Cash May Not Be King Anymore, but It’s Not Ready to Give up the Throne Yet

The recent headlines about the European Union backtracking on its push for a cashless society are nothing if not ironic.

After years of digital payment policies ostensibly about combatting tax evasion and money laundering, Brussels has now decided to prohibit businesses from refusing cash: in 2024, one in eight shops reportedly denied customers the right to pay with coins or notes. It seems the narrative of the disappearance of cash seems to have collided with a much more complex reality.

Europe is not alone. Surveys from around the developed world show that cash continues to have a notable presence in advanced economies. In the euro area, 52% of transactions at point of sale are still made in cash, despite the unstoppable advance of cards and mobile payments. An analysis by the European Central Bank reveals that the circulation of banknotes and coins reached around €1.6 trillion at the end of 2024, equivalent to around 10% of the GDP of the Eurozone, and remains the most widely accepted form of payment among shopkeepers.

These figures seem to refute the idea that we are on the verge of a cashless society. Not only does the use of cash persist, but it remains a tangible store of value and as a payment option in everyday contexts. The digital transition is particularly evident in Sweden, where 90% of purchases are made digitally, and cash represents less than 1% of GDP, but the reality throughout the rest of Europe is much more heterogeneous. In southern and Central Europe there’s still a marked preference for banknotes and coins than in the north or west of the continent, although in Britain the figure is less than 10%.

Why this resistance to going fully digital? beyond generational or cultural preferences, which also exist (young people have not stopped using cash as quickly as predicted), cash fulfills functions that digitalization does not replicate without incurring costs or risks. It is an instrument of financial inclusion for the elderly and people with less access to technology, a backup in situations of infrastructure failure (such as power or network cuts) and a way to preserve privacy in everyday payments. This explains why European authorities have gone so far as to recommend that people have enough cash in hand to survive without electricity or the internet for at least a week.

Here in Spain, we’re no exception to the general European trend. The withdrawal from circulation of high-denomination banknotes, regulatory initiatives and the advance of card payments have steadily curtailed the use of cash. At the same time, national and European measures limiting cash transactions seek to balance the fight against fraud with our right to pay in cash. There remains a certain amount of tension in Spain, where concern for social inclusion and privacy is mixed with the urgency to modernize payment systems.

Meanwhile, in the United States, Federal Reserve studies and consumer behavior surveys show that Americans continue to keep cash in their wallets, even as they embrace digital methods. More than 90% of consumers say they intend to continue using cash as a means of payment or as a store of value, although the proportion of cash payments has decreased over time. Many households use cash for everyday purchases and as a cushion against unforeseen events, despite a growing preference for card payments.

My Gen Z students were born into a digitized world, so they receive most of their money, whether from family allowances, informal payments or occasional work, electronically, and in turn, they overwhelmingly pay by phone. This familiarity means that cash, when it arrives, is often perceived as something “external” to their usual balance, money almost destined for immediate spending and that is not part of their daily digital accounting. This dovetails with recent data showing that more than half of Gen Z only use cash as a last resort, largely considering it outdated.

This creates a paradox that few financial analysts openly acknowledge: digitalization and the decline in cash coexist with a resilience that did not seem foreseeable just a decade ago. This is not so much a linear goodbye to cash, but a rearranging of its functions. In Europe and the United States, cash persists as a safety net for vulnerable segments of the population, a cultural counterweight to a complete reliance on technology networks and third-party financial service providers.

Looking ahead, everything indicates that the evolution of cash will not be a simple downward path towards disappearance, but rather a kind of reconfiguration. Public policies such as the one recently approved by the State of New York requiring businesses to accept cash and not penalize customers who pay in this way reflect the growing concern for equity in access to means of payment. As societies debate technological sovereignty, data privacy and financial inclusion, cash will surely remain part of the conversation.

The idea of a future without physical money is comfortable for technologists and financial planners, but it ignores the complexity of human and economic decisions. Cash, far from dying, is being revalued on multiple fronts. Its survival is not an anachronism: it is an affirmation that, in a world subjected to the logic of digital efficiency, there is still room for a means of exchange that embody attributes that no app or payment terminal can fully replicate. And that space, both in Europe and the United States, seems wider than many forecasters would like to admit.

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This post was previously published on Enrique Dans’ blog.

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