Cash vs. Digital: Determinants of Payment Preferences in the Euro Area
Cash vs. Digital: Determinants of Payment Preferences in the Euro Area

Author(s): Elkjer Qema, Kushtrim Braha, Artan Qineti
Subject(s): Politics / Political Sciences, Politics, Economy, EU-Approach / EU-Accession / EU-Development, Financial Markets, ICT Information and Communications Technologies, Socio-Economic Research
Published by: Университет за национално и световно стопанство (УНСС)
Keywords: payment preferences; cash; digital payments; digital literacy; privacy; euro area
Summary/Abstract: This study examines the determinants of consumer payment preferences in the euro area using data from the European Central Bank’s Study on the Payment Attitudes of Consumers in the Euro Area (SPACE 2024). Although digital payments are increasingly prevalent, cash remains a significant medium of exchange. Understanding the drivers behind consumer choices is essential for shaping monetary policy, financial inclusion, and retail payment strategies. Drawing on questionnaire responses, we analyze how socioeconomic factors, digital capabilities, and trust-related concerns influence preferences for cash versus digital methods. Using logistic regression with country fixed effects, we find that income, education, digital literacy, and privacy concerns are the strongest predictors of digital payment preference. Higher-income individuals are more than three times as likely as lower-income groups to prefer digital methods, while tertiary education increases digital preference by over 60%. Digital literacy raises the odds by about 25%, whereas privacy concerns lower them by around 40%. In contrast to prevailing assumptions, age exhibits no significant effect after controlling for other variables. Likewise, gender and technical issues do not demonstrate statistically significant associations with payment preferences. The findings underscore that economic inclusion, digital skills, and trust-building are more critical than demographics for digital adoption. These insights provide policymakers and payment providers with evidence to design inclusive, secure, and consumer-oriented payment systems across the euro area.

• Details
• Contents