Maltese still in love with their cash, survey shows

Maltese households still prefer to use cash above all other means of payment, a survey has shown.

The research carried out by the Central Bank of Malta also indicated that cards are more popular than cheques as an alternative to cash.
The findings emerged from a survey of the payments habits of the Maltese, which had the goal of providing an insight into the behaviour of households in Malta.

The results were published in the Central Bank’s Annual Report on Wednesday.

The 2018 survey was the second of its kind, and followed a previous study on payment habits carried out in 2013.

The results confirmed that although the use of modern methods of payments has increased, cash remains the preferred way for Maltese households to pay for groceries, consumables, non-consumables, utility bills and wellness services.

Both the survey and additional information based on European Central Bank payments statistics suggest that, when it comes to other payment methods, the Maltese use cards more than cheques.

However, the use of cheques in Malta remains the most prevalent in the European Union. While the average rate of cheque use in the EU is 1.7%, Malta has a usage rate of 17.3%, ahead of Cyprus and France, with 12% and 8.8% respectively.

Accessibility to different payment instruments is up

Compared to 2013, accessibility to the different payment methods and channels has increased across all instruments between 2013 and 2018.

The most significant increases were registered when it came to online payments, direct debits and prepaid cards.

Despite this, these instruments were still perceived to be less accessible than debit cards, credit cards and cheques.

In terms of actual use of the different instruments, 56% of households said they made the same use of payment instruments other than cash and cheques as they did five years ago, while 41.2% said they were using such instruments at a greater frequency.

The most common reason for using particular payment instruments other than cash and cheques emerged as being their convenience, with 60.2% of households citing this.

Efficiency, at 36.7%, and safety and security, at 30.7%, were the next most common reasons behind alternative payment use. Other reasons included the possibility of having a record of payment history, at 15.5%, and the availability of electronic point of sales (EPOS) terminals, at 10.6%.

Cash still king for payment of all goods and services

The survey indicated that cash usage still leads the way as a payment instrument for all goods and services, be they groceries, consumables, non-consumables, utilities and wellness.

A significant 86.7% of households used cash to pay for groceries, 69.1% used it for consumables, and 46% for non-consumables.
Utility bills were paid for in cash by 59.3% of households, and 95.6% use cash to pay for wellness services, which include hairdressers, beauticians and the gym.

Interestingly, cards were the next most frequently used method for households to pay for groceries, while mobile payments were the second most preferred choice for consumables and the preferred option for non-consumables.

The small percentage of households using cards to pay for utilities and wellness services indicates a lack of POS devices in outlets offering such services.

The survey noted that a significant share of households – 37.1% - use online payments to settle utility bills.

It also revealed that cheques were mostly used to pay for non-consumables and, to a lesser degree, utilities, and, predictably, much less for groceries, consumables and wellness services.

A considerable number of households across all age groups indicated that they intend to still use cash over the next five years, with this share ranging from 61.3% for those aged 45-54 to 75.3% for over 55s.

The survey also uncovered, however, that a significant percentage of households intend to make greater use of debit and credit cards in the future, especially households with a young reference person.

Such households also appear to have a higher tendency than others to increase the use of all non-paper payment methods, with two-thirds of those in the 25-34 bracket indicating they intend to increase the use of online payments.

Lack of available electronic means of payment

While Maltese households’ tendency to prefer cash payments might be partly due to their reluctance to change their habits, it could also be a reflection of the lack of availability of alternative electronic means of payment by suppliers or service providers, the survey results conclude.

Although electronic payment instruments are highly efficient and convenient, there may also be constraints from the business community in accepting non-paper means of payment, the results noted.

At the same time, while cash payments still dominate, there was still a shift towards non-paper based payment methods, particularly cards, registered.

Moreover, younger groups are more likely to use multiple payments instruments, reflecting the likelihood that they have been exposed to different payment instruments from a young age.

The study sampled 500 Maltese households, covering 1,118 respondents, and took place in the first quarter of 2018. It was spearheaded by the Regulation and Oversight Office within the Central Bank’s Payments and Banking Department.