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Europe's number of retail cashless payments grew more than 160 percent between 2000 and 2008, according to London-based Retail Banking Research Ltd.
 
Ninety percent of the region's 87 billion transactions were conducted in Western Europe, while 10 percent were conducted in Central and Eastern Europe. Two-thirds of all cashless payments occurred in the eurozone.
 
Despite that cashless-transaction growth and efforts by the European Commission and European Central Bank to curb cash use, RBR finds that cash continues to dominate retail payments in Europe.
Cash payments accounted for 78 percent of the continent's 388 billion retail-payment transactions in 2008. For all of those transactions, the total cost of distributing, managing, handling, processing, recycling and accepting cash was €84 billion — the equivalent of 0.6 percent of Europe's GDP, or €130 per person.
 
RBR says, based on its research, that previous attempts to justify the economics of cash substitution in Europe are no longer relevant. RBR supports a new approach that is based on establishing a business case for different players in the payments market, especially for retailers. Many large U.K. retailers, for example, have stopped accepting checks for payment.
Cash substitution will be driven by numerous factors, including the Payment Services Directive, the Single Euro Payments Area, interchange fees and merchant service charges. RBR says contactless (EMV) cards and mobile phones offer opportunities for increases in the number of cashless payments and it expects to see a significant increase in the use of contactless cards in countries such as France and the United Kingdom, beginning this year.
 
The number of cash payments is forecast to fall 2.3 percent annually in Europe through 2014. Despite that slow decline, cash will remain the dominant payment method, representing 63 percent of mainland Europe's 414 billion payments in 2014.
In its new study, "The Future of Cash and Payments", RBR includes retail payments research from 28 European countries, and for comparison, offers some information about payments in Australia and the United States. The study looks at the economics and business cases for cash substitution and evaluates the drivers that affect the cost and usage of different payment methods.

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