Cash has long-held sway in Spain’s consumer payments market, a
habit fuelled by one of the world’s most extensive ATM networks.
But there is evidence indicating that cash’s dominance is being
eroded though in a rather un-European manner it is a trend assisted
by strong growth in the use of credit cards.
From a very low base of only 16.2 million in 2000 the number of
credit cards has, according to Spain’s central bank Banco de España
(BdE), rocketed, reaching 45.36 million at the end of the third
quarter of 2008. Based on Spain’s population of some 40.5 million
people, this increased the number of credit cards per million
inhabitants from 0.4 in 2000 to 1.12 per million in late-2008.
Spain has three
local bank card processors, ServiRed, Sistema 4B and Euro 60004,
with full interoperability between the three schemes.
The number of credit cards now in issue in Spain puts the
country into the league of major credit card users such as the UK,
where payments industry body APACS reported 73 million credit cards
in issue at the end of 2007. This represented about 1.2 credit
cards per million of the UK’s 60.8 million inhabitants.
Indicative of the prevalence of credit cards in Spain compared
with other major European countries there were, according to the
European Central Bank (ECB), 18.26 million credit/delayed debit
cards in issue in Germany at the end of 2007, up from 16.64 million
in 2000 and equal to only about 0.2 cards per million
Similarly in France the total number credit/delayed debit cards
in issue stood at 12.91 million at the end of 2007, equal to about
0.2 cards per inhabitant. Among countries with a higher penetration
of credit/delayed debit cards, Italy had 34.5 million in issue at
the end of 2007, equal to about 0.6 per inhabitant.
In Spain debit cards were overtaken by credit cards in 2005 when
the numbers ended the year at 31.83 million and 33.25 million,
respectively. Five years earlier in 2000, debit cards outnumbered
credit cards by almost two to one.
Between 2000 and 2003 the number of debit cards in Spain grew
from 29.74 million to 33.1 million, and during the next four years
declined steadily to end 2007 at 31.47 million cards. A recovery in
2008 saw the number of debit cards increase to 31.81 million at the
end of the third quarter, or almost 0.8 cards per inhabitant.
The increase in debit card numbers in Spain in the third quarter
of 2008 represented a 1.1 percent increase compared with the end of
2007, but still fell well short of the 4.4 percent increase in the
number of credit cards during the same period. At the end of the
third quarter, debit cards represented only 42 percent of a total
of almost 75 million payment cards in issue in Spain.
By comparison, at the end of 2007 debit cards represented 83
percent of all payment cards in France while in Germany they
accounted for 84 percent of all payment cards. Even in the UK debit
cards accounted for 49.5 percent of all payment cards in issue at
the end of 2007.
Of note, according to the ECB the total number of credit/delayed
debit cards in the euro-zone increased from 59.5 million in 2000 to
108 million in 2007 while the number of debit cards increased from
195.8 million to 303.8 million over the same period. At the end of
2007, debit cards thus accounted for almost 74 percent of all
payment cards in issue in the euro-zone.
Help from interchange fees
Use of payment cards in Spain has been boosted
by a steady fall in interchange fees over the past several years.
According to the BdE, based on a weighted average of debit and
credit card transactions, inter-network transaction fees declined
from an average of 1.87 percent of transaction value in 2002 to
0.85 percent in the third quarter of 2008. The average credit card
fee in the third quarter of 2008 stood at 0.97 percent and the
average debit card fee at €0.31 ($0.40).
But despite the increase in the number of cards, use of cards
for payments in Spain remains comparatively low.
Based on POS transaction volumes supplied by the BdE, card
transactions increased from 992 million in 2002 to 1.83 billion in
2007 and an annualised 1.97 billion in the first three quarters of
This increase lifted the annual number of card transactions from
24.5 per inhabitant in 2002 to 45.2 in 2007. Card transactions
reached an annualised 50.5 per inhabitant in the third quarter of
By comparison, in the UK there were 118.5 card transactions per
capita in 2007 and an annualised 125 in the third quarter of 2008.
In Finland, Europe’s most intense user of payment cards, there were
173.4 card transactions per capita in 2007. In 2006 the average
number of card payments per capita in the top-five European
countries (Finland, Denmark, Sweden, the UK and the Netherlands)
The comparatively low use of cards for payments in Spain cannot
be attributed to low POS terminal density. POS terminal numbers
have grown considerably, rising from 802,698 in 2000 to almost 1.53
million in the third quarter of 2008, the latter number
representing 37,780 POS terminals per million inhabitants.
