Published: 25.03.2021

During the last six months we have experienced the continued Covid-19 pandemic and seen its impact on payment habits in Latvia. According to the March 2021issue of the "Payment Radar" of Latvijas Banka, non-cash payments continue to strengthen their position. 

The "Payment Radar" contains the latest information on money usage habits of Latvia's households, businesses and the public at large. The "Payment Radar" is published semi-annually and available on Latvijas Banka's website ( Development of the proportion and interaction between non-cash and cash payments (as at February 2021) is the central measurement of the overview supplemented by more detailed numerical information and experts' commentaries.

Highlights of the latest issue of the "Payment Radar" are as follows:

– the share of non-cash payments in the total volume of payments is gradually picking up; the proportion of cash and non-cash payments made by one inhabitant of Latvia constitutes 27% and 73% respectively (32% and 68% respectively in August 2020);

– as people adapted to life under the Covid-19 pandemic, the second half of 2020 saw a more than 10% increase in the share of non-cash payments which more than offset the drop observed in the first half of 2020;

– the use of instant links continues to follow an upward path (the number of instant links exceeded 400 000 in March). In February 2021, 26% of instant payment users made instant payments by just indicating the payee’s mobile phone number (20% in August 2020), while 54% of the others were aware of this service (46% in August 2020);

almost one third (31%) of Latvia’s inhabitants has heard about the potential introduction of a digital euro in the future. When asked about the digital euro, the most frequent opinion of the respondents (35%) was that it should be a universal means of payment which could be used in different ways;

currency security reports further positive developments – 931 counterfeits were identified in 2020 (compared to 1063 counterfeit euro banknotes and coins in 2019);

the number of people who believe that low denomination coins, i.e. 1 cent and 2 cents should be withdrawn from circulation reports a slight increase (46% of the respondents said so in February 2021, while this number was 43% in August 2020). The number of people who think that the 1 cent and 2 cent coins should be retained in circulation remains stable (48% in February 2021 and 49% in August 2020);

the satisfaction of the population with the cash availability reports a small decrease. In February 2021, more than 3/4 or 78% of the people were completely or rather satisfied with the possibilities to withdraw cash from their bank accounts (6 percentage points less than in August 2020). 11% of the respondents (or 3 percentage points more than in August 2020) assessed the possibilities to withdraw cash from their account as critical.

The "Payment Radar" employs the results of the population survey carried out by a market and social research agency SIA LATVIJAS FAKTI in February 2021. Aigars Freimanis, Director of SIA LATVIJAS FAKTI, Deniss Fiļipovs, Head of the Payment Systems Policy Division of the Payment Systems Department of Latvijas Banka, Zita Zariņa, Member of the Council of Latvijas Banka, Jānis Blūms, Head of the Cash Department of Latvijas Banka, and Aleksandrs Antiņš, Head of the Cash Technology Division of the Cash Department of Latvijas Banka, have commented on the recent trends in the development of non-cash and cash use.

"The first conclusion following from the result analysis is quite trivial – the curfew and all the other restrictions imposed during the Covid-19 pandemic reduce the total amount of payments made by cash or by a payment card. Consumers make a large share of such payments while being outside their homes; however, such payment possibilities have dropped sharply under the circumstances of the pandemic restrictions. It also seems quite logical that, under the curfew, consumers more often make payments via the internet", Aivars Freimanis notes. "The picture changes dramatically if total non-cash payments (payment cards + internet) are compared to cash payments. Cash payments have decreased, while the total level of non-cash payments has remained almost the same compared to the pre-pandemic period (since 2019). It is yet another small evidence that non-cash payment possibilities make life easier also under the pandemic."

"The pandemic has been an important trigger for consumers to switch to the digital world and has encouraged considerable changes in e-commerce which are very likely to stay. Although e-commerce reported a sharp drop in the number and volume of transactions in spring, the year 2020 forced many people to gain their first online shopping experience, and it turned out that it is neither difficult nor burdensome. No doubt, it will also promote the overall digital skills of the public at large", Deniss Fiļipovs describes the changes in the public's payment habits. "Even though the pandemic has not affected payments by card, the dramatic increase in the usage of contactless cards is remarkable indeed."

"People have truly diverse opinions on the need for a new digital form of the euro and its inherent opportunities. This is entirely understandable, given that substantial research efforts and experimental work have been commenced to develop a digital euro, and the European Central Bank and national central banks of the euro area are yet to take the final decision on the introduction of a digital euro", Zita Zariņa says about the pan-European initiative of the digital euro. "What is wrong with the "ordinary", non-digitalised euro? There is nothing wrong with it, it has no deficiencies, it continues and will continue to fulfil its role successfully. However, faced with the ongoing ubiquitous digital transformation, money and settlement also follow the path of adaptation. The purpose of a digital form of the euro is to create new and modern opportunities of using central bank money in day-to-day payments for those willing to do so. The digital euro will not replace but rather supplement the physical one, i.e. money will have a new additional form that will coexist with the existing system. Thus, the introduction of the digital euro will not change daily lives of people who do not want to change their payment habits."

"The experience of other European countries makes it possible to assess the risks stemming from an absolute dominance of one means of payment over the other in a timely manner. For instance, Sweden that has experienced a very rapid transition to non-cash settlement currently has to deal with the availability of cash. Finland, Spain, Portugal, Austria and the Netherlands have at least partially faced this problem, leading to the adoption of various legislative provisions guaranteeing the availability of cash", Jānis Blūms emphasizes. "We do not want to end up in a situation where the availability of cash is jeopardised. Therefore, Latvijas Banka has initiated amendments to legal acts to set the minimum free-of-charge service and reachability criteria: the minimum number of ATMs, maximum distance to the closest ATM, minimum amount of cash disbursed without additional costs, minimum hours during which an ATM should be accessible. These criteria are being discussed with the cash handlers directly concerned, i.e. commercial banks, the Finance Latvia Association and cash collection companies. In our opinion, the time is right for commencing discussions on this issue and taking decisive steps towards ensuring wider availability of cash across the country."

"In brief, the euro currency security is positively stable, i.e. the number of counterfeits remains at a stable, low level. However, we should not let ourselves be lulled by this positive news. It is still essential for everyone to know their money, its design and security features. The likelihood of receiving a counterfeit euro banknote is very small. In 2020, 17 counterfeits were reported per 1 million banknotes fit for circulation which is a historic low," Aleksandrs Antiņš comments on the cash security situation. "Positive developments with regard to counterfeiting can be observed both due to higher public awareness of the design and security features of the euro and owing to the measures implemented in the previous years as the second series of euro banknotes – the Europa series – was introduced."

For more extensive expert commentaries, see