How much, where, when, who and whenever one wants?

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Cash usage in

the Netherlands:

How much, where,

when, who and

whenever one wants?

DNB

Occasional Studies

Nicole Jonker, Anneke Kosse and Lola Hernández

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Central bank and prudential supervisor of financial institutions

Authors: Nicole Jonker, Anneke Kosse and Lola Hernández

Aim of the Occasional Studies is to disseminate thinking on policy and analytical issues in areas relevant to the Bank.

Views expressed are those of the individual authors and do not necessarily reﬂ ect ofﬁ cial positions of De Nederlandsche Bank.

Editorial Committee

Jakob de Haan (chairman), Eelco van den Berg (secretary), Hans Brits, Pim Claassen, Maria Demertzis, Peter van Els, Jan Willem van den End, Maarten Gelderman and Bram Scholten.

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form by any means, electronic, mechanical, photocopy, recording or otherwise, without the prior written permission of the Nederlandsche Bank.

Subscription orders for DNB Occasional Studies and requests for specimen copies should be sent to: De Nederlandsche Bank NV Communications P.O. Box 98 1000 AB Amsterdam The Netherlands Internet: www.dnb.nl DNB_OS_1002_Omsl_300821.indd 2 DNB_OS_1002_Omsl_300821.indd 2 23-03-12 15:5823-03-12 15:58

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Nicole Jonker, Anneke Kosse and Lola Hernández

Vol.10/No.2 (2012)

Cash usage in the Netherlands:

How much, where, when, who

and whenever one wants?

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1 Comments made by Hans Brits are gratefully acknowledged as well as comments made by an anony-mous referee. Views expressed in this study do not necessarily coincide with those of de Nederlandsche Bank. Contact details: Lola Hernández: l.hernandez@dnb.nl, Nicole Jonker: n.jonker@dnb.nl and Anneke Kosse: j.c.m.kosse@dnb.nl.

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Abstract

Having accurate information on cash usage is essential for monitoring the substitution process of cash by cards and for assessing the cost efficiency of the payment system. Moreover, estimates on cash usage reflect the transaction demand for cash. This is useful for central banks which are responsible for producing and issuing banknotes. The latest estimates of the number and value of cash payments made in the Netherlands date from 2007. How has cash usage developed since then? In what branches do consumers use cash and what type of consumers still rely heavily on cash? These questions and others are analysed using a one-day diary survey held in September 2010 in which 7,499 Dutch consumers documented their daily transactions. We find that Dutch consumers made about 5 billion cash payments in 2010. Although the majority of purchases are paid in cash, its role has steadily decreased due to increasing debit card usage. Cash is mainly used for low-value transactions, and especially the elderly and lower educated people still rely heavily on cash. overall, the Dutch are able to pay the way they want. only in 3% of transactions they had no choice but to use another means of payment as the one preferred.

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1 Introduction

Both the Dutch central bank (DNB) and the relevant stakeholders on the Dutch payments market have a need to keep abreast of the trends in the use of cash in the Netherlands. Research has shown that the social costs of paying differ according to payment instrument. In general, a cash transaction is found to be more expensive

for banks, retailers and the society as a whole than a debit card payment.2_{This has}

created a huge demand for up-to-date and reliable information on the number of cash payments and the proportion of aggregate payments accounted for by cash, since it allows for a better understanding of how total payment costs change over the years. In addition, as DNB is responsible for the issue of new bank notes and the circulation of notes and coin in the Netherlands, the bank needs to obtain a clear picture of the use of cash in the Netherlands. This has become increasingly difficult as, since the introduction of the euro, no statistics have been kept on the number and value of bank notes and coins in circulation in the individual eurozone countries.

The most recent estimate of the use of cash in the Netherlands dates from 2007, when the Dutch made around 5.2 billion cash payments. To monitor the annual trend in the number and value of cash transactions, DNB launched a series of annual, comprehensive surveys in 2010. The first survey was conducted from 6 September to 5 october 2010, when 7,499 consumers kept a diary of all their payments during the course of a single day. A questionnaire was then used in order to collect and analyse the information on these transactions. This study reports on the main findings and conclusions of this first survey. It gives a clear picture both of how consumers in the Netherlands paid for their point-of-sale (PoS) purchases in 2010 and of the trend since 2007. The relevance of this study is to shed light on the payment behaviour of Dutch consumers, and in particular on the diminishing role of cash over time.

We show that the Dutch made some 5 billion cash payments in 2010. of these, 4.4 billion were made in shops and at other points-of-sale (PoS). These cash transactions represented 65% of all PoS payments, making cash the most frequently used means of payment at the PoS in terms of numbers of transactions. The use

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made of cash at the PoS is, however, on the decline, mainly because debit card

payments are growing increasingly popular.3_{Indeed, the number of cash payments}

has fallen by 17% in three years’ time. At the same time, the number of debit card payments rose by 38% from 1.6 billion to 2.2 billion between 2007 and 2010. The value of debit card purchases outstripped that of cash already a long time ago. In 2010, total PoS cash payments were worth EUR 53 billion, representing 38% of the aggregate value of PoS transactions in the Netherlands.

In addition to PoS payments, consumers made 674 million cash transactions in 2010 as a means of giving money to relatives, friends or charity. The total value of these person-to-person payments was EUR 8.6 billion.

our results also show that in the vast majority of cases, Dutch consumers use the instrument of their choice when making payments. They were forced to resort to other instruments in less than 3% of transactions. overall, there would have been 1.7% fewer cash payments and 2.4% more debit card payments in 2010 if consumers had been able to pay with their instrument of choice. The fact that consumers do not always pay as they would like is due mainly to retailers not always accepting their instrument of choice, charging a small fee for using it, or because a PoS terminal is temporarily out of order. In addition to these constraints, consumers sometimes fail to use their preferred means of payment because they forget to bring it with them.

This study proceeds as follows: chapter 2 briefly discusses the research method and sample used and chapter 3 describes the findings relating to the use of payment instruments in the Netherlands. More specifically, it analyses the use of cash by market segment, transaction value, and the day of the week. Chapter 4 then describes the impact of personal characteristics on the use of cash, and also discusses the amount of money the Dutch carry in their pockets and how they obtain their cash. Chapter 5 highlights perceived constraints in payments, and chapter 6 compares our study findings with those of other countries. Chapter 7 presents our main conclusions.

3 According to EIM (2011), the decrease in cash payments in the Netherlands between 2006 and 2009 is only partly due to the changeover from cash to debit card payments. other explanations are the drop in the overall volume of PoS purchases and the rise in the average transaction amount, possible caused by the growing importance of e-commerce and one-stop shopping.

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2. Research method and sample

2.1 Research scope and research population

The aim of this study is to analyse the number and value of cash payments made in the Netherlands in 2010. In order to bring into focus the role played by cash, we will also take into account all other PoS payment instruments. our study is limited to payments made in the Netherlands by Dutch residents over 12 years of age. As a result, the sample population consists of 13,860,200 people. Transactions made by Dutch consumers abroad, children below the age of 12, tourists and other non-residents have been disregarded. We have looked both at payments made at the PoS (including street vendors and vending machines) and at payments made among individuals, such as relatives, colleagues, and friends, i.e. person-to-person payments. Internet purchases and bank transfers have been disregarded.

