A new rule to regulate cash payments will soon come into force.
It was thought to be obsolete: it is not completely abandoned. The banknote has not been completely replaced by bank paper and still appears to have a bright future ahead of it. According to the latest data, half of transactions are still carried out in cash, even if the use of a bank card – even more so given that it takes place via smartphone – is an easy solution.
However, the regulation on the use of the liquid will soon undergo an evolution, as a result of a decision taken at European level. The EU has decided to introduce a maximum amount for cash payments.
From 2027, the law will prohibit any cash payment when an individual buys something from a company, the amount of which exceeds 10,000 euros, in the 27 countries of the European Union, including France. Obviously this only affects a very few people.
In reality, with this regulation, the EU seeks to combat money laundering. “One of our main objectives is to ensure that white-collar criminals can no longer launder their money by purchasing luxury cars, yachts and private jets,” explained Paul Tang, a Dutch socialist MP responsible for compiling this dossier.
This “tightening” of the law will therefore have no impact on ordinary people. Only a few will be affected by this new rule, which will not apply to transactions between two individuals – they are free to decide how they wish to carry out a transaction. Furthermore, this will not take effect immediately. This is only expected from 2027.
This will have consequences especially in Ireland, Scotland, England, Wales, the Netherlands, Luxembourg, Germany, Austria and Cyprus, countries where there is currently no limit in the legislation. No impact, however, for France, Spain and Italy: national laws already provide for a maximum amount of 1000 euros if you wish to pay for a purchase in cash.
How are businesses adapting to the shift towards digital payment methods amidst changing regulations?
Interview: The Future of Cash Payments in Europe
Time.news Editor (TNE): Thank you for joining us today, Dr. Emily Hayes, a financial regulation expert. The news is buzzing about the new regulations on cash payments set to be introduced by the EU. Can you give us an overview of what these changes entail?
Dr. Emily Hayes (EH): Absolutely, and thank you for having me. The new regulation will effectively cap the maximum amount that can be paid in cash for transactions. While this may seem like a drastic shift, it is part of a broader strategy to promote digital payments and combat issues like tax evasion and money laundering.
TNE: Interesting! Many people might assume that cash is already on its way out, especially with the rise of bank cards and mobile payments. What does recent data say about cash usage?
EH: That’s a valid point. Surprisingly, data shows that cash is still very much in circulation. In fact, about half of all transactions are conducted using cash. This indicates that while digital payment methods are convenient and increasingly popular, there is still a significant public reliance on cash, which isn’t going away anytime soon.
TNE: So, this regulation might feel quite significant to many people. What are the implications for consumers and businesses alike?
EH: For consumers, any regulation that limits cash transactions could lead to inconveniences, especially for those who prefer cash for everyday purchases. It’s particularly concerning for those in vulnerable financial situations who may not have access to banking services.
For businesses, the new limits might require a shift in how they conduct transactions. Smaller businesses that rely heavily on cash might need to invest in payment processing systems to accommodate digital payments.
TNE: With half of transactions still being conducted in cash, do you think this regulation is the right approach toward influencing consumer behavior?
EH: That’s the million-dollar question. There is a balance to strike here. On one hand, promoting cashless transactions can streamline operations and increase transaction traceability. On the other hand, if the regulation feels too restrictive or if there is insufficient infrastructure to support digital payments, it may lead to public backlash.
TNE: Considering the societal implications, especially for those unbanked or underbanked, how should regulators approach this transition?
EH: Regulators need to focus on inclusive financial strategies that encompass not just the push for digital payments, but also ensure access to banking services. Educating the public about the new rules and providing viable alternatives for cash-heavy consumers is paramount. Consideration of implementing community support initiatives to aid in this transition would be beneficial as well.
TNE: Dr. Hayes, what do you predict the future looks like for cash in Europe five or ten years down the line?
EH: I think we’ll see a gradual decline in cash usage, but it won’t disappear entirely. Cash will likely coexist alongside digital payment methods, providing a safety net for consumers who prefer tangible currency. The future will be defined by how quickly society can adapt to these regulations and the extent to which digital services can improve accessibility for everyone.
TNE: Thank you, Dr. Emily Hayes, for your insights. This development is certainly a significant step in the evolution of payments in Europe, and your expertise helps illuminate the complexities involved.
EH: Thank you for having me! It’s an important topic, and I’m glad to share my perspective.