Is the end nigh for physical money?

Physical money has been around for thousands of years, but there’s no certainty it will survive the next decades. The growth of digital payments has put its future in jeopardy – but is the demise of cash really imminent?

Despite occasional alarmist predictions, it’s clear that the end of physical money is not quite around the corner. In 2024, cash was the most frequently-used payment method at points of sale in 14 out of 20 eurozone countries, according to a study by the European Central Bank, although the overall proportion of’ transactions conducted with physical money had fallen from 59% in 2022 to 52%.

However, there are marked differences from country to country. In Slovenia, Malta, Austria and Italy, the share of cash payments was still over 60% in 2024, but it was less than 30% in Finland and the Netherlands. In Britain, another digital payments leader, cash accounted for only 12% of payments in 2023, when around 39% of the country’s adults already lived largely cashless lives, according to trade body UK Finance. The stand-out leader is Sweden, where as of 2025 only 10% of all purchases were in cash.

Second thoughts in Scandinavia?

The embrace of electronic payments in Sweden appears to be bearing out the prediction made in 2018 by then Riksbank deputy governor Cecilia Skingsley, who famously predicted that the country’s economy would be largely cashless by 2025. Skingsley – now head of the Bank for International Settlements’ Innovation Hub – said at the time: “If you extrapolate current trends, the last note will have been handed back to the Riksbank by 2030.”

However, today the Swedish authorities are taking a more nuanced view. In December 2024 the Stockholm government published the findings of an inquiry that proposed requiring some public and private entities to accept cash if citizens insisted on it, a recommendation endorsed by the central bank. At present , while cash is legal tender in Sweden, shops and restaurants can effectively go cashless as long as they make any restrictions on payment methods clear to the public. The Riksbank has also discontinued preparations to launch its e-krona digital currency.

Nevertheless, the global trend toward digital payments appears unlikely to go into reverse. According to McKinsey, digital payments in the United States and Europe, including apps, online and in-store payments, amounted to around $10 trillion in 2024. A similar level of adoption is evident in some Asia-Pacific markets, especially in China, for example in Hong Kong, while it is growing rapidly in Malaysia and Singapore. There, as in Africa, digital payments are seen as a means to boost financial inclusion and enable individuals with difficulty accessing banking services to participate in the financial system.

Regulators and policymakers see the importance of encouraging the shift to electronic payments.

Growth of open banking

Regulators and policymakers see the importance of encouraging the shift to electronic payments. Eurozone members have established the Single Euro Payments Area, which aims to harmonise standards between countries for instant payments. Despite some early obstacles, open banking – opening up banking systems to financial technology firms such as payment providers – is steadily gaining ground.

The EU has set a benchmark for regulators across the globe in establishing legal requirement for legacy banks to put in place application programming interfaces to enable fintech firms to offer innovative digital-based services to the banks’ customers.

However, the concern in Norway and Sweden about vulnerability to cyber-attacks from abroad is just one of the barriers on the road to a completely cashless society. Even without taking into account malicious disruption, the fact that digital payments are reliant on energy and communications networks means cash is the sole emergency payment option. Electronic payments are also vulnerable to system failures on the part of banks and other providers that might affect the ability to buy and sell goods.

Even without taking into account malicious disruption, the fact that digital payments are reliant on energy and communications networks means cash is the sole emergency payment option.

Payment system outages, whether involving banks or international card networks such as Visa and Mastercard, continue to take place frequently enough for raise concern among policymakers. In July 2024, US cyber-security company CrowdStrike distributed a faulty update to its software that crashed the Microsoft Windows operating systems of users, causing disruption to businesses including airlines, banks, hotels and retail outlets as well as governmental services, and leading to worldwide financial damage estimated to have reached at least $10 billion.

Vulnerability to crime

There are also significant concerns about the vulnerability of electronic payment systems to criminals – although a contrary argument is that the use of cash itself can benefit wrongdoers by making money more difficult to track. EU central banks are in the process of phasing out €500 banknotes because large-denomination notes are viewed as being more useful for tax evasion and money laundering than they are in legitimate transactions.

Harvard academic Peter Sands argues that large-denomination banknotes make perpetrators of criminal transactions less conspicuous than if they required large quantities of smaller-value notes. The issue of €500 notes was discontinued in 2019 but they remain legal tender until further notice.

For businesses, managing payments electronically is not only more efficient and cheaper, but makes them less vulnerable to the risk of physical attack resulting from storing cash on their premises. That is also a benefit for individuals, although it means that certain segments of society, notably the elderly, are more vulnerable to physical attack because they are disproportionately more likely to carry cash.

Business preference for card payments

The most recent edition in 2024 of the Companies’ Survey on Cash, a report conducted by the European Central Bank on business attitudes toward payment methods, found that cash remained the most accepted means of payment across the euro area, with 88% of companies accepting cash payments, followed by payment cards with 85%, credit transfers (78%), direct debits (51%) and online or mobile payments (37%). Of the companies that accept cash, 94% expected to continue doing so over the following five years.

However, 37% of companies said they preferred card payments, compared with 25% favouring cash payments and 21% credit transfers. Although businesses said their most important criteria were security (94%) and reliability (92%), they generally regarded cash as better in terms of overall cost, reliability and privacy compared with cards and mobile payments.

In the ECB’s latest survey of individuals’ attitudes, also in 2024, 55% of euro area consumers reported a preference for cards and other cashless payments when paying in shops, compared with 22% who favoured cash – a result unchanged from the previous survey in 2022.

Reassurance, security and privacy

But the majority of consumers who considered it important or very important to have cash as a payment option increased from 60% in 2022 to 62%, citing its anonymity and protection of privacy, as well as a perception that it makes it easier to keep track of spending. Meanwhile 58% of consumers were concerned about their privacy when performing payments or other banking activities using digital channels.

While nearly 90% of eurozone consumers said they were satisfied with their access to cash from banks or ATMs, the proportion had dipped slightly in 2024, possible reflecting the contraction of bank branch networks in many countries as well as the increasing share of ATMs operated by third-party providers that charge fees.

Physical money has its limitations – it can be lost, stolen or inadvertently put through the washing machine – but for many people, it still represents reassurance and security. For some, physical money is also a symbol of freedom against an intrusive state and corporate accumulation of data. While in some countries cash is already losing its central role in society, it seems unlikely that anyone will be handing back the last euro notes and coins to the ECB any time soon.