2.2 Sample

The fieldwork was carried out by Heliview Research between Monday 6 September and Tuesday 5 october 2010. In order to be able to draw reliable conclusions on the use of cash by the entire Dutch population in 2010, Heliview Research took a representative sample from their consumer panel based on the following demographic aspects: gender, age, ethnicity and education. other items factored into the sample were region, country of origin and income bracket. All seven research segments were based on the definitions produced by Statistics Netherlands, the national statistics office.

As purchasing and payment behaviour differs from day to day, the assessments were spread evenly over 31 days. For every day and every week, the number of respondents was sufficiently large and representative in terms of gender, age, ethnicity, education, region, country of origin and income bracket. A total of 7,499 respondents took part in the study. See Appendix I for the final composition and size of the sample.

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2.3 Research method

Respondents were asked to keep a diary of all their payments on one predetermined day. Previous research had shown that keeping a diary in this way helps respondents keep an accurate record of all their purchases, including small, everyday items. If other methods are used, they tend to forget these kinds of payments, for instance if they are called at the end of the day and asked about the purchases they made that day, or if they are asked to record their purchases in a diary for a period of longer than one day (Sudman and Bradburn, 1973; Gibson and Kim, 2007; Tincello et al., 2007; Jonker and Kosse, 2009; Schmidt, 2011).

The respondents were asked to record the following transaction details: • Date, day and time of day (i.e. morning, afternoon or evening); • Place of purchase (choosing from 16 pre-defined market segments); • Payment instrument used;

• Transaction value.

We made very clear to the respondents that, even if they had performed no transactions at all on the respective day, this was still relevant information. So respondents were asked to complete their diaries even if this was the case. They were also asked to record the amount of money that they had on them at the start of the day, how much money they had withdrawn, and/or received during the day, and how much money they had left at the end of the day.

Respondents could use their completed transaction diaries to jog their memories when filling in the questionnaire provided to them the next day. The questionnaire asked them about all the payments they had made the day before. In order to obtain a better picture of their motives in choosing a payment instrument on each occasion, they could also indicate for each payment whether or not they would have preferred to use another means of payment than the one actually used. If this was indeed the case, they were then asked about their preferred payment instrument and why they had used another means of payment than they had intended. The questionnaire also included a number of social demographic questions.

2.4 Recruitment of respondents and data collection

We used a combination of web-based and telephone-based methods for recruiting respondents and for collecting the answers to the questionnaire. of the final net sample of 7,499 people, 7,147 respondents completed an on-line questionnaire and 352 respondents responded by telephone. of these, 199 ended up by filling in an on-line questionnaire after all.

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The on-line process, from sending out the invitations to forwarding the reminders, was performed in conjunction with PanelClix and took four days per respondent. on day 1, the respondents received an email announcing the study. They were asked to download the diary, fill it in the following day, and complete the on-line questionnaire two days later. As the respondents were obliged to confirm their participation in the study, and because there were two days between the confirmation and the actual questionnaire, the final sample could, if necessary, be adjusted if either the total response rate or the rate of response in specific sub-segments, was relatively low. on day 2, the respondents received an email reminding them that their diaries would have to be filled in that day. on day 3, the respondents received a link to the on-line questionnaire, which they could fill in with the aid of their completed diaries until midnight on the same day. on day 4, respondents who had not yet filled in their questionnaires received a reminder. If they did not want to fill in the questionnaire, they were asked to complete a brief non-response form. A telephone survey was held at the same time as the on-line survey, to ensure that people who make no or hardly any use of the internet were adequately represented in the sample. The respondents were approached by telephone and asked if they wanted to take part in the survey. Those agreeing to take part on-line were sent a link to the diary and the on-line questionnaire, as described above. Those wishing to take part by telephone were sent the diary by mail. They were called again the day after they had filled the diary and were interviewed by telephone.

2.5 Weighting and adjustment

As the final composition of the sample was not completely consistent with the composition of the research population (see also Appendix 1), the study findings were reweighed to account for gender, age, education and ethnicity differences. The results were also adjusted in accordance with the day of the week. As the responses were not evenly distributed over the days of the week (e.g. payments made on Mondays and Tuesdays were measured five times, whereas the other days were only counted four times), an adjustment was made to make sure that every daily average was equally represented in the aggregate average. This cancelled out the oversampling on Mondays and Tuesdays.

In order to make a realistic estimate of the total number of cash payments in the Netherlands in 2010, the total research population was adjusted to account for the fact that not everyone was able to make payments. The latter category includes inmates of penitentiary institutions, people with a severe physical or mental disability, people in hospital, expatriates, business travellers and holiday-makers. The size of these groups is estimated at 1,434,086, bringing the final research population to 12,426,114.

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3 Cash payments in the Netherlands in 2010

3.1 Total number and value of cash payments

In 2010, consumers in the Netherlands made a total of 7.4 billion payments by means of cash, debit cards, prepaid cards or credit cards (see table 1). The total value of these payments was EUR 147 billion. The vast majority of these payments were made in shops, bars, restaurants and petrol stations, as well as at vending machines and market stalls and to service-providers. These are referred to collectively as ‘PoS payments’. 9% of these payments were of the nature of payments among individuals or donations to charity. Consumers mainly used cash for these kinds of payments, as bank cards are generally not suited for this purpose. In addition to cash payments, consumers also used bank transfers for payments to other individuals and donations to charity. These have not been included in our study.

Table 1: Number and value of payments in the Netherlands in 2010 4

Number (in millions)

Value

(in billions of euros)

Average value (EUR ) Cash payments 5,045 61.9 12.26 - PoS 4,371 53.3 12.19 - Person-to-Person 674 8.6 12.71 Debit cards 2,154 80.9 37.56 Prepaid cards 178 0.5 2.61 Credit cards 36 4.0 111.11 Total payments 7,413 147.3 19.87 - PoS 6,739 138.7 20.58

4 Apart from cash, debit cards, prepaid cards and credit cards, respondents used other payment instruments such as fuel cards, affinity cards and public transport prepaid cards. Due to their low frequency of usage, these instruments have not been included in Table 1, Diagram 1 or Diagram 2.

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To pay for their PoS purchases, consumers made 4.4 billion cash payments and

2.2 billion debit card payments.5_{Cash was used primarily for minor purchases,}

bringing the total value of cash payments (EUR 62 billion) below that of all debit card payments (EUR 81 billion). Prepaid cards and credit cards were used sparingly: prepaid cards mostly for paying small amounts, while credit cards were used for paying large amounts.

Between 2007 and 2010, the number of cash PoS payments declined by 17% from 5.2 billion to 4.4 billion (see diagram 1). This is due mainly to the fact that the Dutch are making more and more use of their debit cards, but probably also to the fact that they are purchasing from a smaller number of shops. This is confirmed by the increase in the value of the average cash payment, standing at just over EUR 12, up from well below EUR 10 in 2007.

