Cash Is King In Poland, But How Long Will Its Reign Last?

In 2015 alone, Polish consumers spent more than €194 billion in cash, according to new PYMNTS research. Its reign has been volatile, however, and modern payment methods appear to be taking a run at the throne. Find more insights, along with an interview with Joanna Erdman, director of core service and non-banking products at mBank, one of Poland’s largest banks, inside the hot-off-the-presses Global Cash Index™ Poland Analysis.

In Poland, cash is still on top.

But it may have to share its throne in coming years.

According to data revealed inside the brand new Global Cash Index™ Poland Analysis, cash is still remarkably popular in the Eastern European country, despite its economic volatility in recent years. In 2008, 90 percent of retail transactions in Poland were made using physical currency, double the percentage of cash transactions in the U.S. and more than 30 percent greater than the U.K.

In fact, some might even say that euros are royalty in the Eastern European nation.

“In Poland, it’s fair to say that cash is still king,” stated Joanna Erdman, director of core service and non-banking products at mBank, one of the largest banks in Poland.

PYMNTS recently caught up with Erdman to discuss the state of cash in Poland and the future of payments in the country.

Cash’s reign, however, could be coming to an end. research shows that Polish consumers are being lured away from cash by new digital forms of payment.

The Index Analysis predicts that Poland’s cash share will continue to decline, dropping by 9 percent over the next five years, and Erdman noted that new technologies, such as contactless payments and mobile wallets, are already being adopted by consumers around the country.

Cash’s volatile reign

According to the research inside the Index Analysis, cash is still the preferred payment method in Poland, and Erdman said she has seen evidence of its popularity.

According to PYMNTS’ research, Polish consumers spent a total of €194.5 billion in cash in 2015, while spending just €45.53 billion with debit or credit cards. That means that, for every euro Polish consumers spent via credit or debit card, they spent nearly €5 in cash.

What’s more, ATMs, which are the primary way by which Polish citizens obtain cash, along with over-the-counter withdrawals, have seen increased usage of late. Since 2000, there has been a significant increase in the number of ATM terminals in Poland, up to 20,531 ATMs in 2014 — a 289 percent increase over the 5,266 ATM terminals operating at the turn of the century.

But while cash may still be king in Poland, its time at the top has been tumultuous, to say the least. Historically, the country has suffered several economic crises that have affected the value and use of cash and caused its use to vary considerably as a result.

Most recently, cash share usage in Poland experienced a surge from 2000 until 2007. During that period, the cash share increased to 59.7 percent of the country’s GDP from 48.7 percent. It has since fallen drastically, however, sinking below the 2000 level to 41 percent of GDP as of 2015.

Erdman said that cash is still remarkably popular in Poland but also noted that it currently seems to be in a period of decline, one that may be more severe than the rises and falls of years past.

“[Cash usage] definitely still exists and is a huge part of consumer spending, but we are seeing some trends that are changing the picture,” Erdman said. “The adoption of contactless cards and mobile wallets has been progressing quickly, especially among young consumers.”

Changing consumer behavior

While cash may have rebounded from other decreases during Poland’s history, it may not do so again.

New payment technologies are quickly being adopted all over the world, including contactless credit and debit cards and mobile wallets that allow users to pay with their phones, such as Apple Pay and Android Pay.

And while Poland may be a long way from the tech hub of California’s Silicon Valley, its citizens seem especially eager to adopt these new solutions.

Erdman also noted that cash on delivery, which was, in the past, the only way to pay for goods ordered via mail order or the internet, is decreasing, as online merchants offer more payment options and more consumers feel comfortable spending time and shopping on the web.

“Customer behavior is changing,” Edman said. “We have observed more and more customers paying with cards and more and more customers paying via the internet or with some other method separate from cash.”

PYMNTS’ research found that Polish consumers have recently been embracing new payment solutions. The Index Analysis cites a recent survey from Visa, which reports that about 79 percent of Polish mobile phone users have made a mobile payment in the past year.

Will a new king rise to the throne?

Poland is currently undergoing a stark increase in the use of modern technology, which could mean a lower usage of cash.

The number of smartphone users in the country now represents less than 50 percent of the population, but the Index Analysis forecasts this figure will grow to include 65 percent of the adult population by 2019. The research also indicates that there are roughly 4 million users of mobile banking.

Erdman said that she has seen firsthand an increase in the use of modern payments, such as credit or debit cards and mobile wallets, and she expects them to become more popular.

Most users of these new payment types are young people, Erdman said, adding that, as more tech-savvy young consumers enter the market, modern payment technology is likely to become even more widespread.

So, will cash stay on top in Poland, or will mobile payments have their moment in the sun?

We’ll have to wait and see if the recent decline in cash share portends cash’s coregency with other methods over the Polish payments landscape.

To download the analysis, click below…

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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.



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