The use of cash in France and in the euro area

Use of cash in payment transactions

On average, banknotes and coins are used in over 50% of payment transactions in OECD countries, although there are significant disparities between individual nations.

Based on a household survey, the Eurosystem published a report on the payment habits of individuals in the euro area at the end of 2017. The results of this study, entitled "Study on the Use of Cash by Households in the euro area" (SUCH), show that cash is the most widely used payment instrument in the euro area.

The Study on the payment attitudes of consumers in the euro area (SPACE) is the follow-up of the SUCH survey and has been updated by the European Central Bank in 2019.  According to SPACE, in 2019, cash remains the most widely used means of payment in France and in the Eurosystem, both in shops and between individuals: its share stands at 59% in France (73% in the Euro area), while card payments account for only 35% of transactions (24% in the euro area).

Although the growing preference for plastic cards, especially contactless cards, has been accentuated by the Covid-19 pandemic,

• Cash remains the preferred means of payment, in number, for daily purchases.
• However, if the decline in the transactional use of cash continues favouring digital payments, their disappearance is not expected.

The Banque de France ensures that everyone has access to cash, as well as compliance with the legal tender requirement (a retailer cannot refuse a cash payment) in the name of the consumer's freedom to choose the payment instrument.
 

The use of cash as a store of value

One approach to the role of cash is to determine what proportion of all banknotes in circulation is used to pay for everyday transactions. According to the latest study on the subject, in value, only 20-22% of banknotes are held for transaction purposes (Source: ECB, "The paradox of banknotes: understanding the demand for cash beyond transactional use", February 2021).

In addition to its transactional function, the banknote is also a store of value. Between 28 and 50% of banknotes are held for hoarding purposes. This holding of cash meets a need for security, with economic agents choosing to keep money for precautionary purposes in order to protect themselves against future risks, particularly in times of economic uncertainty or political turmoil.

The use of cash is also driven by dynamic international demand. The ECB estimates that between 30% and 50% of the value of euro banknotes are currently held outside the euro area. 

Public access to cash in metropolitan France

The payment instrument landscape is evolving rapidly in France. The country has one of the highest rates of use of cashless payment instruments, with the average resident making a total of 287 cashless payments per year in 2014, compared with 202 in the euro area and the European Union. The use of cash in payment transactions is declining, while card payments (which account for half of cashless payments in France) are increasing faster than other instruments (cash, cheques, bank transfers or direct debits), and contactless payments are also seeing sharp growth.

In 2020, the pandemic has accelerated - probably permanently - the changes in payment habits observed in France and in the Euro area. In order to better understand the impact of the pandemic on the topic, the European Central Bank carried out a shorter online survey in July 2020.  The crisis seems to have accelerated the decline in the transactional use of cash - nine points between 2016 and 2019 - in favour of electronic payments. While all means of payment remained available during the Covid crisis, the pandemic appears to have accelerated:

• the changes in the payment landscape in France:
• the card use continues to rise, driven by the growth in contactless payments (almost doubling each year since 2016);
• the use of cheques - for which the management of cash receipts has been made particularly difficult during
• The use of cheques - whose collection management has been made particularly difficult during the period of confinement - has been falling steadily since the early 2000s;
• the use of other means of payment is stable, with credit transfers being preferred for the highest amounts of payments, while mobile payments and instant transfers remain marginal.

The report on PUBLIC ACCESS TO CASH UPDATE OF THE ASSESSMENT AT END-2019, published on 30/07/2020, confirms that the accessibility of banknotes in the country has been maintained at a very good level.

At the end of 2019, there were 50,316 ATMs in metropolitan France. While this number fell by 4.1% in 2019, the number of private access points rose by 10.1%.

The coverage of the country remains broadly unchanged from one year to the next, with a stable high level of services.

Nearly 99% of the population of metropolitan France aged 15 and over, live either in a municipality equipped with at least one ATM or in a municipality located less than 15 minutes by car from the nearest equipped municipality.

The robustness of the territory's banknote supply circuits was effective during the health crisis, and the good supply of ATMs enabled everyone to retain the freedom to pay in cash.