No Cash - Dutch Regulator Calls For Clarity At Retailers

November 29, 2021
Europe’s tug of war with cash and digital payments continues as De Nederlandsche Bank (DNB) tells merchants to be clear that they accept cash payments.

Europe’s tug of war with cash and digital payments continues as De Nederlandsche Bank (DNB) tells merchants to be clear that they accept cash payments.

If retailers do not accept cash, they should inform their customers clearly in advance, so that they can go to another store if they want, the DNB has advised.

This follows a recent survey commissioned by the central bank, which found that a majority of stores, or 68 percent, did not display whether they accepted cash clearly.

The study involved visits to 5,300 stores, bars, restaurants and hotels, libraries and market stalls, and recorded whether payment policies were displayed on stickers, signs and posters near the shop front, door or cash register.

Of retailers surveyed, 27 percent displayed a wide range of promotional materials to promote card payments.

Of which, 56 percent of these retailers (15 percent of those surveyed) indicated a clear preference, for example through stickers with the message "pinnen ja graagard", which translates as "card payments, yes please".

At these stores, consumers may also count on being able to pay for their purchases in cash, the central bank says.

However, the other 44 percent of retailers that were promoting card payments (12 percent of those surveyed) displayed messages that were less clear, such as "Betaal met pin" (pay by card) or simply PIN.

Just 3 percent of merchants overall, mostly libraries, pharmacies and petrol stations, informed their customers that they operate a card-only (including digital payments) policy. Among those, large chain merchants were far more likely to only accept card payments (7 percent), compared with independent retailers (2 percent).

Payment options differ regionally as well, according to the regulator.

The most card-only stickers were found in Overijssel and Utrecht, representing 9 and 6 percent respectively, whereas the fewest were found in Friesland (1 percent).

As with many markets around the world that are seeing a sharp increase in electronic and digital payments, the Netherlands continues to grapple with the potential social issues caused by falling cash usage and the ability to access it.

In June, the central bank warned that consumers from vulnerable groups such as senior citizens, those with disabilities and those with low digital skills experience, suffered from a decline in the accessibility and availability of payment services.

The ability to access and use cash, therefore, becomes a vital financial inclusion issue.

This research also found that the amount of ATMs in the country has fallen sharply. By law, every citizen in the Netherlands needs to be within a five-kilometre radius of an ATM, based on their postcode area.

Although this number has stayed relatively stable, the number of ATMs has fallen sharply compared with 2016, when there were nearly double as many machines, according to the DNB.

Cash Is Still King?

At a conference in June, European Central Bank official Fabio Panetta declared that: “Faster digitalisation does not spell the end for cash any time soon. Cash continues to play a crucial role in the euro area, and there is still demand for it.”

Although its use as a means of payment declined during the pandemic, the demand for cash has risen, he told the conference.

Panetta, while playing an integral role in the development of the digital euro, has also been a strong advocate for protecting cash.

In February, the Euro Retail Payments Board established a working group to analyse access to and acceptance of cash.

The working group is conducting a stock-taking exercise of various ongoing initiatives by relevant stakeholders and identifying gaps not yet addressed and deserving further investigations. A report is due at the end of November.

This shows that cash is still high on the agenda among Europe’s regulators, something underlined by legislative and industry action in countries varying from Spain to the UK to ensure that access to cash remains intact.

“It is actually rather encouraging that central banks are increasingly looking at ensuring long-term access to cash as well as its acceptance,” said Guillaume Lepecq, a payments consultant and chair of the Future of Cash conference.

For example, access to cash is a core element of the European Commission’s 2020 Retail Payment Strategy, and at the member state level.

In Lithuania, the central bank and financial actors signed a memorandum of understanding in the Summer 2021 to ensure the availability of cash services.

Even in digital-loving Sweden, a law came into force at the beginning of 2021 that obliges the largest Swedish banks to ensure adequate access to cash services throughout the country.

Yet Lepecq cautioned that regulators are also looking to impose limitations on the use of cash in the EU.

In the European Commission’s recent anti-money laundering package, for example, plans have been announced to ban cash payments above €10,000 throughout the EU. This has already prompted backlash in cash-loving countries like Austria.

Lepecq additionally noted that after a two-year consultation in 2018, the commission decided not to impose EU-wide limitations on cash payments, concluding that “while tax fraud and the use of cash are often associated, the study demonstrates that the relationship between the two is not always clear-cut.”

“It is also noteworthy that 17 out of 27 members states of the European Union have already introduced cash payment limitations,” said Lepecq. “In an EU wide-limitation of €10,000, 13 countries would actually see existing limitations increase.”

For example, in Greece there is currently a cash usage limit of just €500, yet in Poland the limit is €14,000.

Yet, regardless of cash payment ceiling, for Lepecq the capability for consumers to pay with cash is the most important issue at stake

The recent decision by Amazon to no longer accept Visa credit cards in the UK clearly shows that consumers do not always have a choice, he said. “The payments industry is incredibly concentrated.”

If you remove cash as a payment option, you are basically facing a duopoly in Europe, he argued.

He is not alone. In September, Giovanni Pitruzzella, Advocate General at the European Court of Justice (ECJ), said: “a direct link between cash and the exercise of fundamental rights does exist in cases where there is a social inclusion element of the use of cash.”

“In other terms, if a merchant refuses cash, he is discriminating against the poor, the unbanked or simply those who prefer to pay in cash, for instance, to protect their anonymity,” said Lepecq.

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