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The Netherlands: Legislation Seeks to Rescue Cash

Categories : Cash generates security, Cash is a public good, Cash is available to all users
April 1, 2024
Tags : Acceptance of cash, Access to cash, ATMs, Europe, The Netherlands
The Cash Payments Act aims to keep cash accessible, available, and affordable in the Netherlands by mandating banks to provide essential cash services and securing continuity in cash transportation services.
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 Infrastructure in the Netherlands

The use of cash in Dutch point-of-sale (POS) payments has declined significantly in the past decade. The share of cash in payments has been close to 20% since 2020 (CPA Memorandum 2024: 1). Per the European Central Bank’s (ECB) 2022 SPACE study, the Netherlands is the penultimate euro-area country by volume of cash payments after Finland. Cash has the lowest share of person-to-person payments in the euro area. Dutch consumers had the lowest cash holdings, with €46.

Cash services and infrastructure have shrunk, particularly after the three major banks  (ABN AMRO, ING, and Rabobank) merged their ATMs into the Geldmaat joint venture in 2019. ATMs for withdrawing cash declined 29.1%, from 7,226 in 2018 to 5,122 in 2023; recirculating ATMs combining withdrawal and deposit functions shrank 34.2%, from 2,960 in 2018 to 1,948 in 2023 (CPA Memorandum 2024: 5). The Netherlands is the second country in the euro area where access to cash worsened the most between 2019 and 2022.

The scaling-down of the cash infrastructure has led to consolidation in the cash-in-transit market. In 2010, there were three large CIT companies: Brink’s, SecurCash, and G4S. Now, Brink’s controls 90-95% of the Dutch CIT market, and two smaller players (Ziemann and VTS) service POS establishments and independent ATM deployers (CPA Memorandum 2024: 6).

While Dutch cash use has declined in the aggregate, 1.3-1.5 million Dutch people depend on cash in their daily transactions, according to a rough 2020 estimate by McKinsey (CPA Policy Compass 2024: 1c). In 2022, 13% of Dutch consumers reported cash was their preferred payment instrument; a plurality (46%) consider having the option to pay with cash very or fairly important. Recent Dutch Central Bank (DNB) research found that nearly 2.6 million people do not manage their digital banking independently (Broekhoff et al. 2023: 6).

Voluntary Agreements to Preserve Cash are Insufficient

Cash remains vital as a payment instrument for people with visual, cognitive, or mobile disabilities, non-Western immigrants, and those who prefer to use cash to budget and pay anonymously. A DNB paper concluded that cash plays an essential role for a substantial and diverse part of the population: 7% of the population rely exclusively on cash, and 28% say they cannot do without it. It is also the only contingency solution in case of electronic payment outages.

Published in early 2021, the DNB study on “The Future of the Cash Infrastructure in the Netherlands” recommended voluntary agreements and legislation to improve the functioning of the cash payments system. In April 2022, payment industry stakeholders agreed to the Cash Covenant, listing voluntary actions to improve the quality of cash services. “The Future Design of the Cash Chain (TICKET),” a May 2023 report commissioned by the DNB and the Ministry of Finance, concluded that voluntary agreements would not suffice and that legislation would be needed.

The Cash Payments Act

The Cash Payments Act (CPA) seeks to “organize the set-up and financing of the cash chain in such a way that a socially desirable level of cash services is offered in the longer term, and that cash remains usable as a means of payment” (CPA Memorandum 2024: 8). The CPA targets both large banks and CIT companies as the primary stakeholders for preserving cash services in the Netherlands.

The CPA would amend the Financial Supervision Act to mandate banks with at least 50,000 account holders maximize access to cash infrastructure (CPA Bill 2024: 1-2). As owners of the Geldmaat ATM network, ING, Rabobank, and ABN Amro would be mainly responsible for funding a basic level of cash infrastructure. Still, it would also include non-Dutch players that have gained market share, such as Revolut.

The CPA would change the Banking Act to make the DNB a supervisor of CIT companies to ensure the continuity of cash transportation services. CIT companies would have to report the geographic coverage of the “unique locations […] for the delivery or collection of euro banknotes or coins” and provide the central bank with information on their business and financial performance (CPA Bill 2024: 3-4).

The CPA conducted a consultation period from January 26 to March 8, 2023. Interested stakeholders include industry actors, the DNB, CIT companies, ATM deployers, and consumer and civil society organizations. There were 37 public responses to the consultation.

This post is also available in: Spanish