Lithuanians use contactless payment cards more often than an average European consumer, yet cash remains predominant
Although the use of cash is declining, it remains the most popular means of payment at points of sale (POS) and in person to person (P2P) payments not only in Lithuania but throughout the entire euro area as well. Payment cards are the second most popular payment instrument in both Lithuania and the euro area as a whole. Over one in two card payments in Lithuania are made using contactless technology (in the euro area – more than one third of all payments).
This data is available at the European Central Bank (ECB) study that involved over 41,000 respondents from euro area countries.
“The study has revealed that Lithuania’s residents use contactless cards more often than an average euro area consumer, and we also tend to spend more for online shopping (an average Lithuanian spends €12 per day, while the euro area average is €11). This once again proves that Lithuania is open for innovations and can provide a favourable environment for their development,” said Marius Jurgilas, Member of the Board of the Bank of Lithuania.
On the other hand, Lithuania has one of the highest shares of residents receiving regular income in cash, which was indicated by 20% of the surveyed (the euro area average is 11%). Furthermore, the surveyed both in the euro area and Lithuania still reported keeping cash reserves at home. During the pandemic, the percentage of such respondents has slightly increased (standing at 39% in Lithuania and 37% in the euro area).
However, consumer habits are changing gradually over time. In 2019, 68% of payments at POS were made using cash, as compared to 75% in 2016 (in the euro area – 73% and 79% respectively). In terms of the amount spent, this share in the euro area is significantly smaller (43%) due to the fact that cash is more often used for small purchases.
In 2020, consumer habits changed due to the pandemic, which has accelerated cashless payments: 27% of the respondents in Lithuania stated that they were paying less with cash (compared to 40% in the euro area), whereas more than one third of the respondents in the country indicated that they had started using contactless cards more often (in the euro area – 40% of the surveyed). The key reason behind decreasing cash payments was the fact that other payment instruments had been made more convenient, particularly the increase in the limits for contactless payments and the installation of contactless-enabled terminals.
In contrast to the actual payment habits, almost half of the respondents in the euro area and over half of the surveyed Lithuanians stated that they preferred using cards or other payment instruments rather than cash. The number of Lithuanians who indicated that they would continue to pay less with cash after the pandemic has increased to 61%, as compared to 90% of the respondents in the euro area. However, the option to pay with cash remains important for 55% of the respondents in the euro area and 49% of the surveyed in Lithuania.
The results of the study initiated by the ECB and their analysis contribute to discussions on different payment instruments. The analysis of consumer habits highlights a common objective of the Eurosystem – ensuring accessibility and security of all payment instruments.
The announced strategic objectives of the Eurosystem in the field of retail and cash payments include both cash and non-cash transactions. As regards instant non-cash payments, the aim is to achieve a general adaptation of instant payments for purchasing goods and services in the euro area and beyond. Meanwhile, the objective of the Eurostystem cash strategy is to make sure that cash remains an accessible, accepted, attractive, reliable and competitive instrument for payments and savings. The strategy also foresees the preparation to issue a digital euro, if necessary, which would be used alongside cash and means for cashless payments.
“Digitalisation has the potential to revolutionise payments. However, it is important that European households and businesses still have a choice. We are therefore working to ensure that a public, simple, costless and safe option remains available in all circumstances. To further understand end users’ needs and concerns, we are inviting feedback from everyone as part of our ongoing public consultation on a digital euro,” said Fabio Panetta, Member of the Executive Board of the ECB.