Despite rising online payments, a study reveals 59% of Luxembourgers prioritize cash as a vital payment option. Explore the findings.
In Luxembourg, a notable 59% of the population expresses a strong preference for cash transactions, underscoring the enduring significance of physical currency in an increasingly digital world. Despite the rising tide of online payments, which have surged to account for 23% of daily transactions in the Grand Duchy, a substantial portion of consumers across the euro area—nearly two-thirds—insist on retaining cash as a viable payment option, as revealed by a comprehensive study conducted by the European Central Bank (ECB).
The ECB’s latest installment of the “Space” survey, released on December 19, 2024, meticulously examines the payment behaviors of consumers throughout the euro area. This edition delves into the nuances of payment method preferences, accessibility, and user-friendliness, providing a rich tapestry of insights into the evolving landscape of consumer finance.
Among the key findings, it is noteworthy that online payments have seen a remarkable increase, with Lithuania leading the charge at 29%, followed closely by Croatia and Austria, both at 28%. Luxembourg, meanwhile, has experienced a significant uptick from a mere 13% in 2019 to its current 23%. Interestingly, the data indicates that approximately 51% of these online transactions involve amounts less than €1,000, with younger demographics demonstrating a proclivity for digital payments compared to their older counterparts.
However, the pandemic-induced shift in payment behaviors has precipitated a decline in cash usage. Despite this trend, cash remains the predominant method for in-person transactions, with over half (52%) of point-of-sale payments in the euro area still conducted in cash as of 2024. This figure, albeit diminished from 59% in 2022 and a staggering 79% in 2016, highlights the resilience of cash in the face of digital encroachment. Conversely, card payments have risen from 34% in 2022 to 39% in 2024, while mobile app payments have doubled, albeit from a modest base of 3% to 6%.
In the context of Luxembourg, the reliance on cash for transactions is notably lower than the euro area average, with only 37% of payments made in cash. In stark contrast, Malta (67%), Slovenia (64%), Austria (62%), and Italy (61%) exhibit a stronger affinity for cash transactions. The Netherlands and Finland, on the other hand, showcase a starkly different trend, with only 22% and 27% of payments made in cash, respectively, as card usage dominates.
The survey further reveals that the importance of cash as a payment option remains steadfast among consumers. More than half of respondents across the euro area, with the exception of the Netherlands, regard the ability to pay with cash as either “very important” or “fairly important.” In Luxembourg, specifically, 29% of participants deem cash payments “very important,” while 30% consider them “fairly important.” A quarter of respondents, however, view cash as “not so important,” and 15% dismiss it as “not important at all.”
When examining person-to-person payments, Luxembourg exhibits a mixed bag, with 23% of such transactions conducted in cash, 32% via cards and mobile apps, and 26% through credit transfers. In a striking contrast, Germany boasts a staggering 74% of person-to-person payments executed in cash.
Lastly, the survey sheds light on the liquidity preferences of consumers, revealing that respondents in Luxembourg and Cyprus possess the highest median cash holdings at €82, while the Netherlands and Finland lag behind with median amounts of €35 and €47, respectively. The overall median for the euro area stands at €59.
The interviews for this extensive survey were conducted between the third quarter of 2023 and the second quarter of 2024, with 1,069 participants from Luxembourg contributing to the broader dataset of 40,981 respondents across the euro area. This rich data set not only illuminates current payment trends but also serves as a critical resource for understanding the evolving dynamics of consumer behavior in the realm of finance.
