We are constantly reading about the FinTech revolution and how new disruptive technology and FinTech developments will change our lives forever. However on a world trip with my husband, where we are currently cycling from London to Auckland, New Zealand, it has been interesting to note that despite this revolution supposedly changing how we manage our money and pay for things, cash is still king in Europe, – with card payments coming a close second.
So far we have travelled through the Netherlands, Germany, Denmark, Norway, Sweden, Poland, the Czech Republic, Austria, Slovakia and Hungary, taking in capital cities, large cities, towns, villages and rural countryside. Aside from the cultural nuances, our experience with making payments has varied throughout – and the cash and card combination is definitely the easiest and safest.
So why, despite the plethora of mobile payment options that are currently available is cash and card still preferable for the international traveller?
Firstly, despite the supposed revolution of mobile payments, they are still in their infancy and tend to be for small payments; so paying for large purchases such as accommodation isn’t possible.
Secondly they rely on the seller having the technology to operate a mobile wallet (as well as the buyer having a charged mobile device, which isn’t always the case on extended international trips like ours!). As mentioned earlier, our travels are taking us through small towns and rural countryside, dealing with small businesses and cottage industries such as fruit sellers and accommodation providers, many of which deal only is cash.
No cash means no purchase unfortunately.
There is no global mobile wallet standard
This was discussed in a recent blog by Chris Skinner where he specifically mentions that he cannot travel the 43km from Copenhagen, Denmark to Malmo, Sweden with the same mobile payment app, because their mobile wallets have no interoperability.
Mobile wallets aside, what is surprising in Europe is that even in 2018 not every business readily accepts card payments, which means that there is still a real necessity to carry cash; and this varies from country to country.
A quick précis of our observations per country on our trip so far
Netherlands – very easy with cash, contactless and card accepted in every business we dealt with. We were impressed with the ability to choose the denomination of notes on cash withdrawals at ATMs (which was also the case in the Czech Republic and Slovakia).
Germany – surprisingly still very cash focused and many restaurants and accommodation venues in large towns and cities do not accept cards. So, travelling throughout the country with only a card, would be problematic.
Denmark, Norway, Sweden – cash, card and contactless readily accepted everywhere, even on small remote campsites. What was interesting here was that we expected to have problems accessing ATMs as we had been told that they were almost cashless societies – especially Sweden.
That proved to be entirely unfounded and we had no problems accessing ATMs or paying by cash wherever we travelled. And card payments are far more more normalised there as even our tour guide on a “free” walking trip offered card payment as a method by which to tip him.
Poland, Czech Republic and Slovakia – cash and card accepted easily everywhere. Despite the widespread use of contactless and card, Poland had a huge network of ATMs – the biggest one in any of the countries we have visited so far, so cash is still definitely king here.
Austria – surprisingly still very cash-based, even in Vienna, where even a busy hairdressing salon in the city centre only accepted cash.
Hungary – cash and card widely accepted in cities and main towns. However cash was still the safer option to have when travelling into smaller towns and villages although there didn’t appear to be as extensive an ATM network as in other Eastern European countries we visited.
This dominance of cash as the global payment of preference is highlighted in a recent report by G4S, where 79% of point of sale transactions in Europe are in cash.
On a worldwide basis, this cash is king view is also supported by the Bank for International Settlements (BIS), which issued a report in March 2018, highlighting that cash still rules.
Data from from the Guardian newspaper contradicts this thinking somewhat by stating that cash usage is on the wane in the U.K.
But it is card and contactless payments that are replacing it – not mobile.
Where does FinTech fit in?
So if cash is still king and card payments are a close second, where does FinTech fit in?
- – These cards are free to anyone and everyone.
- – They provide the flexibility of being able to withdraw cash, or pay by card or contactless, depending on what is required – and one card works internationally.
- – I don’t get hammered by the ridiculous charges for withdrawals and card payments in foreign currencies that my high street bank charges.
- – I don’t get ripped off by extortionate exchange rates. The rates provided are way more competitive than anything provided by my bank.
- – Uploads from my bank account via an App on my phone to the card are instantaneous, so for the long term traveller like myself it’s easy to manage on a real-time basis.
It’s digital banking at its best and more of an enhancer than a disrupter I would say. I don’t see it as disruptive because it’s as easy as using my bank card back in the UK; it’s more of travel “enhancer” because it’s so easy, cheap and uncomplicated to use that it is a real benefit to the international traveller (How people used to travel with travellers cheques and no internet, not SO many years ago still amazes me!).
It’s definitely the one FinTech development that has made a difference to me over the past few years, and on my current trip it has been, and continues to be, invaluable.
FinTech rules where cash is still king
While cash is still king, accessing it as quickly and cheaply as possible on international travel is a must, as well as the ability to pay using the card directly if required.
And for that reason pre-paid currency cards such as Revolut or CaxtonFX are a must – with one one caveat….always make sure your payment is in the local currency, not converted back to Sterling; otherwise you get charged an exchange rate as extortionate as that of your local high street bank, which can add up to quite a lot when used over an extended period of time.
As an example in a recent £300 equivalent cash withdrawal in Hungary. the fixed rate offered to me at the time of withdrawal was £11 more than I was charged by Caxton FX!
So even if you only holiday abroad once a year, if you haven’t joined this FinTech revolution you are definitely missing out. Regardless of how little or often you use it, you will still be quids in – and “every little helps” as they say!
If you would like to keep up with Martina’s adventures you can read regular updates on her trip through her blog here.