Cash Use in Europe

Italy’s new government intends to scrap the requirement to accept electronic settlements for purchases below €30 and to raise it to €60, according to a draft of its 2023 budget recently approved by the cabinet. The budget also raises a limit on cash payments to €5,000 from a previous limit of €1,000 from next year.

The prime minister, Giorgia Meloni, described card payments as private money and told parliament, ‘The only legal currency in Italy and Europe are the paper notes issued by the European Central Bank. Electronic money is not legal tender, it is a form of private money.’ She also said, ‘forcing Italians to almost exclusively use electronic payments’ was an ‘illegitimate present to the banks and financial firms that sell these services.’ Media reports have explored whether this is playing into the hands of those wishing to evade paying taxes.

Cash pressure in Ireland

It is perhaps ironic, therefore, to note that the Irish government is proposing legislation to protect access to cash in the Republic. The Department of Finance has noted that the closure of bank branches means that the infrastructure for the cash system needs support if it is to remain sustainable and resilient.

A Review Team is proposing a legislative framework to manage further decline in an orderly way. It says, ‘It is important future changes in the cash infrastructure do not outpace the expectations or needs of society.’ The fall in cash volume has made the cost of providing cash services high and banks.

The extent to which less cash is a result of banks closing branches and ATMs or following a genuine preference of consumers to bank digitally is not examined. The wish of banks to outsource cash services is noted, along with the result that the cash system is now dependent on a small number of cash- in-transit companies and that ATMs are owned and operated by unregulated non-bank providers. The Review Team has recommended, therefore, that these firms are regulated by the Central Bank.

The report recommends that a National Payment Strategy is created that establishes a roadmap for the evolution of the entire payments system.

Latvia’s approach

The Latvian central bank, the Finance Latvia Association and the banks with the widest network of ATMs and branches in the country – Swedbank, SEB, Luminor and Citadele – have agreed to continue implementing measures ensuring access to cash for residents of Latvia in 2023.

The Central Bank had taken action to ensure access to ATMs through a Memorandum of Cooperation signed in autumn 2021 designed to ensure ATMs were located fairly evenly across the country. The target set was to have an ATM within 5 km for over 80% of the population. The Memorandum had allowed a reduction in ATMs of up to 5%. In the first year the number of ATMs fell from 902 to 897.

The new agreement retains the 5% target and includes ensuring the distance to an ATM does not exceed 20 km for 99% of Latvia’s population. Also, ATMs should be available to consumers for at least 12 hours a day.