As is the case with oil and peak oil – the moment in which global consumption reaches its zenith and begins to fall – the use of banknotes and coins is also approaching its particular peak coin. Dataphones, bizum and mobile payment are significantly reducing the use of cash, to the point that the Bank of Spain already destroys more physical money than it prints. For the first time since the creation of the euro, the amount of banknotes in circulation is lower than that recorded in 2002.
In the first eight months of the year, the difference between the money that the Bank of Spain has withdrawn and that which it has put into circulation is 10,175 million, according to figures recently published by the institution.
Banking sources assume that the trend is the result of the growing use of digital payments. “The issuance of physical money responds to requests from banking entities, which are increasingly focused on offering other solutions to their clients,” they indicate. Funcas identifies the pandemic as the moment in which changes in payment habits accelerated.
In the first year of operation of the euro, the Bank of Spain printed 39,002 million euros more in banknotes than it destroyed. The figure did not stop growing until it reached 87,000 million in 2006. Since then, it stabilized to begin a downward trend until reaching a milestone: at the end of last year, 946 million euros more had already been withdrawn than were They had been put into circulation two decades ago, and as of August of this year the figure is already 11,121 million.
The latest payment trends report from the European Central Bank (ECB) shows that cash payments have gone from representing almost 80% of operations in 2016 to 59% in 2022. However, when the amount paid is assessed , Eurozone citizens already spend more money digitally than physically.
In Spain, the trend is similar. Payment in cash continued to be the most common among individuals, but the average amount with a card is double that made in physical money. The Bank of Spain estimates that cards already represent 65% of the amounts paid in stores.
Another formula that is spreading is payment via mobile phone or the bizum digital directory, in which the main Spanish banks participate and which has just reached 50,000 associated businesses.
KPMG believes that the great takeoff of digital payment begins now and that, between 2025 and 2030, this trend will increase by 61%. The consulting firm Capgemini estimates that the average annual increase until 2027 will be 15% annually.
