It is well-known that the COVID-19 pandemic in 2020 gave a significant boost to cashless payments worldwide. At that time, the Federal Office of Public Health also recommended that Swiss citizens avoid using coins and banknotes to reduce infection risks. This recommendation, suggesting that cashless payments were almost medically endorsed, adorned many cash registers across the country for years.

However, this did not actually reduce the risk of infection—by the end of 2022, the Federal Council's report on «The Acceptance of Cash in Switzerlandreport on «The Acceptance of Cash in Switzerland» noted that international studies had soon shown that coins and banknotes did not pose such a risk, and the fears were therefore unfounded.

Customer Cards More Appealing Than Cash

What did decrease was the use and acceptance of cash in everyday transactions, significantly influenced by providers of cashless payment methods who capitalized on the opportunity (which is understandable).

Retailers and service providers also have a strong interest in moving away from cash. Handling cash incurs costs for them and they expect cashless payment methods—especially when using their own customer cards—to foster stronger customer loyalty and provide more insights into consumer behavior. In marketing terms, this promises a better «customer journey» in the future.

Twint Hits Million-Marker

The changes in payment behavior continue. Twint announced on Monday that since the feature was first available in the spring, over 1 million customer cards from 650,000 users have been stored in the payment app. Currently, 35 merchants support this feature, including major players Coop (Supercard) and Migros (Cumulus).

Apparently, many consumers find retrieving their customer card (or debit or credit card) from their wallet too cumbersome and prefer to use their mobile phones instead. Twint benefits from this trend—along with its owners: the financial institutions Vaudoise Cantonal Bank, PostFinance, Raiffeisen, UBS, and ZKB, as well as the Swiss financial market infrastructure operator SIX and payment service provider Worldline.

SNB Launches Fourth Payment Survey

The Swiss National Bank (SNB), which holds a monopoly on central bank money and thus on banknotes (coins are minted by Swissmint, but the SNB is responsible for supply), has also noticed these changed payment habits. To get a better picture of the developments, it regularly conducts a survey on payment methods among private individuals. The first survey took place in 2017, with subsequent surveys in 2020 and 2022, and the SNB announced last week that it will also be conducted in 2024.

In the coming months, 2,000 Swiss residents will be surveyed about their payment habits, focusing on payment method choices, acceptance at points of sale, and the use of new payment methods. The SNB aims to identify changes in the use of various payment methods over time. Results are published the following year.

Rhetoric and Round Table

Martin Schlegel, currently Vice President and set to become President of the SNB's Governing Board in October, already called in a speech in November 2022 for attention to be paid to cash infrastructure to avoid a negative spiral, ensuring citizens continue to have the freedom to choose their payment method. The SNB, along with the Federal Finance Administration, has convened key players in cash supply, as well as economic and consumer associations, for a round table on cash supply.

The first such meeting took place in October 2023. The aim of these meetings, which are intended to be held regularly, is to identify any potential need for action early to counteract any possible negative spiral in the cash system.

Cash Becomes a Political Issue

The SNB's more pronounced stance is likely related to the fact that the issue of cash has reached the political arena. In February 2023, the popular initiative «Cash is Freedom» was submitted. It demands that coins and banknotes always be available in sufficient quantities and that any potential replacement of the Swiss franc by another currency be presented to the people and cantons.

The Federal Council shares these concerns but considers the initiative text to be «too imprecise» and instead has proposed a counter-proposal, as outlined in its message from June 2024. The second initiative from the cash advocates, titled «Anyone who wants to pay with cash must be able to pay with cash!», is expected to continue collecting signatures until September.

Constitutional Obligation for Acceptance of Cash

This stricter cash initiative aims to concretize the existing legal obligation to accept coins and banknotes (which is rarely enforced in practice) at a constitutional level. It would particularly force public service providers and retailers to accept cash as a payment method.

The initiative touches a nerve, as general acceptance of cash has increasingly been questioned in recent years. Examples include public transportation operators wanting to go cashless (with PostAuto leading the way) and the increasingly common «No cash» signs at shops, restaurants, and festivals.

Ensuring Nationwide Access Points

The initiative also demands that the federal government guarantee nationwide access to banknotes. It specifies that in cities, a banknote access point must be available every 2 kilometers. In municipalities with 1,000 or more residents, there must be at least one access point, and for residents of smaller municipalities, the travel time to reach it by car or public transport must not exceed 15 minutes.

The initiative addresses a real concern, as the number of ATMs has been declining. Whether the stringent constitutional requirement is the ultimate solution remains to be seen. However, it is clear that those who process and distribute cash would benefit from an obligation to accept it. They are part of the ecosystem of service providers in the payment industry, though generally less communicative than many others.

How Will the Smartphone Generation Vote?

The fact that Twint now has 5 million users, accounting for over half of the Swiss population, does not necessarily contradict the majority potential of the second cash initiative.

Some Twint users, particularly the smartphone generation, might be tempted to skip the trip to the polling station or the postal ballot box because the payment service can still be used unchanged. Others might even support the initiative because they are «technology-neutral» and appreciate the freedom to choose their payment method, even if they rarely use cash themselves.