Cash over card: How Malta compares to the EU in the shift towards a cashless society

The way we pay for goods and services is changing rapidly, with digital payment methods gaining ground across Europe. However, the pace of this shift varies significantly from country to country. Recent studies, including a European survey by BearingPoint and local insights from Malta, reveal sharp trends in payment behaviour, highlighting Malta’s unique position in the broader EU context.

According to the latest BearingPoint survey on payment behaviour across Europe, cash is no longer king in many EU countries. The study, which analysed payment preferences in several European countries, found that digital payment methods such as cards, mobile wallets, and online banking are becoming increasingly dominant. Countries like Sweden, Finland, and the Netherlands are leading the charge towards a cashless society, with cash transactions accounting for less than 20 per cent of all payments.

The survey attributes this shift to several factors, including the rise of e-commerce, the convenience of contactless payments, and the growing adoption of smartphones for financial transactions. Additionally, the COVID-19 pandemic accelerated the move away from cash, as consumers and businesses sought safer, more hygienic payment options.

However, the survey also notes that cash remains important in certain regions, particularly in Southern and Eastern Europe. In countries like Germany and Austria, cash is still widely used for everyday transactions, reflecting cultural preferences and a slower adoption of digital infrastructure.

In contrast to the broader EU trend, Malta presents a unique case. The most recent study by The Central Bank of Malta, cash remains a preferred payment method for many Maltese consumers. The phrase “cash is king” still holds true on the islands, with cash transactions accounting for 85 per cent  of those interviewed indicated that they carry cash at all times.

Several factors contribute to Malta’s strong affinity for cash. For one, the island’s small size and close-knit communities foster a cash-based culture, particularly among older generations. Additionally, some Maltese businesses, especially smaller ones, have been slower to adopt digital payment systems due to costs or a lack of infrastructure. This contrasts with larger EU economies, where digital payment solutions are more widely available and embraced.

That said, Malta is not immune to the global shift towards digital payments. The rise of online shopping, the introduction of contactless card payments, and the growing popularity of mobile banking apps are gradually changing payment habits, particularly among younger consumers. The Maltese government and financial institutions have also been promoting digital payment solutions as part of efforts to modernise the economy and reduce the shadow economy.

When comparing Malta to the broader EU, several key trends emerge. 

Cultural preferences play a significant role, as Malta’s attachment to cash contrasts with the rapid adoption of digital payments in many EU countries. A generational divide is also evident, with younger consumers driving the shift towards digital payments both in Malta and across the EU, while older generations tend to prefer cash. Infrastructure and accessibility are critical factors, as countries with advanced digital systems, like Sweden and the Netherlands, are leading the cashless revolution. Malta, while making progress, still has room to improve in this area. Finally, government initiatives and incentives can accelerate the adoption of digital payments, and Malta’s efforts to promote digital solutions could help bridge the gap with other EU nations.

As Malta continues to modernize its economy, the balance between cash and digital payments is likely to shift further. While cash will remain important in the short term, the convenience and efficiency of digital payment methods are expected to gain ground, particularly as younger, tech-savvy consumers become a larger share of the market. For businesses, adapting to these changing preferences will be crucial. Investing in digital payment infrastructure and educating customers about the benefits of cashless transactions can help Maltese companies stay competitive in an increasingly digital world.

While Malta’s payment landscape still reflects a strong preference for cash, the island is gradually aligning with broader EU trends towards digital payments. The challenge for Malta will be to strike a balance between preserving its cultural traditions and embracing the opportunities of a cashless future.