Published: 03.04.2024

The most recent (spring 2024) "Payment radar" published by Latvijas Banka suggests that the ratio between non-cash and cash payments in Latvia was 77% to 23% in February 2024. This represents the highest-ever share of non-cash payments.

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

The "Payment radar" is published semi-annually. The development of the ratio of non-cash payments to cash payments and interaction between them (as at February 2024) is the central measurement of the overview supplemented by more detailed numerical information and expert commentaries.

Ratio of non-cash payments to cash payments

In February 2024, the prevalence of non-cash payments grew compared to August 2023. Half a year ago, the ratio of non-cash payments to cash payments was 73% to 27% (a year ago, in February 2023, the ratio stood at 67% to 33%). In February 2024, the average number of payments per capita in a week was 17.1 (compared to 13.8 and 14.3 in August 2023 and February 2023 respectively), including 13.1 non-cash payments and 4 cash payments.

Payment-related modern technologies

The "Payment radar" data suggest that the payment-related modern technologies are playing an increasingly important role. In February 2024, instant payments surged in popularity as they were used by 41% of respondents on a daily basis. This represents a 10 percent point increase from six months ago and an 8 percent point uptick from February 2023. The use of smart phones for payments has also seen a rise, reaching 22.5% (from 19% and 16% in August 2023 and February 2023 respectively). Meanwhile, the share of payments made with contactless cards has remained constant at 68% over the last six months. This is a 5 percent point increase from February 2023.

Aigars Freimanis, Director of SIA Latvijas Fakti, notes in the "Payment radar" that respondents with higher education and higher income use non-cash payment options more actively. Even with relatively lower income levels, respondents aged 15 to 24 years actively embrace the new payment technologies.

"While not too rapidly, payments with both contactless cards and mobile smart phones are steadily increasing. Interestingly, contactless card payments are popular with both young people and pensioners. Smart phone payments are mostly utilised by young people, whereas pension-aged respondents are much more reserved towards this option. Pensioners' reservations may be attributed to the types of smart phones they own. These phones are often older models, changed less frequently, and therefore have limited technological capabilities,"
Aigars Freimanis comments on the situation.

Improving access to cash

The shrinking share of cash payments is one of the reasons why Latvijas Banka has drafted amendments to the Credit Institution Law and submitted them to the Ministry of Finance. Zita Zariņa, Member of the Council of Latvijas Banka, notes in the "Payment radar" that the intention is to supplement the Credit Institution Law with an article outlining specific criteria (for example, that the bank provides payment account-related services) to identify the credit institutions which are significant in the context of ensuring access to cash in Latvia and which would be obliged to ensure the compliance of the cash withdrawal services provided to their customers with certain requirements. Under the current market conditions, four largest banks in terms of the number of customer payment accounts and the holdings of domestic household deposits (Swedbank AS, AS SEB banka, AS Citadele banka and the Latvian branch of Luminor Bank AS) are to be recognised as significant credit institutions in Latvia. They are also critical financial service providers.

The Credit Institution Law will establish several requirements for preserving access to cash. For instance, with regard to ATMs, the primary means of providing cash withdrawal services, the Law will establish requirements for their geographic coverage, uptime, cash withdrawal limits, etc.

"We sincerely hope that the relevant institutions and the Parliament will support the amendments. The role of cash payments, alongside with non-cash payments, remains very important: for example, about 1/4 of all payments and transfers are still made in cash. Cash is also a significant economic security element in various crises,"
underscores Zita Zariņa.
"Up to now, Latvijas Banka has worked to provide people with a choice between different types of money, each having its advantages, and will continue to do so in the future."

Crypto-assets are becoming more accessible

Over the past six months, the crypto-asset markets have witnessed significant developments as elaborated by Reinis Vecbaštiks, Latvijas Banka's expert of modern payments, in his commentary. On 10 January 2024, the US Securities and Exchange Commission approved 11 exchange-traded funds (ETFs) tied to Bitcoin (BTC), the most popular crypto-asset. ETFs are investment funds that are listed on exchanges, and they can contain several asset classes, for example, stocks, bonds, currency instruments, commodities, etc.

The inclusion of crypto-assets in ETFs and their trading on traditional exchanges will provide opportunities for more people to invest in BTC. Until now, acquiring crypto-assets was relatively complicated. It could be done on specialised exchanges or using dedicated digital wallets. Events of the last few months have facilitated high volatility in the BTC price as it reached historical highs before experiencing a marginal decline.

"The current developments in the crypto-asset world suggest that, given the close interconnectedness in this market, significant value fluctuations could be expected not just in the case of BTC, but for other crypto-assets as well. Anyone willing to invest in crypto-assets should be aware of the inherent risks and various external factors with a potential effect on the value of those assets,"
underscores Reinis Vecbaštiks.

These developments are also felt in Latvia. According to a February 2024 survey conducted by SIA Latvijas Fakti, 94% of Latvia's population have heard of crypto-assets (a year-on-year increase of 9 percentage points). The share of people with experience in holding crypto-assets has also grown from 4% to 7% over a year.


The sociological survey data and detailed information

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