Cash dependency in Europe: When needs and services don’t match

This blog post is part of the Finthropology series Digital Human Finance. We present qualitative research to showcase the kind of insights that can come from deeper, human-focused studies and how they can be used to build new sustainable financial solutions. We focus on the story and its potential in each presented publication.

Access to formal financial solutions has grown tremendously around the world in recent years. Or to be more precise, the availability of such solutions has grown. The global use of cash at the point-of-sale has dropped from 44% in 2014 to just 15% in 2024. This, however, leaves large differences between countries as cash is used for between 30% and 40% of purchases in countries like Nigeria, Philippines, Japan, Germany, Mexico, Colombia and Indonesia but as low as 4-8% in the Nordic countries, the Netherlands, China and South Korea. 

Yet even in well-developed European countries, some groups of marginalized citizens appear to have difficulties in accessing financial accounts and tools. Some would argue that this is a question of low financial literacy, or simply a habit of spending today with little concern for tomorrow. 

This is, however, not always the case. Some marginalized groups must negotiate a life based on many small sources of income–some of which are highly volatile, available perhaps only a few months in the year. Managing this kind of “patchwork economy” does not fit well with expectations of continuous savings or on-time debt repayments. Rather, life becomes a question of prioritizing from day to day. 

Qualitative studies are well suited to unfold the concept of accessibility and understand why there appears to be a gap between financial needs and the financial services offered. In the following, we draw from anthropologist Camilla Ida Ravnbøl’s (2023) research with Roma families to understand their struggles with financial access.

Ravnbøl conducted fieldwork with 40 Roma between 2014 and 2022. Her interviewees lived part time in Romania and part time in Denmark. While they had homes in Romania, in Copenhagen they were homeless, sleeping rough on the side streets around the city and earning their living primarily from scrap-based income streams, such as the refund value on refundable beverage containers. She interviewed them about their financial habits and their issues with traditional financial offerings. 

Principles of accessibility

Of particular interest to our topic is Ravnbøl’s  examples of three Roma brothers (Sorin, Dumitru, and Zabar) and their wives (Mioara, Tatiana, and Ana). She uses them to unfold the concept of accessibility using a theoretical framework from health studies, the “5A principles”. This splits access into the five elements of availability (the existence of a service), accessibility (geographical access based on the existence of infrastructure), adequacy or accommodation (explaining whether services are adequate and continuously available), affordability (whether poor people can pay them) and acceptability (if offers are socially and culturally practical, inclusive and respectful).

Availability

In the EU, the availability of simple financial products is ensured by an EU directive from 2014 (Directive 2014/92/EU). All legal residents–including consumers with no fixed address and people seeking asylum–have the right to open a ”basic payment account”. This should include standard features like making deposits, withdrawing cash, receiving and carrying out payments. It also includes a debit card and access to online banking if available. Depending on the national implementation, a ”reasonable” fee can be charged for the account. It is not required, however, to offer credit. And though the account may allow international transfers, card payments and cash withdrawals in different currencies, these will often incur fees that are not included in the basic fee. 

Apart from this general right, the offer of different digital and very often mobile solutions is growing. Some digital banks and payment service providers may offer cheaper services, particularly on international transfers. Despite the availability of comparison price lists and so on, it is however not necessarily a simple matter to identify the best offer for a marginalized person.

Accessibility

Most people living in the European Union have little difficulty accessing financial services. In many European countries, public benefits for low-income groups or people with health issues are paid automatically into an account. Among the Roma families studied, many had bank accounts, including the three brothers, and some had debit or credit cards (like Zabar, who we will come back to). 

Geography can, however, create a barrier in another way. In Romania, the relatives of all three brothers live in remote towns where ATMs are not available, making it difficult to withdraw cash for use in daily shopping. One of Ranvbøl’s interviewees, Dumitru, put this very precisely:

“If I have a credit card? Ha! Have you ever seen an ATM inside a Roma community? No, we are just thankful that at least we have a sewage pipe”. (Dumitru, interview, June 27, 2019).

Moreover, travelling to the centre of cities where ATMs are located is considered too dangerous, particularly for young women. 

Adequacy

Even if Ranvbøl’s interviewees had an ATM readily available, it isn’t a given that formal financial services would be adequate for their needs. 

