Published: 03.09.2021

Latvijas Banka, Finance Latvia Association and the Latvian banks with the widest network of ATMs and branches – Swedbank AS, AS SEB banka, Latvian branch of Luminor Bank AS and AS Citadele banka – have signed a Memorandum of Cooperation on Ensuring Access to Cash for Residents of Latvia.

The aim of the Memorandum is to ensure access to cash for residents across the entire territory of Latvia, setting the minimum requirements for reachability and accessibility of cash. The signatories of the Memorandum agreed on the following course of action to ensure accessibility of cash across the entire territory of Latvia:

  • preserve the existing network of ATMs and refrain from reducing the number of ATMs by more than 5% until 1 January 2023;
  • when creating the network of ATMs, the straight-line distance from any location to the closest ATM should overall not exceed 20 kilometres for 99% of Latvia's population;
  • ensure adequate actual accessibility of ATMs to consumers (at least 12 hours a day).

Nowadays, various modern payment technologies, like instant payments, contactless card payments, etc., continue developing and are becoming increasingly more popular among the population. Central banks have started working on providing the population and businesses with another form of money, the digital euro, in a foreseeable future. Digital euro is not going to replace cash, but rather complement it and offer people a greater choice in how they pay. Nevertheless, at the current juncture, a large proportion of retail payments in the European Union is still made in cash.

The position of both the European Commission and the European Central Bank as well as the effective legislation clearly provide that cash will remain legal tender, with several restrictions on the use of cash introduced in association with the measures to combat the shadow economy and money laundering.

Ensuring withdrawal of euro banknotes, ATMs maintained by banks are the main sources of the population's access to cash in Latvia. The role of cash is diminishing because of the availability of various alternatives; nevertheless, the discussions among financial industry institutions have already resulted in a timely conclusion that further access to cash at its current level is a matter of public interest. The maintenance of cash withdrawals in certain regions is a matter of strategic significance and social responsibility, and a service of critical importance to national security in times of crisis.

Prior to signing, the Memorandum was submitted to the Competition Council of the Republic of Latvia, receiving a confirmation that, by agreeing on the principles and measures to ensure access to cash, the participating institutions are acting in the public interest without limiting competition.

"Latvijas Banka launched an initiative to set the criteria for access to cash this spring, as it is a matter of public interest, particularly important to those who are living and working in the regions. I am satisfied with our cooperation with the financial industry and our joint commitment to act, in order to continue maintaining smooth access to cash to each resident of Latvia across the entire territory of Latvia also in the future. This provides people with a choice of a preferred means of payment, without prejudice to the interest of the part of the population unwilling to use non-cash for one or another reason", said Zita Zariņa, Member of the Council of Latvijas Banka.

"Digital technologies have seen a particularly rapid development over the most recent years, yet the circulation of cash still has its role in the economy; therefore, daily access to adequate amounts of cash needs to be ensured, to be used at the discretion of the customers of banks. The Memorandum incorporates the core cooperation principles to ensure access to cash previously adopted by the Finance Latvia Association. From now on, more work should be dedicated to awareness, providing information and compatibility of various solutions used by banks, in order to ensure fair competition among banks and other financial service providers, limit the circulation of illegal cash and reduce the shadow economy", highlighted Sanita Bajāre, Chairwoman of the Board at the Finance Latvia Association.

In the period from 2015 to 2019, the average number of ATMs in the European Union has decreased by 4%, whereas the number of POS terminals has grown by 47.7%. The numbers of ATMs are obviously decreasing at a higher rate in countries which are more advanced in digitalisation. This can be explained by the fact that there is a lower demand for cash and the banks are maintaining the respective infrastructures to the extent needed for their customers.

The number of ATMs in Latvia has declined by slightly more than 11% from 2015 to 2019, in proportion to demand (the decrease in the numbers of cash withdrawals). About 42% of card holders do not withdraw any cash at all within a month. According to the most recent data for 2020 and 2021, the decline in the number of ATMs is moderate and consistent with the changes in the patterns of customer behaviour.

Currently, there are 902 ATMs in Latvia. The closest ATM is at a distance of below 5 kilometres for over 80% of Latvia's population.