Cash continues to have many followers in Spain . It is not only the attachment for the paper money that the Spaniards may have, but the ease of accessing it . That is why it is not surprising the high use it has in our country. According to a study published in 2015 by PwC and IE Business School, 100% of Spaniards use it . However, the advance of the cards as a substitute for the metal is in crescendo.
At the end of the third quarter of 2016, there were 73.66 million plastics in circulation in Spain. Two thirds of which were credit. Taking into account that the population in Spain in the middle of last year was just under 46 and a half million people, the average is one and a half cards per inhabitant. And if we take into account that this type of means of payment is almost always in the hands of adults, the average is 2.3 plastics per person, point out from the card comparator and banking products HelpMyCash.com .
In the absence of knowing the data of the last quarter of the year, it seems that 2016 was an exercise of changes in terms of means of payment . During the first three quarters of the year, the amount that Spaniards extracted from ATMs was lower than the amount of spending they made with a card in stores.
So, better in cash or with a card?
From the comparator HelpMyCash.com point out that the difference in cost does not lie so much in whether the cash is used or the card purchase is paid, but in whether the purchase is paid in cash, either with a debit card or with money in cash, or if it is financed on credit. In the end, a debit card works like a wallet and only allows spending the money that the customer has in the account that is automatically deducted, similar to the payment in cash. However, swiping a credit card over a dataphone is synonymous with taking on a debt.
Credit cards allow you to pay for purchases at the end of the month or in convenient terms. If you opt for the last option, you will have to face an interest rate that is usually around 21% on average . Thus, the purchase of a product of, for example, 500 euros could cost that same figure if paid in cash, with debit card or credit card with payment at the end of the month or a higher amount if the payment was split. If we take as a reference a period of six months to settle the debt and a TIN of 21%, the cost of the operation would have been 31.06 euros. In exchange, instead of disbursing 500 euros at a stroke, they would pay 88.51 euros per month.
If you are going to opt for a credit card to alleviate the impact of a purchase on your pocket, the ideal is that, first, be free and, second, have an interest rate as low as possible or compensate a higher TIN with a bonus For example, while the average is around 21%, the ING Direct Credit Card has a TIN of 14.06% for purchases of more than 90 euros postponed to 3, 6, 12 or 18 months. Very below average.
Other cards have higher interest rates, but in return they return a part of the amount of purchases, which considerably reduces the cost of the operation. For example, the Bankintercard Gold Card returns 5% of the deferred purchases during the first year and 3% from the second. It is free, it has insurances incorporated and a TIN of 24%. Or the Vodafone Card of bankintercard also has an interest of 24% and, like the previous one, it is free, but in this case it offers 30 euros of discount in the invoice of Vodafone and, in addition, it allows to save up to 8% in each invoice based on purchases made with the card.
What impact does it have for banking?
63.5% of small Spanish businesses accept card payment , an increase of 11 percentage points compared to 2013, according to a MasterCard statement published in the middle of last year. “The main reasons why merchants offer this payment method are to facilitate sales (61.7%), convenience and simplicity in payment (57.3%) and to meet the demands of the customers themselves (50, 3%) “, point out from Mastercard.
There is no doubt that the convenience of being able to do without cash benefits both customers and businesses , but we can not forget that another of the big winners are banks. When the client postpones the payment of a purchase, it assumes a debt with the bank that will accrue interest in favor of the entity, which is a source of income for them. However, credit cards are not the only ones that report benefits to banks.
Any card payment reports benefits to both the issuer of the plastic and the owner of the POS that the merchant has. When a shopkeeper accepts a card payment, whether credit or debit card, he must pay a discount rate to the owner of the dataphone to accept the transaction and manage it through his POS. And the owner of the dataphone must pay an exchange fee to the issuer of the card.