"Payment Radar": the ratio between non-cash and cash payments is 67% to 33% in Latvia

  • 2023-03-30

The most recent (spring 2023) "Payment Radar" of Latvijas Banka suggests that the ratio between non-cash and cash payments in Latvia was 67% to 33% in February 2023.

The "Payment Radar" contains the latest information on money usage habits of Latvia's households, businesses and the public at large. This information has been obtained from the results of the population survey conducted by a market and social research agency SIA Latvijas Fakti.

The "Payment Radar" is published semi-annually and is available on Latvijas Banka's website (https://www.bank.lv/en/operational-areas/payment-systems/payment-radar). Development of the proportion and interaction between non-cash and cash payments (as at February 2023) is the central measurement of the overview supplemented by more detailed numerical information and experts' commentaries.

Ratio between non-cash and cash payments

In February 2023 compared to August 2022, the use of cash somewhat increased. Half a year ago, this ratio was 71% to 29% (a year ago, in February 2022, the ratio between non-cash and cash payments stood at 74% to 26%). In February 2023, the average number of payments made by one inhabitant per week had reached a historical peak when this measurement was taken – 14.3 (12.6 in August 2022 and 12.8 in February 2022).

Use of modern payment technologies is growing

According to the "Payment Radar" data, the use of modern technologies is slowly but consistently achieving a stable position in the field of payments. In February 2023, 33% of respondents used instant payments on a daily basis (31% in August 2022, 30% in February 2022), 16% of those surveyed had made payments via smartphones (14% in August 2022, 13% in February 2022), but 63% of respondents – with a contactless card (66% in August 2022, 61% in February 2022).

"As usual, younger people are more likely to use innovative payment methods. It is worth pointing out that four years ago, only 4% of the Latvian population used a smartphone as a payment instrument. The hypothesis that bank customers trust and are willing to use new technological solutions is once again confirmed," comments Aigars Freimanis, Director of SIA Latvijas Fakti.

Public satisfaction with the availability of cash and its viewpoint concerning 1 and 2 cent coins

Traditionally, the "Payment Radar" measures several indicators describing the use of cash. The population's satisfaction with the opportunity to withdraw cash from their bank accounts remains unchanged – 84% (like it was in August and February 2022), but 9% of the population were dissatisfied with the above opportunity in February 2023 (8% in August 2022, 10% in February 2022).

The share of people supporting the withdrawal of small denomination coins – those of 1 and 2 cent – has decreased. In February 2023, 41% of respondents took the view that the above coins should be withdrawn from circulation (49% in August 2022, 51% in February 2022), but 50% were against their withdrawal from circulation (43% in August 2022 and February 2022). Typically, those with higher income, university education and Latvians are more inclined towards supporting the withdrawal of small denomination coins from circulation.

Euro – a secure currency with low numbers of counterfeits; encouraging counterfeiting statistics in Latvia

Statistics on the security of money for 2022 have been compiled. In 2022, 889 counterfeit banknotes and coins were detected in circulation in Latvia, including 433 and 456 counterfeit banknotes and coins respectively. The number of counterfeit banknotes decreased by approximately 13% within a year (497 counterfeit banknotes were detected in 2021), but the number of counterfeit coins climbed 2.2 times (206 counterfeit coins were detected in 2021). Taking account of the decrease in the number of detected counterfeit banknotes, the financial losses caused by counterfeits have edged down by approximately 2% (they constituted 26.8 thousand euro in 2022 and 27.3 thousand euro in 2021).

Digital euro – next steps to be taken this autumn

The "Payment Radar" of spring 2023 suggests that public awareness of the potential introduction of the digital euro in the future has substantially increased reaching 49% (35% of respondents had heard about it in August 2022 and 39% in February 2022).

In the commentary section of the "Payment Radar", Reinis Vecbaštiks, State-of-the-Art Payment Expert of Latvijas Banka informs the readers that the investigation phase of the digital euro project is currently ongoing. At this stage, the European Central Bank, in cooperation with euro area central banks and market participants and in consultation with the general public, decides on the functionality or design of the digital euro. The investigation phase will end in October 2023, when the decision-making bodies of the European Union (EU) will decide whether (or not) to launch the experimental phase of the digital euro.

Risks pertaining to crypto-assets; public awareness is increasing

As a result of several shocks experienced in the crypto-asset field, the public takes less interest in these risky assets and their use. The recognisability of crypto-assets (e.g. Bitcoin, Ethereum, Ripple, etc.) edged down to 85% in February this year, which represented 1 percentage point and 4 percentage point reduction compared to August 2022 and February 2022 respectively.

Only 4% of respondents had purchased a crypto-asset (9% in August 2022 and 8% in February 2022). 11% of those who own crypto-assets have used them to pay for goods and services (17% half a year ago and 12% a year ago). In February 2023, 70% of respondents had heard about the collapse of certain crypto-asset exchanges and the detention of their founders.

In the expert commentary section of the "Payment Radar", Reinis Vecbaštiks and Emīls Dārziņš, state-of-the-art payment experts of Latvijas Banka, express the hope that public awareness of risks associated with investment in crypto-assets is increasing. Work in this area will continue to improve the protection of private investors and their assets. EU institutions plan to approve a proposal for a regulation on markets in crypto-assets (Regulation on Markets in Crypto-Assets or MiCA). This regulation would establish joint rules for crypto-asset market participants across the EU. The regulation would apply to both crypto issuers and service providers, including crypto-asset exchanges.