Is this the end of the old phrase ‘cash in hand’?

Customers and retailers have realised that more and more business is being carried out digitally: Mbway, apple pay, credit or debit card, mobile phone or smartwatch - anything goes, as long as there is enough cash in the account.

A habit that has long been observed throughout Europe is the need to make payments using means that don't require ‘cash’. This trend in shops and services is becoming more widespread, arriving in Portugal with considerable drive and increasingly breaking down the barrier of the typical ‘Card payments from €5’ sign displayed in supermarkets, pastry shops, stationery shops, etc.

The truth is that for a long time this form of payment was a habit only observed among the younger generations and little by little (or perhaps too quickly) it has convinced the older generations that this is a safer, faster and, above all, more practical method.

With these changes, practically all retailers have had to adapt, namely by acquiring (more) card payment machines, lowering or cancelling the card payment limit, while at the same time they have seen a reduction in the number of cash machines and credit institution branches.

In addition, brands and retailers are communicating differently, adapting to new ways of making themselves known. But that's something for another article.

According to a study by the Bank of Portugal, between 2017 and 2022 - the period that covers before and after Covid-19 - the use of cash in payments in Portugal fell by 28 per cent to 2.4 billion transactions, according to the new edition of the study ‘Costs of retail payment instruments in Portugal’. In contrast, the Bank of Portugal recorded 2.6 billion payments using debit or credit cards, an increase of 60 per cent in the same half decade.

This has led to some setbacks with shop owners, especially in high street shops, who have become more dependent on stable communication links, more demanding of the services provided by banks and telecoms, in order to have better network reception and thus speed up card payments.?

When analysed in terms of value, card payments have long since overtaken cash payments, which are generally used for smaller transactions (on average, 12 euros per payment, compared to 50 euros for each card transaction). This means that in 2022, for every 100 euros of cash payments, the Portuguese made 448.25 euros of card payments, more than double what was observed half a decade earlier.

Even so, consumers continue to value the possibility of making payments with banknotes and coins. More than 82 per cent of those surveyed rated this possibility as ‘important or extremely important’ and, ‘in addition, 90 per cent of respondents said they usually had cash available for day-to-day payments’, reads the banking supervisor's study.

The paradigm is shifting, the way in which services are purchased is changing, shops are no longer just used to display and sell a product or service, they are now also used as a place to collect something that has already been chosen and paid for by digital means, in other words, cash has not been used, and certainly not the shop itself to make the payment.

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?What will the pocket change be used for?