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3 NEWS 16.12.2021 FROM PAGE 1 But while the number of non-cash payments rose again, it grew only by 3.7% (+3.6 billion transactions). More than half of this total (55%) was driv- en by a dynamic increase in Germany, which accounts for about one-quarter of aggregate euro-area payment trans- actions. In Malta, around 89% of all transac- tions were cash payments, as opposed to merely 33% in the Netherlands, at the other end of the spectrum. Hot on Malta's tails for the number of cash pay- ments are Cyprus (83%), Spain (82%) and Italy (81%). e small increase in the euro area was mainly due to card payments, which make up about half of all non- cash transactions. eir growth rate slumped to only 2.5%, down from dou- ble digits in the years before. is may mainly reflect the cutback in household consumption due to lockdowns and in- come losses during the pandemic. How- ever, depending on the country and on the payment situation (i.e. at the till or online checkout), there were different or even opposing trends. e bottom line is that payment hab- its at the till are converging: euro-area customers increasingly use cards – and this is also true for some countries where they (traditionally) prefer cash payments. At the same time, national differences seem to become more pro- nounced in online shopping. Depend- ing on the country, either the use of cards or e-payment solutions increased. e report found that at the point of sale (POS), i.e. in brick-and-mortar shops, the pandemic probably reduced traditional differences concerning the use of cash or cards. Customers in some countries with a strong preference for cash switched from cash to card pay- ments to such an extent that card pay- ments saw considerable growth despite the lockdown. is took place particu- larly in Germany and Spain, but also in Greece and Austria. In Italy, the num- ber of POS card payments declined only slightly. By contrast, the Netherlands saw POS card payments drop signifi- cantly as shops were closed – after all, the Dutch rarely used cash already be- fore the pandemic. Developments were similar in France where cash payments were only marginally more popular than card payments even before 2020. At the same time, national differences in online shopping seem to have been reinforced as a result of rising inter- net purchases during the pandemic. According to surveys, customers pre- fer to use cards to pay for their online purchases in some countries such as France, Italy or Spain, whereas in others - including Germany and the Nether- lands - they like to pay by bank transfers (purchase on account) or e-payment solutions. e Deutsche Bank researchers ex- pect the number of non-cash payments to increase considerably across the euro area in the post-pandemic period, as many consumers will have switched permanently from traditional cash to card payments. Moreover, once the pandemic-related restrictions on phys- ical shopping and the hospitality sector are lifted, transactions in card-oriented countries are likely to jump. It also remains to be seen to what ex- tent European consumers will return to local brick-and-mortar shops instead of shopping on the internet. If online shopping retains its higher share in to- tal retailing, card or e-payment solu- tions will gain further in importance, depending on the individual countries. And if customers return to brick-and- mortar shopping, they will probably use less cash than before the pandem- ic. Right now, this mostly drives up the number of card payments. In the future, mobile phone payments may gain in importance at the till, at the expense of cash and card payments. From 2026, another payment method might be used: the digital euro. It re- mains exciting to see which traditional and new payment methods customers will prefer. December 15, 2021 EU Monitor National payment preferences The restrictions of private, business and public life met with very different payment preferences and payment service offerings in the individual countries. In some cases, the preferences converged, in others the differences became more pronounced. At the point of sale (POS), i.e. in brick-and-mortar shops, the pandemic probably reduced traditional differences concerning the use of cash or cards. Customers in some countries with a strong preference for cash switched from cash to card payments to such an extent that card payments saw considerable growth despite the lockdown. This took place particularly in Germany and Spain, but also in Greece and Austria. In Italy, the number of POS card payments declined only slightly. By contrast, the Netherlands saw POS card payments drop FR NL DE ES IT 2018 2019 2020 of POS card payments in bn (more) card payments where tended to use less (more) cash 4 ECB, Deutsche Bank Research 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% MT CY ES IT PT GR AT DE** SK SI IE LT LV FR BE LU EE FI NL Cash payments Card payments Other * incl. person-to-person (P2P) payments ** 2017; incl. a small number of payments in online shopping Share in total transactions, surveys 2019 How Europeans paid at the till* before the pandemic 3 Sources: ECB, Deutsche Bundesbank, Betaalvereniging Nederland, Deutsche Bank Research How Europeans paid at the till before the pandemic COVID-19 triggered widespread switch from cash to cards Card payments and e-payment solutions are expect to rise if customers return to brick-and- mortar shopping

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