IDEAS home Printed from https://ideas.repec.org/a/vrs/ecoreg/v18y2025i2p206-219n1007.html

The Importance of Cash and a SWOT analysis of the Limits on Cash Payments

Author

Listed:
  • Apanel Adrian Paweł

    (Institute of Finance, Faculty of Economics and Sociology, University of Lodz, Poland)

Abstract

Subject and purpose of the study The subject of the study was the characteristics of cash payments, their role in the payment system and the changing preferences of consumers toward cash and non-cash transactions. The purpose of the research was to gain knowledge about the importance of cash payments in everyday transactions, to assess their advantages and disadvantages compared to non-cash payments, and the effects of cash payment limits on the economy and society. The following research hypothesis was formulated: cash payments, despite the growing popularity of non-cash transactions, still play an important role in everyday transactions, and the introduction of cash payment limits, while it may contribute to increasing financial transparency and reducing the shadow economy, comes with challenges, such as digital exclusion and limiting consumers’ freedom of choice. Materials and methods Statistical data mainly from reports of the National Bank of Poland and the European Central Bank on cash and non-cash transactions in Poland and the European Union were analyzed. A SWOT analysis was used to assess the consequences of introducing cash payment limits. A literature study was also conducted and the results of an empirical study by the NBP, based on diaries recording consumers’ daily transactions, were presented. Results The results of the study showed that despite the growing popularity of non-cash transactions, cash payments remain an important part of the payment system, especially in low-value transactions. Seasonal changes in the number of cash transactions are associated with the holiday and Christmas seasons. Cash is characterized by high accessibility, immediacy and anonymity, which is valued by consumers. Conclusions Limits on cash payments contribute to improving financial transparency and reducing the risk of financial crime and the shadow economy, among other things, but they also come with challenges, such as digital exclusion and potential data privacy issues. Decisions on the introduction of limits should take into account both potential benefits and risks to ensure the sustainability of the payment system. The proposed SWOT analysis is a versatile tool that can support various actors in evaluating and optimizing financial policies at different levels, both nationally and internationally.

Suggested Citation

  • Apanel Adrian Paweł, 2025. "The Importance of Cash and a SWOT analysis of the Limits on Cash Payments," Economic and Regional Studies / Studia Ekonomiczne i Regionalne, Sciendo, vol. 18(2), pages 206-219.
    • Handle: RePEc:vrs:ecoreg:v:18:y:2025:i:2:p:206-219:n:1007
    DOI: 10.2478/ers-2025-0017
    as

