22 February 2022
Why do ATMs matter in the age of the e-payment?
The Lithuanian Banks Association (LBA) recently announced its plan for ensuring that 90% of the population has cash withdrawal within 10 kilometres. In an age of digital payments, is cash really so important? And what can this situation in the Baltics tell us about the future of payments across Europe? Absolutely and quite a lot, actually.
The last iteration of the European Payment Services agreement included a provision about cash availability. Every country has a different way of ensuring that availability, however. Germany set a requirement for a high percentage of the population to have an ATM within 10 kilometres. The Nordics, meanwhile, set a necessary minimum number of ATMs to be maintained, as their digital payment uptake is high while ATM usage is stable. So, is this provision about cash availability just unnecessary bureaucracy?
Absolutely not. Even in the digital age, ATMs are still needed. This provision ensures an equal quality of life, regardless of where one lives. For example, people in villages in the Baltics tend to be less wealthy than those in major cities, as is often the case across Europe. There’s often not a financial incentive for banks to maintain ATMs in less populated areas. Like its counterparts, the LBA plan ensures that everyone has access to cash. At its most fundamental level, local ATMs are about the right to access your own money.
People need cash and ATMs
Across Europe, ATM transactions are fairly stable, which demonstrates that some basic habits around cash aren’t changing. All economies have some cash element. In the Baltics, this often covers home healthcare, nannies and odd jobs around home maintenance and repair. “It’s the reality that people still need cash, and we need to support it”, explains Worldline’s Head of Nordic and Baltic Region Financial Services Zanda Brivule-Jansone. “We need to accept, too, that there are normal, everyday reasons for wanting to pay anonymously.” These benign reasons can range from buying an embarrassing book to gift-buying when you share an account.
The Baltics are experiencing the same stable cash volume trend that’s happening across Europe, but financial institutions are trying to optimise their networks. The region has many small municipalities that experience a lack of ATMs as a real pain point. Lithuania, especially, has many small towns that need better access to cash. While payment by card is rising, especially in retail, cash use is still quite intense. Retail payments, for example, range from 40% by card in Lithuania to 60-70% in Estonia. The LBA plan to increase ATM deployment will particularly help these less urbanised areas.
The future of ATMs
Over the next decade, cash will continue to be important, even as electronic payments improve. The relative stability of cash withdrawals during this current time of escalating electronic payments shows that ATMs will continue to be matter deeply to local communities. The Baltics may even be leading the way in the next iteration of ATMs: contactless. Many new ATMs in the Baltics don’t require users to put their card into an ATM – which means they won’t lose or forget their card!
In fact, Worldline’s experience launching the first contactless ATM network in Estonia and Lithuania demonstrated a truly positive outlook on improving ATM technology. The contactless machine was trialled in Vilnius, with users being observed to see what their experience was. Customers immediately recognised the new function and knew what to do. That trial isn’t just encouraging for the roll-out of contactless technology but also for other ways of improving the customer experience. In the coming years, you’ll see customer-oriented solutions from digital wallet integrations to making a more personal customised experience, such as repeat ATMs remembering your language.
ATMs aren’t going anywhere, but they are getting better. Financial institutions across Europe are finding new ways to make ATM usage reliable and personalised.