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Cash still king as Cypriots take digital leap

CBC report says Cypriots turn to digital payments, while maintaining cash and check options

Source: CNA

The growing preference of Cypriots for digital means of payment, but also the desire to maintain the ability to pay with cash and checks, are the main conclusions of the report of the Central Bank of Cyprus on Retail Payments in Cyprus for the years 2014-2021, which was published on Thursday on the basis of data collected by the CBC on payment statistics and the publicly available report of the European Central Bank on the use of cash in 2016.

According to the report, Cypriots still perceive important to always have the option to pay with cash and cheques. Consumer preferences favour digital payment methods, as manifested by the following: the increased use of cards, which is mainly driven by debit cards. It says that in fact, Cypriots consistently choose debit over credit cards (2021: 84%; 2019: 77%; 2014: 66%).

It notes that access to cash is not as easy as in 2014, due to the reduction and consolidation of the banking sector. The number of banks’ offices decreased by 42% (2021: 260; 2014: 615) and the decrease in the number of automated teller machines (2021: 451; 2015: 526).

The culture of using digital methods for retail payments is not yet as widespread in Cyprus as in the EU as a whole

The report says that consumer habits indicate a clear preference for making purchases using cards at physical POSs (81%) rather than online. In specific it says that the pandemic had no major impact on the volume of card transactions (online or at physical POSs) and that the pandemic mainly affected the value of online card payments since 2019 with a sharp increase of 58% to EUR 2,9 bln in 2021 compared to EUR 1,9 bln in 2019. Card payments at physical POSs decreased by only 6% to EUR 3,7 bln in 2021 from EUR 4 bln in 2019.

It says that the aforementioned effect of the pandemic was only short-term, as the value of online card payments had stabilised in 2021.

The report says that e-commerce transactions using payment cards are gaining popularity and have increased by more than 5 times in volume and in value terms from 2014 up until 2021. The culture of using digital methods for retail payments is not yet as widespread in Cyprus as in the EU as a whole. In 2021, the average value per card transaction is almost twice the EU average (CY: EUR 60; EU: EUR 36).

Consumer behaviour for Cyprus’ population of just under one million citizens is shifting towards digital payment methods at double the pace compared with the EU average (5-year CAGR: 18% in CY vs 9% in the EU) the report notes.

It further points out that this is only expected because Cypriots still pay in cash and via cheques, therefore any shifts towards digital payments have a greater impact compared to the EU average and that the pandemic has accelerated profoundly this shift. Concluding, it notes that since 2019 digital payments have increased by 40% in Cyprus as opposed to 18% in the EU.

Cyprus  |  economy  |  consumer  |  credit  |  debit  |  electronic payment  |  cash

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