Diagram 2 shows that debit cards have become much more popular, and cash less popular, during the past three years. Between 2007 and 2010, the proportion of PoS payments accounted for by debit card payments climbed by 9 percentage points from 23% to 32%, whereas cash payments fell from 74% to 65%. Looking at the trend in debit card payments as a percentage of the total value of all PoS payments, the growth rate is much less sharp, i.e. 3 percentage points from 56% to 59%. There has been a comparable decline in the proportion of cash payments, from 41% to 38%. The main reason for this is that consumers have started using their debit cards to pay for smaller amounts, which is why growth in numbers is much higher than growth in terms of the size of the payments. If consumers continue in the same vein in the years ahead, debit card payments will gradually account for an increasing share of PoS payments, and there will be a slight increase in the proportion of consumer spending accounted for by debit card payments.

5 The annual figures for payments by debit card and prepaid card were obtained from Currence (2011). The number of reported debit card payments by our respondents overestimated the true number of debit card payments by about 20%. There are no indications that the number of cash payments were overestimated as the number matched the figure found by EIM (2011) fairly well.

Diagram 1: Number and value of POS payments in 2007 and 2010 5.2 1.6 0.2 _0.03 4.4 2.2 0.2 0.04 0 1 2 3 4 5 6

Cash Debit card Prepaid card Credit card

In billions 2007 2010 50 69 4 81 4 0.5 53 0.5 0 20 40 60 80 100

Cash Debit card Prepaid

card Credit card

In billion s of euros 2007 2010

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The amount of use made of prepaid cards has remained virtually unchanged during the past three years, whilst the use made of credit cards has edged up from 33 million in 2007 to 36 million transactions in 2010 (MoB, 2011).

3.2 The use of cash relative to the amount paid

Most payments made by consumers are small. They seldom pay large amounts. over one in three payments is worth less than EUR 5, while only three in 100 purchases involve EUR 100 or more. The average consumer payment is worth EUR 20.58.

Diagram 3 shows the distribution of payments made in 2010, broken down by payment instrument. At the forefront are cash payments of up to EUR 5: no fewer than 27% of all purchases have a maximum value of EUR 5 and are paid in cash. As shown by previous international studies (see Boeschoten, 1998; Bounie and François, 2006; Jonker, 2007; Klee, 2008; and Von Kalckreuth et al., 2009), the way in which consumers pay correlates closely with the amount paid: small amounts are mostly paid in cash, whilst debit cards are used relatively often for large amounts. The Diagram 2: Usage of POS payment instruments in 2007 and 2010

Proportion of total number of POS payments

Proportion of total value of POS payments 2007 Cash 74% Debit card 23% Prepaid card 2% Credit card0.5% 2010 Cash 65% Debit card 32% Prepaid card 3% Credit card_0.5% 2007 Cash 41% Debit card 56% Prepaid card 0.4% Credit card_3% 2010 Cash 38% Debit card 58% Prepaid card 0.4%Credit card_3%

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point at which consumers prefer to use debit cards rather than cash lies between EUR 20 and EUR 30. However, consumers are more inclined to pay a large amount in cash than to use their debit cards to pay small amounts.

Compared with 2007, consumers used their debit cards more often in 2010 to pay for small amounts of up to EUR 20, and cash less often (see diagram 4). In three years’ time, debit card payments as a proportion of aggregate payments of up to EUR 20 rose from 13% to 20%, while the proportion accounted for by cash fell from 83% to 71%. Not only are consumers using their debit cards more often to pay for small amounts, they have also adopted new payment instruments, such as the public transport chip card (OV-Chipkaart) to pay for public transport, and mobile phones to pay parking fees.

Diagram 3: Breakdown of POS payment instruments by transaction value in 2010

27% 14% _12% 4% 2% 1% 2% 1% 3% 5% 4% 3% 2% 4% 2% 5% 7% 1% 1% 0.3% 0.2% 0.2% 1% 0.1% 0% 5% 10% 15% 20% 25% 30% 35% 40% < € 5 € 5 - € 10 € 10 - € 20 € 20 - € 30 € 30 - € 40 € 40 - € 50 € 50 - € 100 >= € 100 Cash Debit card Other

Diagram 4: The use of cash, debit cards and other payment instruments to pay for amounts of up to EUR 20 (in 2007 and 2010)

2007 debit card 13% other 4% cash 83% 2010 cash 71% debit card 20% other 9%

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3.3 The use of cash payments by market segment

Consumers taking part in the study also specified the market segments in which they spent their money. Diagram 5 shows the breakdown of all cash spending in the Netherlands by market segment, in terms of both numbers and value. In addition to payments made in shops, hotels, bars and restaurants and fuel stations, and to street vendors, the figures include spending on charity and payments between individuals, such as between relatives, friends and acquaintances.

The most popular location for cash payments is the supermarket: a quarter of all cash payments are made there. This applies to both the number of transactions and the size of the payments. That said, for efficiency and safety reasons, Dutch supermarkets have launched a campaign to encourage customers to pay with debit cards rather than with cash. The supermarkets’ share of overall cash payments may therefore decline in the years ahead. Consumers also often use cash to pay for drinks and meals in bars and restaurants: 14% of all cash payments, representing Diagram 5: Breakdown of cash payments by market segment in 2010

0% 5% 10% 15% 20% 25% 30%

Family, friends, acquaintainces Charity Other Non-food retail, high value purchase Transport Service providers Retail clothing Interior decoration, DIY and garden centres Department stores Leisure, culture and entertainment Fuel stations Street vending Vending machine Non-food retail, low value purchase Food/tobacco shops Hotels, bars and restaurants Supermarkets

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10% of cash spending, are made there. In the third place are shops selling food, drinks and tobacco; 10% of all cash payments are made here. Cash is used least in shops selling high-value non-food items such as consumer electronics, household appliances, jewellery, and opticians and bicycle shops. 1% of all cash payments are made in these types of shops, and the items that are paid for in cash here are in fact relatively expensive. In terms of value, 10% of all cash payments are made in these shops, thus taking this segment to the same spending level as hotels, bars and restaurants in terms of value.

Consumers also use cash to transfer money to relatives, friends and acquaintances (representing 8% in terms of numbers and 12% in terms of value), charity and good causes (representing 6% in terms of numbers and 1% in terms of value).

The fact that most cash payments are made in supermarkets is in itself not very surprising, as the supermarket is the place where the vast majority of payments are made. In order to get a better picture of the role played by cash, we therefore need to look at the total number of payments made in each of the segments and also at the other payment instruments used by consumers.

