Who decides the way we pay – retailer or customer?

Retailers say they expect acceptance of cash to decline gradually in the years ahead. Some have already decided to switch away from cash. 

Cash and debit cards are widely accepted

In the survey among more than a thousand retailers, 92% indicate they accept more than one means of payment. In addition to cash, debit cards enjoy ever-broader acceptance. This gives consumers the choice of how to pay, while it offers retailers a fall-back option should one of the means of payment fail temporarily. However, cash acceptance has gradually decreased over the years to 96% in 2020, while debit card acceptance increased sharply recently. In 2020, 92% of retailers accepted debit cards, against 87% in 2019 (see Figure 1). The outcomes from the telephone survey will be validated in practice in a field study in the first quarter of 2021.

Figure 1: Retail acceptance of cash and cards in the Netherlands

Two in three retailers would prefer their customers to use a debit card. These are mainly large retailers, such as supermarket chains, and petrol stations (see Figure 2). At 62% and 50%, respectively, retailers in these two sectors most actively encourage their customers to use debit cards. They typically use stickers or signs, in addition to asking customers whether they wish to use their debit card. Retailers cite safety and convenience as reasons for encouraging card use. They also say they found the temporary closure of cash deposit machines very annoying. This could also have affected their preference for non-cash transactions.

Figure 2: Preferred means of payment (n=999)

Expectations for future cash acceptance

Expectations are that retailers will increasingly force their customers to pay by card in the years ahead. Currently, 4% of retailers only accept debit card payments. Within this group, start-ups often decide to refuse cash (51%). 21% cited COVID-19 as a decisive factor in switching to a cards-only approach. In addition, 3% of respondents who still accept cash are considering moving away from this payment option within the next 12 months. 9% expect to move away from cash within the next five years (see Figure 3), most notably in street vending (11%) and hospitality (14%).

Figure 3: Future cash acceptance (n=1,021)

COVID-19 affects availability of payment options

COVID-19 is an incentive for almost a quarter of retailers (23%) not to accept cash outright. Not only do retailers promote card payments, 18% say they discourage consumers from paying in cash. These are mainly large retailers (25%) and petrol stations (27%). In addition, 2% of respondents who say they accept cash have adopted a cards-only approach, either temporarily or permanently. Retailers cite fear of COVID-19 transmission as the main reason for changing their approach following the virus outbreak (see Figure 4). Recent ECB research shows that 53% of Dutch respondents could not always pay in cash in the summer of 2020 due to alleged contamination risks. Almost half of the Dutch respondents consider it important to be able to pay in cash. They value their freedom of choice between card and cash payment.

Figure 4: Reason for changing cash acceptance since the COVID-19 outbreak (n=259)

It is safe to accept cash

According to the Dutch National Institute for Public Health and the Environment (RIVM), the risk of transmission via a surface such as that of a banknote or coin is very small. When paying cash, take care to avoid hand-to-hand contact. Put the money on the counter if you can. More generally, do not touch your face, and always wash your hands thoroughly after doing your groceries or shopping. Similarly, the ECB has commissioned tests from European laboratories, which show that banknotes are not a significant source of contamination. It is much more difficult for a virus to be transferred from porous surfaces such as cotton banknotes than from smooth surfaces like plastic. In sum, everyone can be confident in accepting cash, as long as we avoid hand-to-hand contact.