    Download full text from publisher

    File URL: https://doi.org/10.2478/ers-2025-0017
    Download Restriction: no
    File URL: https://libkey.io/10.2478/ers-2025-0017?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Klee, Elizabeth, 2008. "How people pay: Evidence from grocery store data," Journal of Monetary Economics, Elsevier, vol. 55(3), pages 526-541, April.
    2. Agnieszka Huterska & Anna Iwona Piotrowska & Joanna Szalacha-Jarmużek, 2021. "Fear of the COVID-19 Pandemic and Social Distancing as Factors Determining the Change in Consumer Payment Behavior at Retail and Service Outlets," Energies, MDPI, vol. 14(14), pages 1-18, July.
    3. Michael Cohen & Marc Rysman, 2012. "Payment choice with consumer panel data," Working Papers 13, University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy.
    4. John Bagnall & David Bounie & Kim P. Huynh & Anneke Kosse & Tobias Schmidt & Scott Schuh, 2016. "Consumer Cash Usage: A Cross-Country Comparison with Payment Diary Survey Data," International Journal of Central Banking, International Journal of Central Banking, vol. 12(4), pages 1-61, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Arango, Carlos & Huynh, Kim P. & Sabetti, Leonard, 2015. "Consumer payment choice: Merchant card acceptance versus pricing incentives," Journal of Banking & Finance, Elsevier, vol. 55(C), pages 130-141.
    2. Claire Greene & Shaun O'Brien & Scott Schuh, 2017. "U. S. consumer cash use, 2012 and 2015: an introduction to the Diary of Consumer Payment Choice," Research Data Report 17-6, Federal Reserve Bank of Boston.
    3. Joanna Stavins, 2017. "How Do Consumers Make Their Payment Choices?," Consumer Payments Research Data Reports 2017-1, Federal Reserve Bank of Atlanta.
    4. Claire Greene & Scott Schuh & Joanna Stavins, 2018. "The 2012 diary of consumer payment choice," Research Data Report 18-1, Federal Reserve Bank of Boston.
    5. Carbó-Valverde, Santiago & Cuadros-Solas, Pedro J. & Rodríguez-Fernández, Francisco & Sánchez-Béjar, José Juan, 2023. "Mobility restrictions and payment choices: The case of the Covid-19 pandemic," Journal of Behavioral and Experimental Finance, Elsevier, vol. 40(C).
    6. Tamás Briglevics & Scott Schuh, 2020. "This Is What's in Your Wallet...and Here's How You Use It," Working Papers 20-04, Department of Economics, West Virginia University.
    7. Martin Brown & Nicole Hentschel & Hannes Mettler & Helmut Stix, 2020. "Financial Innovation, Payment Choice and Cash Demand - Causal Evidence from the Staggered Introduction of Contactless Debit Cards," Working Papers on Finance 2002, University of St. Gallen, School of Finance.
    8. Martin Brown & Nicole Hentschel & Hannes Mettler & Helmut Stix, 2020. "Financial Innovation, Payment Choice and Cash Demand – Causal Evidence from the Staggered Introduction of Contactless Debit Cards (Martin Brown,Nicole Hentschel, Hannes Mettler, Helmut Stix)," Working Papers 230, Oesterreichische Nationalbank (Austrian Central Bank).
    9. Arifovic, Jasmina & Duffy, John & Jiang, Janet Hua, 2023. "Adoption of a new payment method: Experimental evidence," European Economic Review, Elsevier, vol. 154(C).
    10. Rodrigo Lluberas, 2014. "How people pay in Uruguay: the role of transaction characteristics," Documentos de trabajo 2014005, Banco Central del Uruguay.
    11. Joanna Stavins & Huijia Wu, 2017. "Payment discounts and surcharges: the role of consumer preferences," Working Papers 17-4, Federal Reserve Bank of Boston.
    12. Marc Rysman & Scott Schuh, 2017. "New Innovations in Payments," Innovation Policy and the Economy, University of Chicago Press, vol. 17(1), pages 27-48.
    13. Tobias Trütsch, 2016. "The impact of mobile payment on payment choice," Financial Markets and Portfolio Management, Springer;Swiss Society for Financial Market Research, vol. 30(3), pages 299-336, August.
    14. Rodrigo Lluberas & Joaquín Saldain, 2014. "Paper or plastic? Payment instrument choice in Uruguay," Documentos de trabajo 2014007, Banco Central del Uruguay.
    15. Oz Shy, 2021. "Consumer Use of Multiple Payment Methods," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 58(3), pages 339-355, May.
    16. Francesco Flaviano Russo, 2020. "Cash Thresholds, Cash Expenditure and Tax Evasion," CSEF Working Papers 579, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    17. Constanza Martínez Ventura, 2019. "The use of cash and debit cards as payment instruments in Colombia," Lecturas de Economía, Universidad de Antioquia, Departamento de Economía, issue 90, pages 71-95, Enero - J.
    18. Brown, Martin & Hentschel, Nicole & Mettler, Hannes & Stix, Helmut, 2022. "The convenience of electronic payments and consumer cash demand," Journal of Monetary Economics, Elsevier, vol. 130(C), pages 86-102.
    19. John Bagnall & David Bounie & Kim P. Huynh & Anneke Kosse & Tobias Schmidt & Scott Schuh, 2016. "Consumer Cash Usage: A Cross-Country Comparison with Payment Diary Survey Data," International Journal of Central Banking, International Journal of Central Banking, vol. 12(4), pages 1-61, December.
    20. Justus Meyer & Federica Teppa, 2023. "Euro area consumers' payment behaviour and banking digitalisation," Working Papers 772, DNB.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Systems; Standards; Regimes; Government and the Monetary System
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:vrs:ecoreg:v:18:y:2025:i:2:p:206-219:n:1007. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.sciendo.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.