Diagram 6 shows the relative use made of cash by market segment as compared with debit cards and other payment instruments, in terms of both numbers and transaction value. The role played by cash clearly differs sharply from one segment to another. In segments in which purchase values are relatively high, such as fuel stations and fashion and shoe shops, consumers pay with debit cards relatively often. In segments with low average purchase values, such as street vending, bars and restaurants, leisure and cultural institutions, and shops selling food, drinks and tobacco, consumers generally use cash. However, the differences in cash usage across market segments, may also reflect the different levels of penetration

of payment terminals across the different types of stores and market segments6_,

or differences in retailers’ explicit pricing of payment instruments. Rysman (2007) and Bolt, Humphrey and Uittenbogaard (2008), for example, demonstrate that consumers’ choice of payment instruments is highly correlated with the level of card acceptance by retailers, and Bolt et al. (2010) show that consumers react strongly to the explicit pricing of payment instruments by retailers.

So although diagram 5 revealed that consumers make the majority of their cash payments in supermarkets, diagram 6 shows that a significant proportion of payments is made by debit card: 60% of all payments were in cash and 40% by debit card. In terms of value, the debit card is actually dominant: 62% of total

6 About 90% of all Dutch retail traders are able to accept debit card payments. The levels of penetration of payment terminals, however, considerably differ across different types of stores: supermarkets (100%), fuel stations (100%), fashion stores (97%), specialized food stores (82%), catering (64%) and street vendors (28%) (HBD, 2010; EIM, 2011).

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Diagram 6: Usage of payment instruments by market segment in 2010

Proportion of total number of payments, by market segment

Proportion of total value by spending, by market segment

60 80 48 67 53 56 60 70 44 83 97 82 23 75 87 95 94 40 18 49 31 44 40 37 14 47 10 2 12 11 24 12 1 3 1 1 3 2 3 3 4 16 9 7 1 6 66 1 1 4 3 0% 20% 40% 60% 80% 100% Supermarket Food/tobacco shop Retail clothing Non-food retail, low value purchase Non-food retail, high value purchase Interior decoration, DIY and garden centres Department stores Vending machine Fuel stations Hotels, bars and restaurants Street vending Leisure, culture and entertainment Transport Service providers Other Charity Family, friends, acquaintainces

37 56 25 41 48 22 32 34 18 56 96 58 18 60 59 92 90 62 43 61 58 47 74 57 49 67 32 3 33 29 39 39 2 7 1 1 14 2 6 5 11 17 15 13 1 8 53 1 3 6 3 0% 20% 40% 60% 80% 100% Supermarket Food/tobacco shop Retail clothing Non-food retail, low value purchase Non-food retail, high value purchase Interior decoration, DIY and garden centres Department stores Vending machine Fuel stations Hotels, bars and restaurants Street vending Leisure, culture and entertainment Transport Service providers Other Charity Family, friends, acquaintainces

Cash Debit card Other

spending in supermarkets is by debit card as opposed to 37% in cash. The relatively high usage made of other payment instruments in the transport segment is worth noting. This is due to the fact that consumers often use sector-specific payment instruments such as public transport prepaid cards in the transport sector.

Cash is by far the most popular payment instrument for donations to charity and person-to-person payments. The payments industry is currently developing electronic payment instruments such as mobile phones, to enable people to transfer

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money to each other. In time, these new instruments may evolve into a good alternative for person-to-person payments in cash.

3.4 The use of cash during the week

As already shown by Jonker and Kosse (2009), the number and value of purchases made by Dutch consumers fluctuates during the week (see diagram 7). Some 19% of all weekly purchases are made on Saturdays, followed by Fridays (18%). on Sundays, when shops are closed in most places, consumers make relatively few payments: 9% of all weekly purchases are made on a Sunday.

Not only does the number of payments differ from day to day, the manner of paying does, too. In terms of the number of transactions, consumers are on average twice as likely to pay for their purchases in cash as with other, electronic payment instruments. However, consumers use cash more often immediately before and during the weekend than they do from Monday through Thursday. one possible explanation for this is that they may be relatively more likely to visit bars, restaurants and leisure facilities just before or during the weekend. In these market segments, cash payments are more customary because of the combination of low transaction values and the relatively low acceptance of payment cards.

Diagram 7: Distribution of cash and electronic payments during the week in 2010 Proportion of the total number of all payments

Proportion of the total value of all payments

4% 5% 6% 7% 6% _3% 8% 9% 9% 9% 11% 13% 6% 0% 5% 10% 15% 20% 25% 30% 35% 6% 9% 11% 9% 13% 11% _4% 4% 4% 4% _5% 10% 9% 2% 0% 5% 10% 15% 20% 25% 30% 35% Electronic Cash

Mo Tue Wed Thu Fri Sat Sun Mo Tue Wed Thu Fri Sat Sun

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Diagram 8: Distribution of person-to-person payments during the week in 2010 12% 12% 14% 15% 16% 21% 10% 0% 5% 10% 15% 20% 25%

Mo Tue Wed Thu Fri Sat Sun

Diagram 9: Distribution of the value of person-to-person payments during the week in 2010 Mo 6% Tue 9% Wed 13% Thu 13% Fri 23% Sat 24% Sun 12%

Looking at the distribution of payments over the week in terms of value, we see that the bulk of spending takes place on Fridays. 23% of total consumer spending during the week takes place on this day of the week, followed by Saturdays (20%). on Sundays, consumers are substantially less active, with 6% of the value of spending made on that day. Purchases made on Sundays are also smaller. The average value of a cash payment on a Sunday is EUR 8.74. This is twice as low as the average cash transaction on a Friday, i.e. EUR 19.44. In terms of the share of cash and electronic payments in the total value of spending, the proportion accounted for by electronic payments is higher than that accounted for by cash payments. This is due to the fact that consumers mostly use debit cards to pay for more expensive purchases. on average, the Dutch give money to people such as relatives, friends and representatives of charities 0.84 times a week. The distribution of these payments

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over the week follows more or less the same pattern as that of PoS payments (see diagram 8). Most payments are made on Fridays (16%) and Saturdays (21%), and relatively few payments are made on Sundays (10%).

on average, people give EUR 14.28 to other people or good causes during the week. The bulk of these payments is made on Fridays (23%) and Saturdays (24%) (see diagram 9). At EUR 4, the average value of these payments is twice as high as that of those made on other days. Evidently, different types of payments between individuals are made on Fridays and Saturdays than on other days of the week. A possible explanation may lie in family behaviour, in that children and grandchildren are more likely to receive their pocket money and clothing allowances on these days.

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4 Who uses cash?

4.1 Number of cash payments per person per day

on average, the Dutch make about 1.6 payments per day, which equals some 11 payments a week. They use cash for most of these payments, with 1.12 cash transactions a day, i.e. almost 8 a week. The Dutch use their debit cards 0.5 times

a day, i.e. 3.5 times a week.7_{These are, however, averages, since both the total}

number of payments and the number of cash transactions differ from one person to another (see diagrams 10, 11 and 12). overall, our findings correspond to the existing theoretical and empirical payments literature that suggests an important role of transaction characteristics and consumer characteristics in consumers’ payment

choice.8_{As previous studies have shown (see, for example, Boeschoten, 1998;}

Borzekowski et al., 2008; Jonker, 2007; Klee, 2008; Stavins, 2001), the use of cash and debit cards differs by age, education and income level. Moreover, payment behaviour varies according to ethnicity and region.

