Cash is a dying breed, new study shows

Digital and card-based payments are gaining ground across the board but cash remains the payment method of choice for everyday transactions such as groceries, particularly among older consumers.

The information comes from a new study by the Central Bank of Malta, which offers a snapshot of payment preferences across different types of purchases.

Authored by Stefano Savo and Brenda Lee, the study is based on telephone interviews with 1,416 individuals conducted in February and March 2024.

Cash remains the dominant payment method for groceries in Malta, with 39.5% of respondents preferring it for everyday shopping. However, debit card usage is on the rise, accounting for 34.2% of grocery payments. This represents a radical change from a similar study held in 2020, in which 86% reported using cash for groceries.

The move away from cash is even more evident in other categories. For consumables like clothing, shoes and books, 41.1% of respondents now use debit cards, compared to 29.2% who still use cash. Nearly 20% use a credit card for these purchases.

Similarly, 36.9% of respondents pay for non-consumables — such as electronics and furniture — using debit cards, with just 22.2% using cash. Less than a fifth are using credit cards for such purchases. This marks a significant reversal from 2020, when cash was still the dominant method in both categories.

Utility bill payments are increasingly made online, with 34.2% of people opting for digital methods. Still, 23.9% continue to use cash, particularly where post offices — which only accept cash — are the payment venue of choice.

Despite a drop from 95.6% in the 2020 survey, cash still accounts for 61% of payments to hairdressers, beauticians and gyms. Services such as cleaning and repairs are also largely cash-based, at 71.4%. These sectors are often dominated by self-employed individuals, many of whom lack access to traditional POS terminals. New mobile POS technologies that allow card payments via smartphone may drive change, but adoption remains slow.

Peer-to-peer transactions are another area where cash dominates, with 56.8% of people preferring it to other payment methods. But mobile payments are gaining traction — 36.5% now use them — but their spread is limited by the inability to transfer funds instantly between accounts held at different banks. A forthcoming EU regulation mandating instant interbank payments could significantly change this.

Age divide

The study also exposes a digital divide between older respondents who see cash as the safest option, while younger people view it as the least secure. Interestingly, it is the younger demographic that reports a higher incidence of fraud, likely due to greater use of online payment platforms.

Only 14% of those over 55 said they had used fintech services like Revolut, compared to nearly half (49.5%) of 16- to 34-year-olds. Older participants also expressed greater concern about the transition away from cash, often citing lack of technological know-how.

The study also shows that 74.4% of Maltese have access to a debit card, 58.6% have access to mobile banking, 51.9% have access to a credit card and 34.9% have access to a cheque book. A small fraction amounting to 4.9% of respondents, claimed that they do not have access to any alternative payment instrument to cash.