We’re living in an increasingly cashless society. In my daily life, I see the number of shops, bars and restaurants that accept mainly – or only – card or digital payments growing rapidly. In some countries, it’s becoming increasingly difficult to find retailers that actually accept cash. At the same time, banks are rapidly shutting down their cash machine networks.
Still, cash has its advantages and is still popular with many people, making up 59% of payments at point of sale in Europe. Cash is privacy-friendly by default. It’s widely available (providing you can find a cash machine). It allows people to manage their budgets and is easy to use.
A digital equivalent of cash
With society becoming increasingly digitalised, it’s clear though that we will need some form of digital euro. One that is inclusive, mirrors the key characteristics of cash, and is guided by the public interest (not that of private banks).
In June 2023, the European Commission issued proposals looking both at cash and the digital euro, which we welcomed at the time. As the proposals begin to go through the European legislative process, there are several things that policymakers must keep in mind to ensure consumers are on board.
Put consumers first
Firstly, the main features of the digital euro cannot be left to private banks. The governance of the digital euro payment scheme must ensure adequate representation of consumer interests. The design of the digital euro will determine whether consumers trust and use it.
The main features of the digital euro cannot be left to private banks
In particular, concerning privacy, which is part of the consumer interest. Anyone with access to consumers’ payment and transaction information can learn a lot about their financial and personal lives. 43% of people in a recent European Central Bank consultation ranked privacy as the most important feature of the digital euro.
Making the digital euro accessible
As for cash, the digital euro should be free of charge for all. For consumers, banking services are increasingly expensive. If private banks decide on the costs of digital euro accounts, the risk is they will apply similar costs (e.g., for opening an account or topping up a wallet) as for normal bank accounts. This cannot be allowed to happen.
It also needs to be easily available. Cash is the only means of payment for many vulnerable consumers, including for those without access to a bank account, people with disabilities, or in instances of a lack of digital connectivity. The digital euro must be inclusive by design to offer a viable – and complementary – option to cash.
The digital euro should be free of charge for all
For this to work, consumers need easy and safe access to digital euro accounts, for example via payment cards. But like cash withdrawals, consumers should be able to transfer money into a wallet offline too, with the help of an access point network, e.g., at cash points.
Many consumers use cash as it allows for easier household budget management. According to a survey by our German member vzbv, 35% of consumers cited this as the most important reason for using it; a digital euro user interface should support consumers in this.
Convenient and safe
To ensure consumer take-up, merchants also need to play their part. They should be obliged to accept both physical cash and digital euros without surcharge. Consumers are increasingly struggling to pay with cash. I can certainly attest to this experience at many of the sandwich shops near BEUC’s offices in Brussels. This while cash is becoming less available: machines are rapidly disappearing according to our Belgian member Testachats.
What’s more, the digital euro must be developed as a resilient system. In a cashless society, the disruption of digital payment solutions can prevent consumers accessing essential needs. The digital euro needs to be able to work offline and make Europe independent from service providers outside the EU.
It’s time to break free!
The digital euro is a major innovation for consumers. It offers the prospect of a digital equivalent of – and complement to – cash. That is, provided it can replicate the key characteristics of cash (privacy, accessibility, convenience and safety) and become a public currency – managed by central banks, not private banks. What’s more, it could allow consumers to break free from dependency on major international card schemes to pay on and offline.
It’s time to make the digital euro a reality for consumers in Europe.