As diagrams 11 and 12 show, the older consumers are, the more likely they are to use cash, whereas the average number of debit card payments sharply declines the older they get. Young adults between the ages of 25 and 34, for instance, pay in cash 0.92 times a day and use their debit cards 0.64 times a day, whereas the over-75s use cash 1.17 times and their debit cards 0.19 times a day on average. on average, people from ethnic minorities make more purchases than people of ethnic Dutch descent (1.8 purchases as opposed to 1.4 purchases per day respectively). They make both more cash and debit card payments a day. There is hardly any variation in the average number of cash payments made according to consumers’ educational qualifications. The usage of debit cards, and with it the total number of purchases

7 These debit card estimates are calculated on the basis of actual debit card statistics provided by Currence (the scheme owner of the Dutch debit card scheme) and the cash / debit card ratios found in our survey. Please note again that the total research population equals 12,426,114 people.

8 In addition to consumer and transaction characteristics, the payments literature agrees that consumer payment choice is influenced by financial incentives given by card issuers as well as merchants’ decisions on card acceptance and surcharging. See Baumol (1952) and Tobin (1956) who developed the first transaction demand models. Recent studies include Duca and Whitesell (1995), Shy and Tarkka (2002) and Alvarez and Lippi (2009). The influence of merchants’ decisions and the optimal pricing of payments was modeled for the first time by Baxter (1983), followed by among others Rochet and Tirole (2002), Wright (2004, 2010), Hayashi (2006), Monnet and Roberds (2008) and McAndrews. and Wang (2008). Bolt and Chakravorti (2010) provide a useful synopsis.

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per day, however, increases sharply as the standard of education rises. The number of daily payments, especially the number of debit card payments, also rises in line with household income. The region of residence also appears to influence consumers’ purchasing and payment behaviour: people living in the north of the country make significantly more debit card payments a day, compared to the rest of the population, whereas people from the south are less frequent debit card users. Diagram 10: Average number of POS payments per person per day in 2010

0.00 0.50 1.50 1.00 2.50 2.00 Average Man W oman 12-24 25-34 35-44 45-54 55-64 65-74 75+

Ethnic Dutch descent Ethnically non-Dutch Primary education

Lower voc. - junior gen. secondary Senior sec. voc. - pre-university

Higher professional

University

Other

< 13400 euro

13400 - 24600 24600 - 36400 36400 - 48200 48200 - 61000 61000 - 72800 72800 - 97400 > 97400 euro Three big cities

W est N L North N L East N L South N L

Gender Age Ethnicity Education Gross annual

household income Region

Diagram 11: Average number of cash payments at the POS per person per day in 2010 0.00 0.50 1.00 1.50 Average Man W oman 12-24 25-34 35-44 45-54 55-64 65-74 75+

Higher professional

University

Other

< 13400 euro

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Diagram 12: Average number of debit card payments per person per day in 2010 0.00 0.50 1.00 Average Man W oman 12-24 25-34 35-44 45-54 55-64 65-74 75+

Higher professional

University

Other

< 13400 euro

Note: estimates presented in diagram 10, 11 and 12 are based on weighted data. All reported differences are significant at the 5% level, except for gender.

Diagram 13: Usage of POS payment instruments, according to personal characteristics in 2010 0% 10% 30% 20% 50% 40% 60% 70% 90% 80% 100% Average Man W oman 12-24 25-34 35-44 45-54 55-64 65-74 75+

Higher professional

University

Other

< 13400 euro

Gender Age Ethnicity Education

Debit card

Cash Other

Gross annual

64% 70% 66% 55% 34% 30% 33% 35% 3% 1% 10% 10% 65% 67% 66% 56%62% 66% 64% 92% 64% 84% 71% 62% 58% 61% 68% 74%_{63% 61% 59% 60%} 47% 59% 62% 64% 65% 66%69% 33% 32% _29% 39%36% 34% 34% 15% 33% 20% 30% 36% 38% 23% 30%27%_{36% 38%} 36% 35% 42% 39% 31% 32%36% 34% 32% 2% 1% _{5% 5% 2%}1% 2% 4% 2% 4% 16% 2% _{2% 5% 5%} 2% _{7% 4%}

Note: estimates based on weighted data. All reported differences are significant at the 5% level, except for gender.

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28

4.2 Share of cash payments in the total number of payments

on average, the Dutch pay for 65% of all their PoS purchases in cash. Debit cards are used for 32% of transactions and the remaining 4% are paid for by other means of payment. These are averages, however, as the degree to which consumers use cash too, varies widely from one person to another (see diagram 13).

Cash usage is relatively high among seniors and the elderly. People aged between 65 and 75 use cash for 70% of their purchases, and the over-75s pay for as much as 92% of their purchases in cash. This is much higher than the comparable figure for young adults and middle-aged people (i.e. about 60%), who use their debit cards, credit cards and their e-purse relatively often. Cash is also often used by people with relatively low levels of education or income. In particular, consumers with educational history beyond primary school and a gross annual income of less than EUR 24,600 often pay a relatively high share of their purchases in cash. The higher their level of education and the higher their income bracket, the more likely consumers are to use debit cards rather than cash. In addition, people in the south of the country use cash relatively often, whereas people in the northern part of the country use debit cards relatively often.

4.3 Amount of cash in people’s pocket

on average, the respondents had EUR 41.42 in their pockets at the beginning of their survey day. However, there are significant variations between the different population groups (see diagram 14). Men, for instance, have EUR 10 more on average on them than women do. Moreover, people significantly carry more money on them as their age increases. The amount of cash in people’s pockets also rises according to their level of education and income, and varies according to living region and ethnic background.

That said, not all Dutch people always have cash on them. of all respondents, 7.5% said that they had no cash at all on them at the start of their registration day. This percentage is relatively high among young people aged between 12 and 24 (about 10%), among people living in one of the three large cities (11%) and among those with a gross annual income of less than EUR 13,400 (11%). Middle-aged people, elderly people, people with a high level of education, high earners, and people living in the south of the country are relatively less likely to have no cash on them at all (see diagram 15).

4.4 How people acquire cash

The respondents were asked to state whether they had withdrawn or received cash on the day they recorded their transactions (changes received not included).

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Diagram 14: Amount of cash in people’s pockets, according to personal characteristics in 2010 0 10 30 20 80 60 70 50 40 In euro Man W oman 12-24 25-34 35-44 45-54 55-64 65-74 75+

Higher professional

University

Other

< 13400 euro

Note: estimates based on weighted data. All reported differences are significant at the 5% level, except for ethnicity, which is significant at the 10%.

Diagram 15: Proportion of respondents with no cash on them at the beginning of their registration day, according to personal characteristics in 2010

0% 2% 6% 4% 14% 12% 8% 10% Average Man W oman 12-24 25-34 35-44 45-54 55-64 65-74 75+

Higher professional

University

< 13400 euro

Note: estimates based on weighted data. All reported differences are significant at the 5% level, except for gender and ethnicity.

