How do Dutch consumers pay?

Dutch consumers not only use cash money to pay for purchases, but also for payments and gifts to each other. In 2010, the Dutch used cash money for family members, colleagues, friends or charities 674 million times. The total value amounts to EUR 9 billion. Together with cash payments at retailers this is more than 5 billion cash payments, representing a collective value of EUR 62 billion. On average, the Dutch have EUR 41.24 in cash on them.

Measured in number of payments, the most used payment method at checkouts in the Netherlands is cash (See Chart 1). However, its importance is steadily declining because consumers increasingly use their debit cards. The number of cash payments in shops dropped from 5.2 billion in 2007 to 4.4 billion in 2010, whereas the number of debit card payments went up from 1.6 billion to 2.2 billion. This means that the number of cash payments at checkouts in three years' time decreased by 17%. In terms of value, the debit card has long beaten cash money. The total value of cash payments has been below that of debit card payments for several years now.

Who pays cash?

How Dutch consumers pay in part depends on their personal characteristics. It appears that especially women, senior citizens, lower educated people and inhabitants of the southern part of the Netherlands pay cash relatively often. The payment method of the Dutch is also closely related to the height of the amount to be paid and the type of shop. On the whole, consumers pay small amounts in cash and large amounts with their debit cards. In sectors where purchase amounts are generally low, for instance at bakeries, in cafés or vending machines and at markets, cash is still the most used payment method. But consumers more and more also use their debit cards for smaller amounts, thanks partly to media campaigns promoting card use for small amounts. In addition, cash money still plays an important role in inter-consumer payments, e.g. for pocket money, clothing allowance or dividing up the bill when eating out.  

Few thresholds; the Dutch usually pay the way they want

In everyday life, Dutch consumers almost always seem to be able to pay in the manner they would like. In less than 3% of all transactions, circumstances force them to pay in a different way than they desired. For instance, they sometimes pay cash though they would have preferred to use their debit cards or the other way around. This is usually because the retailer does not accept the payment instrument they have chosen, but it may also be that consumers themselves have simply forgotten to bring along their preferred method of payment (See Chart 2). Whether consumers can pay the way they want strongly varies per sector. In particular for vending machines or in public transport for instance, they cannot always use the payment instrument they prefer. On the other hand, consumers are very appreciative of the choice of payment methods in department stores.

Decline in the use of cash money reduces costs and increases safety

A further replacement of cash money by debit card payments reduces the societal costs of the payment system and increases safety. Debit card payments are usually much cheaper for banks and retailers than cash payments, and entrepreneurs with little cash in the till form less attractive targets for raiders. Consumers also profit from this, because retailers can consequently charge lower prices for their products. Considering the constantly growing popularity of the debit card in large sections of the population, the use of cash money is expected to decrease further in the coming years. Continuation of media campaigns for promoting debit card use for small amounts and stimulation of the acceptance of debit card payments by retailers will also spur on this development.