First, an account in Romania may be of little practical use for day-to-day payments in Denmark. Sending savings to a foreign account can be expensive in currency conversion and international transfers. And Zabar’s expectation that a credit card would help him was soon let down. As his Romanian credit card was not a VISA card, it proved to be of little use in Denmark–even for cash withdrawals. He also quickly realised that the international transfers that he needed to do came with high separate fees for both the transfer and the currency conversion. Further, he realized that he had travelled to Denmark shortly before the expiration of the card and could only renew it if he went back to Romania.

Ravnbøl tells us that Zabar dreamed of a Danish issued VISA card, which would be a lot easier to use and renew. However, Zabar lacked a Danish social security number and documentation showing a Danish address. Thus, while by law bank accounts should be available to migrants, in practice migrants can be excluded. 

Zabar also experienced difficulties with formal financial services in Romania.. There, he receives a small medical benefit that was paid into his bank account, but the state would deduct fines from the payment, when he could ill afford them. (The fines came from driving his cart around the streets to collect and sell scrap.) To overcome this problem, he put the card in the name of his wife, Ana.

Access to a basic bank account usually does not include credit cards or loans. But managing in the patchwork economy had caused all three brothers to incur debt to overcome family needs and meet medical costs. Dumitru and his wife Tatiana were badly off as Tatiana suffered from mental illness and was frequently hospitalized. They had incurred large debts to informal Romanian moneylenders, and spent their earnings from scrap work and begging on medical costs and debt repayments. Ravnbøl explains that all three families were increasingly using moneylenders. A formal loan would be paid into a bank account, and they would face the same issue as Zabar: the state automatically deducting debts and fines reducing the value of the loan for immediate needs. 

The difficulty of obtaining a Danish credit card also impacted the families’ income-earning opportunities. It caused many interviewees to miss out on refunds for beverage containers at the major Danish music festivals in the summer period. This used to be a lucrative business, particularly in good weather. But festivals are increasingly turning cashless, and increasingly require bank accounts and ID to pay out refunds. 

In summary, these experiences illustrate that the right to a basic payment account is not adequate to support the needs of unregistered and marginalized groups. Making  money from day-to-day activities, they need to prioritize from day to day to provide for family members both in Denmark and Romania. The basic account does not cater to cross border payments.  And having an account carries the risk of having fines and owed debt repayments  deducted from any income. This is driving people to give up the use of banks. 

Affordability 

The right to a basic payment account requires banks to provide it with a reasonable fee. A basic payment account will usually charge extra fees for cash withdrawal in a different currency and for international transfers and payments. This was the case for Zabar who had a Romanian credit card, but experienced many fees for payments to his family in Romania. Similarly, interest on debts necessary to tide families over difficult periods and cover, for instance, medical expenses run high both with formal loans and with informal loan providers. All in all, affordability is not good.

Acceptability

A particular issue appears when discussing acceptability. Where loans are available they may not be seen as acceptable. Indeed, it may be shameful to owe money. Sorin says:

”But it’s a shame if you borrowed money and then they come to your door [claiming repayment]. We are Roma and we have our pride, and we don’t like to be gossiped about in the community”.

Thus financial use is not only shaped by what is available, but also by what is culturally acceptable.

Key insights

So, what can we learn from Ravnbøl’s fieldwork?

First, it helps to understand why a broader concept of access is necessary. Secondly, it focuses on the specific challenges that Roma families experience when trying to conduct their lives in the traditional Roma way in an increasingly orderly European context. Third and most importantly, it identifies the need to include and interview consumers in different groups to understand their financial needs and build financial offerings that serve them right. This can be the responsibility of providers themselves, or they can work with the help of organizations representing marginalized groups like the Roma, or other groups like for instance homeless people. 

As rightly pointed out by Ravnbøl, this is partly a political issue. Most banks are commercial and providing for small groups that bring little profit may have low or no priority. While community banks might exist they might not be directed at international groups. And many digital newcomers in the market are focused on reaching large groups of consumers to be able to scale. In any case, awareness of the need to understand customer context is a first step.

Ravnbøl, C.I., 2023. Accessing cash(lessness): Cash dependency, debt, and digital finance in a marginalized Roma neighborhood. Economic Anthropology 10, 44–54. https://doi.org/10.1002/sea2.12265