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About 15% of respondents said that they had (see diagram 16). In most cases (54%), consumers get their cash from ATMs. They also regularly receive money from other people, such as relatives, colleagues and friends (34%). In only 4% of cases, people obtained cash by asking for cashbacks in shops. other sources of cash mentioned relatively often include ‘found in the street’ (1%), ‘money received from a retailer after

returning a purchase’ (2%) and ‘work/income’ (1%).

Based on these findings, we have made a rough estimate of how often the Dutch withdraw money from ATMs per week, month and year, and how often they obtain cash in other ways (see table 2). on average, consumers use ATMs 2.5 times a month, withdrawing EUR 110 on average. The Dutch receive money from other people approximately 1.5 times a month. These person-to-person gifts and receipts are worth EUR 34 on average. Consumers rarely go to bank branches to withdraw money. They do so approximately 0.7 times a year, often withdrawing relatively large amounts, EUR 793 on average. Cashback (in which a retailer adds an amount to the total purchase paid by debit card and the customer receives that amount in cash along with the purchase) is not very popular. Consumers use this option just over more than twice a year. The average amount involved is EUR 44.

The way in which Dutch consumers obtain their cash varies sharply according to personal characteristics (see diagram 17). Compared with other age categories, young people aged between 12 and 24 use ATMs relatively less frequently. Instead, they receive money from other people relatively often (e.g. pocket money and clothing allowances). The elderly use cashback in shops relatively often, and they also receive money in other ways relatively frequently. Withdrawal and receipt Diagram 16: Have you withdrawn or received cash today?

No; 85% Withdrawn from ATM; 56% Withdrawn at bank branches; 1% Cashback in shops; 4% Given by someone; 34% Other; 5% Yes; 15%

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Table 2: Number and value of cash withdrawals and receipts, by source in 2010 Average number per person per week Average number per person per month Average number per person per year Average value (EUR)

Cash withdrawals from ATMs 0.6 2.5 29.6 EUR 110 9

Cash withdrawals from banks 0.0 0.1 0.7 EUR 793 10

Cashbacks in shops 0.0 0.2 2.2 EUR 44

Received from other people 0.3 1.5 17.7 EUR 34

other 0.0 0.2 2.5 EUR 23

Note: estimates based on weighted data.

910

9 These estimates fairly correspond to the official DNB Statistics, according to which the total number of cash withdrawals made at Dutch ATMs in 2010 equaled 434 million, with an average value of EUR 119. These numbers include withdrawals made by Dutch as well as foreign consumers with both debit and credit cards.

10 These estimates slightly differ from the official DNB Statistics, according to which the total number of cash withdrawals made at Dutch bank branches in 2010 equaled 6.7 million, with an average value of EUR 930.

Diagram 17: How people obtain their cash, according to personal characteristics in 2010 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Man W oman 12-24 25-34 35-44 45-54 55-64 65-74 75+

Higher professional

University

< 13400 euro _{13400 - 24600} _{24600 - 36400} _{36400 - 48200} _{48200 - 61000} _{61000 - 72800} _{72800 - 97400} > 97400 euro

Three big cities

W est N L North N L East N L South N L Average

Gender Age Ethnicity Education Gross annual household income Region Withdrawals from ATMs Withdrawals from bank branches Cashback in shops Received from others Other

51% 39% 57 56 32 64 66 62 58 60 66 54 62 44 54 59 62 65 56 59 66 69 71 60 31 45 65 _{51 61 60} ₇₀ 5 17 9 33 34 57 32 25 28 30 28 34 32 48 33 31 27 28 34 36 34 23 21 26 54 40 31 _{39 32} 28 20

Note: estimates based on weighted data. All reported shares of ATM withdrawals, cashbacks and receipts differ significantly from each other at the 5% level, except for gender and ethnicity. The shares of withdrawals from bank branches only differ significantly for gender and education, but at the 10% only.

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behaviour also differs according to the level of education. Those with a low level of education receive cash from other people relatively more often, whereas those with a high educational level obtain their money mainly from ATMs. The highest earners receive money from other people, or in other ways than from an ATM, relatively often. People living in the western part of the country also receive their cash from third parties relatively more often than people in the rest of the country. The amount of money that the Dutch withdraw from ATMs also varies sharply from one individual to another (see diagram 18). The average amount withdrawn increases with age: young people aged between 12 and 24 withdraw approximately EUR 42 at a time, whereas the elderly (i.e. the over-75s) take out more than EUR 215 on average. The amounts withdrawn also decrease as the level of education rises: people with no educational history beyond primary school withdraw EUR 174 in one go on average, while people with a university education withdraw slightly less than EUR 90 at a time.

Diagram 18: Average amount withdrawn from ATMs, according to personal characteristics in 2010 0 50 150 100 250 200 Average euro Man W oman 12-24 25-34 35-44 45-54 55-64 65-74 75+

Higher professional

University

< 13400 euro

Note: estimates based on weighted data. All reported differences are significant at the 5% level, except for gender and ethnicity.

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Diagram 19: Proportion of consumers who would rather have used another payment instrument, by instrument used in 2010

As a % of the total number of payments

0% 2% 4% 6% 8% 10%

Total Cash Debit card Prepaid card Credit card

3% 3% _2%

5%

4%

Note: estimates based on weighted data. All reported differences are significant at the 5% level.

5 Constraints

In recent years, Dutch consumers have started to make more and more use of bank cards to pay for their purchases, rather than paying for them in cash. Various trends have contributed to this. one of them is the increase in the number of outlets in the Netherlands where consumers can use their debit cards. Secondly, fewer and fewer shop-owners now require consumers to pay a surcharge for using a debit card for minor purchases. Thirdly, major awareness-raising campaigns have been launched on TV and in shops, encouraging consumers to make more use of their debit cards. In order to ascertain whether consumers felt any constraints in their choice of payment options in 2010, our respondents were asked to indicate for each purchase whether they had paid for it with the instrument of their choice. If this had not been the case, they were asked why not and how they would have preferred to pay.

5.1 Perceived constraints for each payment instrument

our findings show that the Dutch are very satisfied with the payment options offered by retailers. In their daily purchases, they experience hardly any constraints in relation to their payment options (see diagram 19). only 3% of all payments were not paid in the desired manner. Consumers cited debit cards least often as the

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payment instrument they would rather not have used (2%), followed by cash (3%). Prepaid cards were cited most frequently as the payment instrument they had used to pay, despite the fact that they were not their first choice (5%).

Whether or not consumers were able to use their preferred payment instrument depends on the market segment in question (see diagram 20). Consumers are significantly often not able to pay as they would have liked when making purchases from sweets, drinks or snacks vending machines (6.5%), They are most satisfied with the payment options in department stores, where only 1% of purchases were not paid for with the instrument of their choice. This is because department stores accept a broad range of payment instruments, whereas consumers using vending machines can only pay with one single instrument.

