. More notes.

Le Metro

Having experienced frequent delays when commuting by subway in New York City and Mexico City, I found the Parisian metro marvelous. The service was reliable throughout my stay. I got a Navigo card at the Gare du Nord train station; I could not pay with cash for it even though merchants are legally required to accept cash in France.

The food-vending and coffee machines in the stations mesmerized me. Most took cash; I got rid of my euro cents by grabbing espressos whenever possible. The situation stands in strong contrast to the United States, where coin circulation has experienced disruptions since the Covid-19 pandemic.

As long as commercial service providers ranging from tolls, parking meters, laundromats, and vending machines admit coins in payments, coins will preserve the efficiency of the cash cycleRepresents the various stages of the lifecycle of cash, from issuance by the central bank, circulation in the economy, to destruction by the central bank. More (U.S. MintAn industrial facility manufacturing coins. More, Federal Reserve 2022: 5).

Cash, Digital Payments, and the Cash Infrastructure

Per the Banque de France, the flow of banknotes from the public to cash handlers (financial entities, cash-in-transit companies, and the central bank) decreased from 7 billion in early 2010 to 4.6 billion banknotes in 2019.

While the Covid-19 pandemic accelerated the trend as the flow diminished to 3.5 billion banknotes in 2020, the net banknoteA banknote (or ‘bill’ as it is often referred to in the US) is a type of negotiable promissory note, issued by a bank or other licensed authority, payable to the bearer on demand. More issuance reached €168 billion that year, an 11% yearly increase.

Graph 1 shows that the number of ATMs has decreased since 2015. The country experienced a relatively small reduction in ATMs during the pandemic.

Graph 1. France: ATMs (units)

Source: CashEssentials (2019), Banque de France (2023).

In 2020, contactless payments increased by 35% in the number of transactions) and 88% by value. The number of cards grew by 13.2% between 2017 and 2021; the number of lost and stolen cards with at least one fraudulent transaction rose by 5.8% in the same period (see Graph 2).

Graph 2. France: Cards, Lost and Stolen Cards with at Least One Fraudulent Transaction (millions of cards)

Source: Number of cards and instruments, Banque de France (2022).

France: Payment Habits and Cash Usage

Cash is still the preferred means of payment for transactions in France. Per the European Central Bank’s most recent (2022) SPACE study,

• Cash use declined 7% by volume of transactions and 10% by value between 2019 and 2022.
• French respondents had the third-lowest cash holdings (€61) in the euro area.
• France had the lowest share (30%) of people keeping extra cash reserves in the euro area.
• Less than 15% of French respondents reported cash was their preferred payment instrumentDevice, tool, procedure or system used to make a transaction or settle a debt. More. Still, France was one of the euro-area countries where the preference for cash increased the most (5%) between 2019 and 2022.
• The share of respondents perceiving that access to cash withdrawals was difficult did not increase between 2019 and 2022.
• ATMs are the favorite source of cash for most French consumers (78%). France is the third euro-area country where customers still favor bank counters (9%) as a critical source of cash. The third most favored source of cash is cash reserves (7%).

Per a 2021 IFOP study for the Monnaie de Paris,

• An overwhelming majority of the French population (91%) said they regularly use cash (slightly lower than  97% in 2020), 70% said they use it daily, and only 9% said they do not use cash.
• 87% of the French use cash for daily purchases (an increase from 74% in 2020), and 72% use it in vending machines.
• Cash is the most trusted payment instrument: 61% of respondents said it is very trusted, compared to 51% for bank transfers and 47% for payment cards.
• A slight majority (51%) oppose abolishing one and two-cent coins.

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