Greeks back to digital payments – ECB Study

Of Leonida Stergiou

Huge differences in perceptions and payment habits from country to country were identified by a pan-European quality survey presented yesterday during the European Parliament briefing by ECB member Fabio Panetta on the stage at which the digital euro is being prepared.

Similarities

As Mr. Panetta mentioned, the only common points that the research showed, like the previous ones, are the requirement for security, anonymity, ease of use, to be a means of payment that will replace cards, mobile applications, etc., to be cheap, to be accepted everywhere, to be accessible to everyone and not to replace cash.

These are the specifications with which the digital euro is designed and which were identified and decided from the first phase of the initial investigation.

He also acknowledged that more communication is needed to find out what the digital euro is, that it is not a cryptocurrency, that it is not a digital payment service, that it works like cash, it is just intangible, along with cash, and it is not going to disappear. the cash.

Various

On the other hand, there are huge differences. As, for example, research has shown in Sweden, which has moved further towards the issuance of the digital crown, where Swedes do not realize any difference because they do not use any cash anyway.

He also revealed that 20 days ago, the US Fed decided to proceed with the issuance of the digital dollar, adopting the model and proposal of the ECB, while the Chinese digital currency is being prepared.

Use-War in Ukraine

He also spoke about the need to use innovation and protect the system from the uncontrolled cryptocurrency space.

As he said, innovation must be useful and he used the Russian war in Ukraine as an example.

If there was a digital euro, it would be much easier to give money to refugees and Ukrainians, while sanctions would be more effective.

What Greek consumers think

The 128-page report, which presents the findings of the ECB’s new qualitative research on payment habits, contains a special chapter on Greece, which presents the perceptions and views of consumers and traders.

The main conclusions about the views of Greek consumers can be summarized as follows:

– The pandemic and the fear of transmitting COVID with banknotes and coins erupted and consolidated electronic transactions and plastic money in Greece.

– The use of debit card and contactless transactions prevailed over cash, something to which the various reward programs of the banks contributed.

– The use of cash for payments over 500 euros is prohibited, although in practice, from daily experience, it is not observed.

– Few Greeks have heard about the digital euro that the ECB has been preparing for two years. Greece was one of the few countries in the Eurozone where the plan for the digital euro was less known.

– Those who have heard it, most believe that it is a cryptocurrency like Bitcoin, while for others it is difficult to understand where it differs from electronic transactions, contactless payments, digital wallet, etc. When the difference with cryptocurrencies was explained and with payment services and that digital euro is a currency and not a payment service, it was immediately understood and accepted, due to the security and guarantee as it is issued by the ECB.

– The general perception is that only cash can ensure anonymity, although there is an acknowledgment that digitization increases transparency and can combat tax evasion.

– Under-40s find digital euro safer currency for ECB-issued transactions, while older ones are skeptical that cash could disappear, noting that the difference between digital currency and digital payment service is smaller distinct.

People over the age of 50 are skeptical of the security of the digital euro and believe it serves the interests of governments and businesses to maximize their profits by using personal data.

– The use of Paypal online service is less widespread than in other countries in Europe.

– Women over 55 are more concerned about security and the possibility of hacking into electronic transactions.

– People over the age of 40 believe that cash helps them to control their finances more.

Instant face-to-face payments are quite common in the 18-40 age group, while in the lower age range it is used almost daily to share common expenses or a bill in a restaurant, or to send money to older people.

– For ages 41-64, the key to accepting the digital euro is security. For those over the age of 65, the key is private security (anonymity).

– The most technologically familiar, mainly men 25-45 years old, prefer e-wallets and mobile payments (eg ApplePay, Google Pay), as well as applications for mobile banking, while the frequency of card use is limited.

– Young people who mainly use e-wallets pay a lot of attention to their security and private security, but they are bothered by the limit of 150 euros, as this looks like a prepaid card.

– A new innovative solution of a digital currency would be useful, if it replaced everything that digital wallets do by offering additional facilities.

– The fact that the digital currency will be issued by the ECB is becoming more accepted (security and guarantee) by young people and they would even like to trade directly with the ECB, bypassing commercial banks.

– Young people would like to make transactions with the digital euro using the QR code and the e-wallet.

– Less familiar and older people think that cash makes life easier, as well as less use of technology. Electronic payments, such as internet banking, should be limited, as for tax payments. Most in this category had not even heard of the digital euro and what it could be. Most do not trade online, but would do so as long as there is security in case of loss and personal training and information on how to make payments.

The view of traders

– Electronic transactions are now a reality and will dominate in the future.

– They prefer personal relationships with banks, rather than with payment providers.

– They ask for a reduction of commissions or transactions without commissions in POS or alternatively to have other benefits, such as visibility based on geographical area, customer reward programs, etc. They noted that the commissions are large for low value markets.

– They ask to pay less taxes due to the use of POS, even if they pay commissions, with the logic that the use increases transparency and reduces tax evasion.

– They agree that digital currency is secure and guaranteed once it is issued by the ECB.

– They want new technological solutions in accepting payments, such as direct payments, replacement of POS from mobile applications or the introduction of “buy now, pay later” models offered today by some foreign banks (in Greece) and fintech.

The appropriate technology is sought

Today we are going through the second phase, in that of the research, which will be completed in October 2023 and then it will be decided if and when it will finally be released.

At this stage, technologies are being tested, their operation is being planned and any monetary implications or side effects on financial stability are being studied, not only in the Eurozone but also in other countries.

Today, the tests are based on the existing Eurosystem systems, namely the TIPS (Target Instant Payments) system. The system processes 40-50,000 transactions per second. These include mass-commercial transactions.

One element taken in technology is efficiency, but also energy consumption, ie to be environmentally friendly. As Mr. Panetta noted, technologies that use cryptocurrencies will also be tested.

But these are energy consuming. Transactions with the ECB system consume as much energy as a car running on a motorway, while one cryptocurrency technology corresponds to the total energy consumed by Sweden in one year.

update

Critical and common point also highlighted by the research is the confusion of most people of the digital euro with cryptocurrencies, but also with digital payment solutions, such as digital wallets.

It is still known to most that it will be a new currency, a new currency, with a different currency from the natural euro, which will be issued by the ECB and will circulate in parallel with the natural euro, at the same exchange rate. Maybe, at a different interest rate and in different amounts, at least initially, in order to avoid outflows of deposits.

On the other hand, innovation and the digital euro need attention. It is fascinated by young people, and can be a means of accumulating wealth and safe haven in low-income countries.

There, some who have money or banks can buy huge amounts of digital euros, causing capital outflows.

Ή young people to exchange natural euros with digital ones and to have outflows of deposits from commercial banks, which will have greater consequences when digital money goes abroad either for shopping abroad or for tourism, etc.

To this question he answered that the ECB has analyzed these risks, has considered scenarios, such as a ceiling on the digital euro circulation limit, and knows how to deal with it, without giving further details.

However, the initial study on the digital euro included the ceiling and the possibility of a different interest rate between digital and physical euros, in order to avoid turning it into an investment instrument.

The ECB, in the first instance at least, only wants it as a means of payment, such as cash, that is, to maintain anonymity and make the payment on the spot, but in an intangible form.

That is, digital and physical euros to circulate simultaneously with the exact same features and without cost. Be accessible to everyone and acceptable everywhere.