In addition to their preferred payment instrument not being accepted (40%), consumers reported several other reasons why they were not always able to pay as they would have liked (see diagram 21). These included having to pay a surcharge for the use of their preferred payment instrument (5%), not being able to use it because the PoS terminal was out of order (4%), and having to pay by debit card because the retailer did not have enough change (1%). However, it is not always due to the retailer or the equipment that consumers are not able to pay as they would have preferred. In a fair number of cases, consumers stated that they did not have their preferred payment instrument with them (20%). Moreover, in certain instances they were not able to use their prepaid cards because the balance on the card was not sufficient (3%).

Diagram 20: Where were consumers unable to pay with their preferred payment instrument in 2010

As a % of the total number of payments per market segment

0% 1% 2% 3% 4% 5% 6% 7% 8%

Total Department stores Non-food retail, low value purchase Fuel stations Interior decoration, DIY and garden centres Street trade Hotels, bars and restaurants Food/tobacco shops Retail clothing Supermarkets Leisure, culture and entertainment Service providers Transport Non-food retail, high value purchase Vending machines 2.6% 1.0% 1.5% 1.7% 1.9% 2.1% 2.2% 2.2% 2.2% 2.5% 2.5% 3.6% 5.5% 5.5% 6.5%

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Diagram 21: Reasons why consumers did not use their preferred payment instrument in 2010

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

Preferred payment instrument not accepted Preferred payment instrument not with me Surcharge for using preferred payment instrument Payment terminal out of order Sufficient cash on me Insufficient balance Not enough change available No answer 40% 21% 5% 4% 3% 3% 1% 24%

Diagram 22: Used instrument versus preferred instrument in 2010

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Cash

Debit card Prepaid card

Preferred payment instrument

Used, second choice

Cash Debit card Prepaid card Credit card Other

69% 60% 74% 23% 11% 8% 5% 2% 3% 12% 18% 15% 5.2 Used instrument versus preferred instrument

So which payment instrument would consumers actually have preferred to use? Diagram 22 shows the instrument actually used relative to the preferred instrument. The majority of people who were forced to pay in cash, would have preferred to use either a debit card (74%) or a prepaid card (11%). The opposite applies in the case of people who would rather not have used their debit cards: 69% of them would rather have paid in cash and 8% would have preferred to use a prepaid card. Those who used their prepaid cards in spite of preferring to use another instrument also said they would have preferred using cash (60%) or a debit card (23%).

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5.3 Perceived constraints according to personal characteristics

Just over 4% of respondents said that they had not used their preferred payment instrument for one or more transactions. This is an average, however, as the degree to which people experience constraints in their choice of payment instrument differs according to their personal characteristics.

The older consumers are, the least often they feel constrained in their choice of payment instrument. Whereas 7% of young people aged between 12 and 24 said that they were not always able to pay with their preferred instrument, only 1% of people over 75 reported the same thing. In part, this can be explained by the fact that elderly people often pay in cash, which they can use almost everywhere. The elderly in particular experience constraints when they want to use a debit card or prepaid card. For them, the fact that debit cards and prepaid cards are not accepted everywhere is not the only constraint, as it is for other age groups. They are frequently unable to pay by debit card or prepaid card because they forgot to bring their card with them. Forgetting a means of payments is not just a problem for seniors and the elderly, by the way. People of up to 35 years of age who had intended to pay in cash were not always able to do so because they had either no or not enough cash on them.

Diagram 23: Proportion of respondents who did not pay with their preferred instrument, by personal characteristics in 2010

0 2 6 4 14 12 8 10 Average Man W oman 12-24 25-34 35-44 45-54 55-64 65-74 75+

Higher professional

University

< 13400 euro

household income Region 4% 5%_4% 7% 6% 5% 3% 4% 2% 1% 3% 10% 6% 5% 3%4% 7% 5% 5% 3% 4% 2% 12% 3% 5% 6% 4% 6% 4% 4%

Note: estimates based on weighted data. All reported differences are significant at the 5% level, except for gender and region.

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The frequency with which respondents were able to use their preferred payment instrument varies according to the ethnical background, with people of ethnic Dutch descent facing less often constraints (3%) than others (10%). The main reason why they were not able to use their debit cards as often as they would have liked was because the acceptance rate of debit cards is relatively low in the outlets where they make their purchases.

Educational background also plays a role. People with a secondary vocational qualification pay significantly more frequently as they want than people with only primary education and university graduates. Consumers with a low level of education would like to use their debit cards more often, but do not do so for various reasons: their cards are not accepted, they forgot to bring them along, or they are charged a surcharge for using a debit card. University graduates said that they would like to use their debit card or prepaid card more often, but were unable to do so because either the payment terminal was out of order or their card was not accepted. The influence of income on the proportion of people who do not always pay as they would have preferred is fairly small, with one exception. The proportion of people on an income of between EUR 61,000 and EUR 72,800 who report not being able to use their preferred payment instrument is significantly high (12%). 5.4 Recorded and desired POS payment behaviour in 2010

Supposing that everyone in the Netherlands had been able to pay for their PoS purchases with the payment instrument of their choice, what sort of payment behaviour would we then have seen in the Netherlands in 2010? Table 3 shows how the Dutch actually paid in 2010 and how they would have paid if they had consistently been able to use their preferred payment instrument.

There are no major shifts to be discerned, as the Dutch made 97% of their payments with their preferred payment instrument. The number of cash payments would, however, have been 1.7% lower at 4.3 billion and the number of debit card payments would have been 2.4% higher (at 2.2 billion) had everyone been able to use their preferred payment instrument. At 40 million transactions, the number of credit card payments would have been 12.5% higher than actually recorded and the number of prepaid card payments would have been 0.8% lower, at 177 million. The annual number of debit card payments grew by 10.7% between 2007 and 2010. This is significantly higher than the difference between the actual and the desired number of debit card payments in 2010. This shows that the changes in Dutch consumer payment behaviour over the years are not only due to the removal of constraints preventing them from using their favourite payment instruments. other factors are also involved, including demographic changes, technological developments resulting in better payment instruments and the creation of new ones, and the influence

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Table 3: Actual and desired number of POS payments by payment instrument in 2010 11 Actual number (in millions) Desired number (in millions) Difference Cash payments 4,371 4,297 –1.7% Debit cards 2,154 2,206 +2.4% Prepaid cards 178 177 –0.8% Credit cards 36 40 +12.5%

of consumer campaigns. These external factors influence consumers’ payment preferences and produce gradual changes in their payment behaviour over time.

11 In addition to cash, debit cards, prepaid cards and credit cards, respondents were also able to indicate which other payment instruments they had used, such as fuel cards, customer loyalty cards and public transport chip cards. Due to their limited frequency of use, these payment instruments have not been included in the table. The actual and desired usage of these instruments was, however, included in the calculations of behavioral shifts, which is why the totals of the ‘actual’ and ‘desired’ columns are not the same.

