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“Cash or card?” - Austria, the coronavirus pandemic and the increasing trend towards cashless payment.

Whether in a restaurant or in a supermarket, paying without cash has become a matter of course in the meantime for many Austrians. Nevertheless, Austria as well as Germany are still considerably behind other European countries when it comes to paying with a card or via mobile telephone. Only every tenth person in Austria can imagine completely doing without cash (compared to every fifth person in Europe).

The World Payment Report 2019 issued by Capgemini documents the decline of paying in cash. Accordingly, the increased volume of cashless payments in Austria amounted to 7.1 percent year-on-year to more than 1.6 billion transactions (2017). The biggest rise in Austria was registered by payments with debit or cash cards, which climbed 14 percent to a volume of 642 million transactions. The annual volume increase had been significantly lower in the previous years. Debit cards comprised the fastest growing type of cashless payment instrument, recording a 17 percent rise in the number of transactions in 2017, ahead of credit cards (+ 11 percent) and bank transfers (+ 10 percent).

The transaction volume of cashless payments in the emerging markets of Asia showed a much higher increase of 32 percent, particularly in Russia, India and China. It is expected that 1,046 billion cashless payments will be carried out across the globe by the year 2022, which would represent an average annual growth rate of 14 percent.

40% more cashless transactions in only two years

The average number of cashless payments per person in Austria rose by 40 percent to 107 transactions per year in only two years. This is the conclusion of an analysis of all cashless payment transactions carried out at point-of-sale terminals of BAWAG P.S.K. customers in the period between June 2018 and May 2019. This includes cashless payments in Austrian supermarkets as well as card payments in shops or restaurants. On average, Austrians spent € 36 per transaction. In particular, the use of cash was overshadowed by electronic means of payment on Fridays and Saturdays. More than one third of all transactions on these days are cashless, in contrast to only five percent on Sundays.

"Cash or card?" – A question of age

Age plays a decisive role when the time comes to make a decision to pay in cash or use a card. Younger customers resort much more frequently to electronic means of payment. Austrians in the age group between 20 and 40 are the most active users of cards, registering 140 transactions per capita each year. 40-50 year-olds turn to cashless means of payment 123 times per year, compared to only 92 times in the age group of people between the age of 50 and 60. Austrians who are over 60 decide to use cashless payment methods 67 times annually on average. Nevertheless, the amount of the individual transactions is in contrast to the frequency of use. 20-30 year olds pay an average of € 25 per transaction, compared to € 39 by people between the age of 40 and 50.

If one takes a closer look at gender-specific differences, women turn to debit cards more frequently (114 times annually on average) than men (101 transactions p.a.). One-third of all men particularly resort to cashless payment for smaller amounts under € 10, compared to about one-quarter of women. Moreover, men are more active at night than women. 16 percent of all their cashless transactions are between 6 p.m. and 9 a.m., higher than the level of 13 percent for women.

"Please pay cashless"

In order to exclude the possibility of cash being a transmitter of the coronavirus during the acute phase of the crisis, many retailers and restaurants asked consumers to pay without using cash, if at all possible. Consumers increasingly agreed to this request, and the country's banks reacted to this upward trend by deciding to double the limit for contactless shopping without entering the PIN code from € 25 to € 50 in order to continue to promote this behaviour.
Even if renowned institutions, for example the European Central Bank, did not assume that the virus could be likely spread by using cash, 72 percent of the Austrians believe it makes more sense to pay with a card or via a smart phone.
In the meantime, the fears regarding the reliability of a sufficient supply of cash, which were even more prevalent at the beginning of the pandemic, are fortunately no longer a problem. The average amount of money people withdrew from the ATMs in Vienna (ING customers) at the beginning of the lockdown rose from € 147 to € 247 each time, thus 70 percent higher than in the previous months. After Easter 2020, this once again declined to € 183 per withdrawal. The Austrian banks managed to calm the population, making it clear to people that a sufficient supply of cash is ensured.

New challenges lead to new innovations

The behaviour of consumers during the coronavirus crisis motivated many companies to think things over and even change their thinking. Multinationals such as Google, Amazon, Facebook and Apple want to continue revolutionising cashless payments. Apple already offers the possibility to make payments without entering the PIN code at the terminal using Apple Pay or Google Pay on the iPhone or Apple Watch, or the Austrian payment solution "Bluecode" can be used on all smart phones. Android users can also digitally install their cards on their mobile phones, depending on the bank they use. However, it is necessary to specify a bank account and install an App on the smart phone to ensure the exchange of data. The existing technologies will now be expanded and offer new innovative possibilities to make cashless payments and support the trend away from cash, also after the acute phase of the coronavirus crisis.
In 2018 Amazon launched Amazon-Go-Stores in the USA, making cash unnecessary in the shops. The customer selects a product, the scanner registers it and payment is automatically made via an App. This type of hybrid shopping will also be tested in Europe in the near future. However, there are still no specific plans to introduce this in Austria.

"Cash or card?" The coming months and years will also show if the trend intensified by the coronavirus pandemic continues or if completely new methods of payment not only replace cash but possibly also credit cards and cash cards as well.

Find out more about digitalisation in the finance sector.

Jakob Cencic, MA

Director Strategic Investment, Africa, Middle East
+43-1-588 58-238 or +43-676-6517077
j.cencic@aba.gv.at

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