Evolution of Euro-zone Peer-to-Peer Transactions Using Fiat Currency
In a significant evolution of the financial landscape, person-to-person (P2P) cash transactions in Euro-using countries are experiencing a notable shift away from traditional cash exchanges towards digital P2P payments. This transformation is driven by the rapid growth in instant and mobile payment technologies, as well as regulatory mandates for real-time credit transfers.
According to the European Central Bank (ECB), day-to-day cash payments have dropped substantially, from 68% in 2019 to around 40% in 2024. This decline reflects a clear move away from cash towards digital alternatives.
P2P mobile payments in Europe are among the fastest-growing segments of the mobile payments market, with an annual growth rate (CAGR) of about 32.56%. Although still smaller than POS transactions, P2P payments are expanding quickly due to domestic wallet schemes like Bizum (Spain), BANCOMAT Pay (Italy), and Vipps MobilePay (Nordics) increasingly interconnecting through frameworks such as EuroPA.
Instant credit transfers regulated under the SEPA Instant Credit Transfer rulebook, reinforced by EU legislation in 2024, ensure real-time euro payments. This regulation mandates all euro-denominated payment operators to support instant transfers at capped fees, making P2P digital payments a convenient, low-cost alternative to cash for informal exchanges.
P2P payment services are extending beyond purely person-to-person use into retail and micro-merchant payments through features like QR codes and alias-based identifiers. This crossover is expected to accelerate the decline in cash usage further.
The European Payments Initiative (EPI), supported by major banks and the European Commission, aims to unify and simplify digital payments, including P2P transfers, via the Wero digital wallet. This initiative promotes next-generation payments by enabling instant, account-to-account transfers without intermediaries, which could further reduce cash reliance.
However, despite this trend towards digital payments, the ECB's latest report shows that the number of cash payments continues to remain significant in 2024. In Germany, cash accounted for 74% of transactions, but only 33% of the total value. Countries such as Lithuania, Italy, Cyprus, Slovenia, and Slovakia also had high usage of cash for P2P transactions.
In 2024, cash accounted for 41% of P2P payments, with credit transfers accounting for 11%, instant payments accounting for 6%, and other payment types, including cheques, gift cards, and alternative forms, accounting for 7%. Mobile apps and cards accounted for 34% and 29% of the total value of P2P payments, respectively.
In conclusion, while cash still plays a significant role in P2P transactions, the ecosystem in Euro-using countries in 2024 strongly favours instant, digital P2P transactions facilitated by mobile wallets, regulatory mandates for real-time credit transfers, and new pan-European payment solutions. This trend is powering a marked decline in physical cash use for person-to-person payments. Instant P2P payment adoption continues to grow rapidly, supported by EU policy and innovative digital payment frameworks.
As the European Payments Initiative (EPI) progresses, digital wallets become increasingly integral to P2P transactions, promoting instant, account-to-account transfers and further reducing cash reliance. Simultaneously, the continual growth in P2P mobile payments, with an annual growth rate of about 32.56%, reflects the rapid shift from cash to digital alternatives in Europe's business landscape, profoundly influenced by technology advancements and regulatory moves towards real-time credit transfers.