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6 International comparison

Besides the Netherlands, various other countries have studied the payment behaviour of their residents. The main purpose of these studies was to better understand consumers’ payment behaviour and the factors that influence it, such as the costs of certain payment instruments, the speed of payments, security and budget management (see, for instance, Bagnall and Flood, 2011 for Australia; Arango and Hoggs, 2010 and Arango et al. 2011 for Canada; Jacobsen and Nielsen, 2011 for Denmark; Deutsche Bundesbank, 2010 for Germany; The Payments Council, 2011 for the UK). A number of international payment surveys have also been performed as part of a study into payment costs. The researchers undertaking the latter study need information on the number and value of the transactions performed with different payment instruments (see, for instance, Turján et al., 2011 for Hungary; Gresvik and Haare, 2008 for Norway). The results of these studies, highlighting PoS payments and the research methods, are summarised in Table 4.

6.1 POS payment behaviour

A comparison of international studies shows that consumers in the countries under review make about two purchases a day. There are vast differences, however. The Australians and the British make slightly more than two purchases a day on average, while the Danes and the Norwegians make one or fewer payments a day on average. At 1.6, the average number of payments made per day in the Netherlands lies somewhere in the middle.

In almost all studies, consumers say that they make the majority of their payments in cash, followed by the debit card. on the whole, consumers in the countries studied make approximately one cash payment a day and one debit card payment every two days, as do the Dutch. Again, there are differences between the countries. The Danes use cash almost as often as their debit cards, whereas the Norwegians hardly use any cash, and mainly pay by debit card. Generally speaking, consumers do not make much use of other payment instruments such as credit cards, except in the US and the UK, where consumers use their credit cards relatively often, although not more often than their debit cards.

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The choice of payment instrument differs according to the transaction value in all countries. Consumers usually pay for small amounts in cash and use their debit cards for larger amounts. The average or median purchase value of a cash payment is three to four times lower than that of a debit card payment. In most countries, the average amount paid by credit card is higher than that paid by debit card.

121314

Table 4: Summary of findings of international payment studies

Netherlands Australia Canada Denmark Germany Hungary Norway UK

Results

No. POS trx.

a person a day 1.6 2.2 1.7 1.0 1.6 n.a. 0.8 2.1

Of which:

Cash 1.0 1.4 0.9 0.5 1.3 0.8 0.2 1.1

Debit card 0.5 0.7 0.4 0.5 0.2 n.a. 0.6 0.4

Credit card 0.01 0.4 0.02 0.02 n.a. 0.1 0.2

Av. value 12:

Cash EUR 12.19 AUS $ 1213 CAN $ 19.17 Kr 190 EUR 20.11 HUF 2900 NoK 218 GBP 10

Debit card EUR 37.56 AUS $ 38 CAN $ 60.94 Kr 316 EUR 61.51 HUF 6990.68 NoK 370 GBP 45

Credit card EUR 111.00 AUS $ 50 CAN $ 89.38 Kr 530 EUR 76.69 HUF 8157.10 NoK 628 GBP 41

Av. value 14:

Cash EUR 12.19 EUR 8.47 EUR 12.17 EUR 25.51 EUR 20.11 EUR 10.93 EUR 27.73 EUR 11.74

Debit card EUR 37.56 EUR 26.82 EUR 38.68 EUR 42.42 EUR 61.51 EUR 26.35 EUR 47.06 EUR 52.80

Credit card EUR 111.00 EUR 35.29 EUR 56.73 EUR 71.15 EUR 76.69 EUR 30.74 EUR 79.87 EUR 48.11

Research Residents Residents Residents Residents Speakers of Main payers in Residents Residents

population 12 + 18 + 18 – 75 15 – 79 German 18 + household 16 + 16 +

Sample size 7.499 1.241 and 6.800 ques-3,190 diaries

tionnaires 1.294 2.272 300 2.608 2.000

Survey period _{6 oct 2010}5 Sep – _{19 Nov 2010}25 oct – Nov₂₀₀₉ _{24 oct 2010}22 Sept – _{summer 2008}Early 1 week mid - _{Sept 2010} Whole of ₂₀₀₉ Scope PoS & P2P PoS & remote PoS PoS PoS, P2P & _remote Cash payments PoS, P2P & _remote PoS, P2P & _on-line Method of

data collec-tion

on-line or

phone survey Paper diary Paper & on-line survey phone surveyon-line or on-line survey interviewPersonal Phone survey on-line survey

Use of diary? yes yes yes ? yes no no yes

Diary

registra-tion period 1 day 1 week 3 days 1 week 1 week - - throughout 4 weeks

the year

12 Average transaction value as published in the relevant research reports. 13 Mean transaction value in stead of average value.

14 Average transaction value converted to euros based on the exchange rate prevailing on day 1 of the relevant research period. For Hungary the exchange rate prevailing on 31 December 2009 was used.

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6.2 Research methods used

Although the research methods used in the various country studies to collect data on consumer payment behaviour are broadly similar, there are certain differences. As already shown by Jonker and Kosse (2009), variations in the research methods may lead to variations in the eventual results.

First of all, the scope of the studies varies. Most of them focus on both PoS payments and remote payments. The Danish, Dutch and Canadian studies, however, focus specifically on PoS payments. In addition to consumer-to-business payments, the Dutch study also includes person-to-person payments (which are not included in Table 4, by the way).

The number of respondents varies from 1,241 in the Australian study to 7,499 in the Dutch study. The differences in the numbers of respondents taking part are partly attributable to variations in the number of days on which the respondents reported their payment transactions. In order to be able to collect sufficient transaction data, countries that opted for short recording periods worked with a larger sample.

The Hungarian study used a sample of 300 households.15_{In all studies, the survey}

findings were reweighed to ensure that they were representative for the population. The studies also vary somewhat in terms of the age profile of the research population. The Netherlands and Canada are at opposite ends of the scale. The Dutch study included consumers from the age of 12 and did not set an upper age limit, whereas the Canadian study focused on adults up to the age of 75. These variations in age profiles may have influenced the payment statistics shown in Table 4. Young people and the elderly use cash relatively frequently and payment cards relatively infrequently. The inclusion of young people and the elderly therefore leads to a rise in the average number of cash payments and a decline in the average number of card payments.

The studies also differ in terms of the methods used for collecting payment data. The Hungarian and Norwegian respondents were asked about the payment characteristics of their purchases of the day before (Norway) or of last day (Hungary), i.e. in retrospect. In the other studies, respondents recorded the payment characteristics of their purchases in a diary. The advantage of this method is that it helps people to recall as much as possible about their payments and to report on them in detail (see Jonker and Kosse, 2009). The length of the recording period, however, varies in each study. The Dutch study used the shortest period, i.e. one day, and the UK study used the longest period, i.e. four weeks. Despite the fact that

15 Households were asked about the payment instruments that all household members had used for purchases the previous day. The information thus collected was used to estimate the number and value of cash payments. Payments made with other payment instruments were drawn from payment statistics.

How much, where, when, who and whenever one wants?

Cash usage in

the Netherlands:

How much, where,

when, who and

whenever one wants?

DNB

Occasional Studies

Cash usage in the Netherlands:

How much, where, when, who

and whenever one wants?

1

Table of contents

Abstract

1 Introduction

2. Research method and sample

3 Cash payments in the Netherlands in 2010

4 Who uses cash?

5 Constraints

6 International comparison