Cash or app? Smartphone payments still to take Malta by storm

The durability and flexibility of traditional money has aided civilisations for centuries. Yet electronic payments are making stacks of cash and fumbling around for coins a vestige of past, as some countries prepare to dive headlong into a cashless future.

Malta is still lagging behind, with statistics from the European Central Bank showing that 92% of all transactions are carried out in cash, as opposed to Sweden where only 25% of Swedes paid in cash at least once a week in 2017, according to a survey by Insight Intelligence – down from 63 percent just four years ago.

The ECB interviewed more than 65,000 European citizens for their analysis: although use of credit and debit cards has spread, cash remains a dominant force with 79% of payments in case, followed by 19% card payments. To the ECB, the results show that any move to a cashless future is “questionable”.

Myney

Malta’s cash dominance makes it clear it will be one of the last countries to let go of cash, although one company is on the frontline of the cashless ‘revolution’.

Myney was launched in 2016 as a mobile phone payment system that allows smartphone users to top up an account with money provider Fexserv, to affect payments by ‘scanning’ their phone.

When Myney was first launched at the Chamber of Commerce, Fexserv expected some 600 businesses to show interest in the app. So far, there are 350 merchants accepting Myney as a payment method.

Head of sales and business development Adrian Cachia says Fexserv launched Myney as it spotted the international cultural shift in payment, anticipating the “difficulty” Malta would face with changing money habits.

“We knew that we had to be realistic in our expectations on Maltese shifting from cash and we hope that initiatives like ours and electronic payments, in general, will start getting more support from the authorities be it in terms of incentives or policy,” Cachia said.

“Our ultimate target market is not just the Maltese market, which we consider as laboratory size and a place to improve our technology, but also overseas markets where we have a number of interesting ongoing collaborations with international organisations on prospective projects.”

The company now is introducing a contactless prepaid Mastercard that is linked to the Myney payment account. In this way, all merchants accepting card payments will automatically be able to accept the Myney MasterCard, opening up tremendous opportunities for the system.

Electronic payments may be nothing new around the world, but Myney is the first Maltese-based company to introduce the service in Malta.

Myney works as a downloadable app through which users can open their own online payment account, with its own individual IBAN – just like a bank account, only held at Fexserv, which is itself an MFSA-licensed financial institution.

The IBAN connects users to the international traditional banking network allowing them to make payments in different currencies, as well as to received and hold money in their online account.

More importantly, smartphone users can pay in shops that accept Myney using a QR code or proximity payments.

“We are now in the final stages of launching a contactless MasterCard Debit Card, which can be used in ATMs, all shops that accept MasterCard and online. This card will be linked in real-time with your Myney account,” Cachia said, who praises Myney’s ability to give users immediate settlements without any additional commissions or transactions fees payable to banks.

“It’s practical in that it works from a mobile app, a device that we all carry with us nowadays,” Cachia said, adding that the Myney network can be used to pay bills, salaries and services at no extra cost. And with its peer-to-peer function, Myney users can send and receive money from other ‘non-Myney’ individuals, as long as they have a mobile phone number.

A Swedish shop - completely cash free

But when linked with a prepaid contactless MasterCard, such ‘cashless’ payment systems like Myney allow users to transfer cash globally to any international bank account, virtually reaching any shop around the globe.

Cachia insists Myney is quickly gaining traction, mainly with the younger generation and foreign workers. “Changing habits in other demographical categories takes longer but we knew this and we also knew that we would be slightly ahead of the market readiness to shift.”

And as expected, the onset of cryptocurrencies in Malta means Fexserv is also looking into adding this as an option to Myney once the regulatory landscape in Malta becomes clearer.

With banks like Bank of Valletta or BNF taking a cautious approach to cryptocurrencies – only recently it adopted a policy not to allow any SWIFT payments to cryptocurrency exchange platforms – digital banks like Revolut and Transferwise are filling in the gap, allowing users to use their free accounts as a ‘middlemen’ between your bank account at BOV, and a cryptocurrency exchange such as Coinbase.

Cash trumps card

According to a recent study conducted by the European Central Bank (ECB) people in Germany carry around more cash than in any other country of the Eurozone. In 2016 the German citizens had €103 in their wallet on average – the average of all European countries came down to only €65. Following Germany comes Luxembourg (€102) and Austria (89). Portugal (29), France (32) and Latvia (41) make up the tail light.

If we look at the number of transactions that are made in cash, Malta is placing first (92 percent) followed by Cyprus (88), Greece (88), Spain (87) and Italy (86). In Germany 80 percent of the transactions are cash-based.

But there is a slope between the “cash-loving” southern countries as well as Germany, Austria and Slovenia on the one hand and Finland, Estonia and the Netherlands on the other hand. Only 45% of the transactions in the Netherlands have been made in cash. The same pattern could be observed in Estonia (48) and à (54).

Males used more cash than females, but they also made more payments per day, regardless of the means of payment. People who were older than 40 also used cash more often than younger people. According to this the transactions made by card decrease for people older than 40. On the contrary, the level of education did not make a big difference.

The ECB tries to explain the popularity of coins and bills by looking at the amount of money people spend per payment on a day-to-day basis. Almost two thirds of the payments were less than €15. Amounts up to €45 were most likely to be paid in cash.