Lithuania’s Lasting Love Of Cash

Call it an oldie but goodie. The latest research from the hot-off-the-presses Q3 2016 PYMNTS Global Cash Index™ is in, and it proves that cash use is alive and well in Eastern Europe, with $1.3 trillion being spent by Eastern European consumers in 2015. For other key takeaways, along with insights from the Bank of Lithuania’s head of the market infrastructure policy division, Tomas Karpavicius, check out the latest index.

Lithuania loves cash.

The latest research from the Q3 2016 Global Cash Index™ is in, and when compared to its Eastern European neighbors, Lithuania leads the way in total cash spending as a share of its GDP, also known as the cash share of the wallet.

And while some have speculated that modern payment methods, such as credit and debit cards and mobile wallets, will spell the end of days for cash, it continues to thrive. It is still the most widely accepted form of currency, and its tangible nature continues to give consumers a feeling of security in times of upheaval, be it economic or political. In fact, our research estimates a $300 billion increase in the amount of cash in the Eastern European market between 2015 and 2020.

According to Tomas Karpavičius, head of the market infrastructure policy division of the Bank of Lithuania, the country’s love of cash is driven in large part by the sense of familiarity, safety and habit it generates among consumers.

“People don’t tend to change their habits, and they are used to cash and feel safe about using it,” he explained.

PYMNTS caught up with Karpavičius about cash, Lithuania and the country’s future.


Old Habits Die Hard

While cash is still used fairly frequently by young Lithuanians, it is most loved by the older population, which is particularly wary of the costs that can come with modern payment methods, Karpavičius told PYMNTS.

“Older people are much less likely to change their habits, while younger people are more open to new payment methods,” he said. “They are used to spending cash — they’re familiar with it and view it as a currency that is free of charge to use, as opposed to payment cards and other payment services.”

Regardless of the spender’s age, cash is often favored because consumers feel it is a more reliable form of currency, Karpavičius explained. In Eastern Europe, where political unrest and economic insecurity are woven into the recent history of the region, spending cash is seen as more secure than using credit to make purchases or investing.

“The level of income also influences the usage of cash,” Karpavičius said. “People who have low income … tend to use cash more than cards because they worry about their spending or being charged a fee.”

Ron Delnevo, executive director of the ATM Industry Association (ATMIA) in Europe, agreed. He noted that cash is also favored by consumers in developing countries who may not have access to modern payment methods or lines of credit.

“In Greece, when there were economic problems, [cash] usage went up,” Delnevo said. The country’s residents felt insecure during this time and didn’t want to spend too much or face high interest rates, so they preferred using cash over cards, he said.

Delnevo’s sentiments are backed up by our research. According to the index, wealthier countries and consumers tend to use more cards and less cash as a percentage of total spending, and cash is more popular in Eastern Europe than it is among its wealthier neighbors in the West.


Outpacing Its Peers

Among all the Eastern European countries, when it comes to cash usage, Lithuania prefers cash most of all.

It has a cash share of 86.5 percent, the highest among the 14 countries studied for this index. The country outdoes second place finisher Croatia by more than 15 percent.

Cash usage in Lithuania can be characterized by the following ratio, according to Karpavičius: “For every euro spent via debit or credit cards at the POS, we have more than €2 being taken out from the ATM.”

While many countries in the region have heavy cash usage compared to Western Europe, Lithuania also tops border nations, such as Latvia and Poland, Delnevo noted. Lithuania’s spending far exceeds those countries, which have cash shares of 29.3 percent and 41 percent, respectively, according to the index.

Karpavičius credits Lithuania’s strong preference for cash in some part to the country’s lack of innovations.

For example, many POS systems in the country still cannot accept more modern forms of payment, including credit and debit card advancements, such as contactless, said Karpavičius. And mobile payments have yet to make a major impact in Lithuania.

“Mobile wallets are used mostly by technologically advanced users, and while they’re becoming more and more popular, they are still largely insignificant,” Karpavičius said. “For now, mobile wallets are just taking the first steps in terms of popularity.”


What’s To Come For Cash?

In Lithuania, there are 1,170 ATMs around the country, a number that is decreasing as more consumers turn to mobile banking apps, Karpavičius told PYMNTS. While the rise in popularity for these apps, along with an increase in use of card and mobile wallet technology, may mean a decrease in cash’s dominance, he said, it will not spell its doom.

The largest portion of Lithuania’s nearly 3 million citizens still live and work in rural areas and therefore depend on cash, Karpavičius said. He also cited a “shadow economy,” or black market, that, according to some estimates, occupies around one-quarter of the country’s economy and relies on cash. This market alone will keep the method in use, he said.

“We think the popularity of cash will gradually decline, but it is not going to disappear,” he added.

While credit and debit cards, mobile wallets and mobile banking apps may have their effect on the use of cash around Eastern Europe, the love of cash is here to stay.

Editor’s note: The data cited in this article, unless otherwise attributed, was sourced from research. It is independent of the Bank of Lithuania’s findings regarding the state of cash.


About The Index

The Global Cash Index™, a Cardtronics collaboration, focuses on the use of cash for making payments and as a payment method that equally plays a role with cards, checks, direct debit and other methods of settling up between consumers and businesses. Unlike most reported estimates of cash, our proprietary data analysis focuses on the use of cash for making payments rather than hoarding.

To download the 2016 Q3 PYMNTS Global Cash Index™, fill out the form below.

Your Corporate Email (required):



The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.

Click to comment