With the rapid advancement of digital technology and changing consumer habits, the way we make payments has been evolving. Simon Mifsud, Technical Division Sales Manager at Joseph Cachia and Son Ltd, has decades of experience in the retail sector and being involved in the cash handling field at the company, itself part of the M Demajo Group, he holds meaningful insight on current developments.

However, Mr Mifsud underlines that “cash still plays a significant role in Europe, especially for small-value transactions”. Perhaps significantly, “some people prefer cash for budgeting purposes, as it helps them manage their spending more effectively.” This aspect seems to retain a strong element in the way many choose to handle their finances. Mr Mifsud also remarks that “additionally, cash is still used in many local markets, street vendors, and even certain cultural or traditional events.”

Cash in hand remains important, and central banks across Europe continue to issue banknotes and coins, in line with their commitment to ensure the availability of cash as a payment option. And, while digital payments offer several advantages over cash, particularly in the European context as Mr Mifsud readily acknowledges, he also advises that “it's essential to strike a balance between the convenience of digital payments and ensuring that everyone has access to safe and reliable payment options.” And indeed, this point can never be emphasised enough.

Cash continues to play an important role, whether as a store of value or as a medium of exchange. This differentiation, Mr Mifsud explains, is useful to understand the trends that are taking place. He clarifies further: “In many countries where cash payments may be declining, particularly during the pandemic, cash circulation has continued to increase. To give just one example, in the UK where the proportion of cash payments has fallen in recent years, the volume of cash in circulation has increased year on year since the early 1990s.”

The reasons as to why people continue to hold cash may be a source of discussion, and merits further analysis. Individual countries and their specific circumstances differ, as do attitudes and reasons at the individual level. There is also the fact that cash payments do not require the availability of the internet or electricity. As Mr Mifsud states, “the continued use of cash as a means of payment worldwide puts into perspective claims that we are inevitably ‘speeding’ towards a cashless society.”

He makes reference to the European Central Bank’s Cash 2030 strategy which “is driven by the vision to preserve also in the long run euro cash as a generally available, attractive, reliable and competitive payment instrument and store of value of choice.” (ERPB/2020/031, 12 November 2020).

The recent pandemic has quickened the adoption of contactless payments in many countries, with measures adopted by the authorities, financial institutions and commercial enterprise likely to have played a strong role in concurrence with any shift in consumer behaviour.

So how will payments behaviour change in the coming period? Here too, Mr Mifsud refers to research in the eurozone undertaken by the ECB during July 2020, at the height of the COVID pandemic. The study indicated that consumers believe that electronic payments have been made more convenient during the pandemic, although for security reasons a significant proportion of these transactions still require entering a PIN.

At the same time, Mr Mifsud notes, a significant number of people choose to hold cash during a time of crisis. One example that he highlights is a spike in ATM withdrawals noted in the United States and Germany at the start of the pandemic. Mr Mifsud continues that “to some extent, this can be explained by cash’s function as a store of value. This is the paradox of banknotes.”

As Mr Mifsud elaborates, “at any one-time, large numbers of notes are being held other than for use in transactions. Historically, more notes may be held during a period of low-interest rates because the opportunity cost of cash holding has declined. Increased cash may also be held during a period of uncertainty for the economy and, certainly, if there are questions regarding the operations of banks. A weakened currency, too, has been given as a reason for the increased holding of large-value notes”.

Homing on to the Maltese context, Mr Mifsud points to reports from the Central Bank of Malta noting that that at the end of June 2023, euro banknote circulation in Malta reached 33.9 million banknotes, at a total value of €2.3 billion. These substantial figures represent an annual growth of 3.8 per cent and 4.2 per cent in terms of both number and value of banknotes respectively. The European Central Bank’s SPACE survey in 2022 shows that “77 per cent of all transactions in Malta were done in cash while 65 per cent in terms of value were done in cash”. 

With these ongoing trends, commercial operations need to maintain their readiness to cater for client needs. Joseph Cachia and Son Ltd, a member of Demajo Group, has various solutions at hand. These include coin counters and sorters; note-counting machines that often also detect counterfeit banknotes or currency notes quickly; note deposit machines with a primary function to accept and securely process cash deposits whereby for example shop employees can deposit cash from daily sales swiftly and accurately, as well as contactless payment cash machines. The company also has several other products such as self-service digital kiosks and self-check-out solutions, as well as queuing systems.

Wrapping up, the Technical Division Sales Manager at Joseph Cachia and Son Ltd says it is “clear that the European payment landscape is evolving, with digital payments gaining momentum while cash continues to have its place.

“The future of payments in Europe will likely involve a mix of both traditional and digital methods to accommodate various preferences and needs”.

Joseph Cachia and Son Ltd appears poised to continue positioning itself as a reliable partner, assisting companies to handle cash payments in the most efficient manner.