This is a considerably higher POS terminal density than in
high-card use European countries. According to the ECB, for
example, Sweden had 20,478 POS terminals per million inhabitants at
the end of 2007, Finland 20,192, the Netherlands 18,964 and the UK
17,270. The average in the euro-zone was 17,960 per million
Land of the ATM
Matching Spain’s high density POS terminal coverage are its
three ATM networks which have increased the number of ATMs in
service from 44,851 in 2000 to 60,588 in 2007 – with a further
increase to 62,098 in the third quarter of 2008.
The absolute number of ATMs makes Spain a close rival to Germany
which at the end of 2007 had 68,321 ATMs and the UK which according
to APACS had 64,546 ATMs at the end of the third quarter of
However, in terms of ATMs per million inhabitants – 1,533 in the
third quarter of 2008 – Spain is in a class of its own. By
comparison, the UK had 1,062 ATMs per million inhabitants in the
third quarter of 2008 and Germany 831 at the end of 2007. At the
end of 2007 the average density in the euro-zone was 918 ATMs per
million inhabitants and in the US 1,348 per million
The largest of the three ATM networks is operated by ServiRed
which serves 16 commercial and savings banks and at the end of 2007
operated a network of 32,106 ATMs.
In addition there were 39,764 ServiRed cards in issue, all Visa
and MasterCard branded, and 660,241 merchants covered by its
Spain’s ATMs meet a still-high demand for cash – though
precisely how dominant cash is in the consumer payments sector is
unclear. However, there are clear indications that the use of cash
is declining steadily.
According to the Spanish savings bank association Fundacion de
las Cajas de ahorros, cash was used for an estimated 78 percent of
POS payments in the mid-1990s, declining to about 60 percent in
2000. Subsequent growth in cash withdrawals from ATMs and POS
transactions indicate that cash’s dominance has been eroded
According to BdE data ATM cash withdrawals increased from €82
billion in 2002 to €109 billion in 2007, a CAGR of 6.8 percent.
Transactions at POS terminals displayed stronger growth rising from
€46.8 billion in 2002 to €89.4 billion in 2007, a CAGR of 13.8
These two growth rates indicate that consumer purchases are now
divided about equally between cash and card payments in value
terms. However, it should be noted that as in all European Union
countries data is not available for cash-backs at electronic POS
transactions and over-the-counter cash withdrawals at Spain’s bank
Cheques in retreat
value terms the big winner in Spain’s electronics payments system
has been the credit transfer. According to BdE, in 2007 credit
transfers accounted for 72 percent of total non-cash retail
payments in value terms, up from 50 percent in 2001, and 18 percent
of transaction volumes, up from 15 percent in 2001.
By contrast the really big loser in Spain has been the once
highly popular cheque, use of which has been in steep decline in
According to BdE in 2007 cheques accounted for 8 percent of
Spain’s non-cash retail payments in value terms, down from 27
percent in 2001, and 2 percent in volume terms, down from 8 percent
However, despite the decline, cheques still accounted for the
third highest value of transaction in Spain’s retail payments
market in 2007. Spain ranks as the seventh highest user of cheques
in Europe based on a percentage of total non-cash transactions per
capita – 3.9 in 2007.
Since November 2003 cheques and other paper-based payments
instruments such as bills of exchange have been truncated and
settled electronically. The only exceptions are credit transfers
and cheques exceeding €50,000 which are still settled manually.
Transactions of this size account for under 0.5 percent of total
volume processed through Spain’s two payment systems the retail
payment system, Sistema Nacional de Compensacion Electronica (SNCE)
and the real time gross settlements system the Servicio de
Liquidación del Banco de España (SLBE).
Established in 1990 as an automated clearing house, the SNCE is
managed by Iberpay, a private company owned by the credit
institutions participating in the SNCE. In 2007 the SNCE processed
1.44 billion transactions with a total value of €2.032 trillion.
This represented 22 percent of total transaction volumes of 6.53
billion and 18 percent of total transactions by value of €11.14
The SLBE is owned and managed by BdE and is also the Spanish
component of the Trans-European Automated Real-time Gross
Settlement Express Transfer System, the large-value euro payment
system operated by the European System of Central Banks.
The Spanish may well have taken to the credit card en masse, but
when it comes to adopting the internet for banking they have
displayed a hefty dose of caution.
Indicative of attitudes towards internet banking, a study
published by Deutsche Bank in May 2008 revealed that only 16
percent of Spaniards had banked online in the previous three
months, ranking Spain 12th among 17 European countries.
The percentage of Spanish online bankers lagged the European
Union (EU) average of 29 percent and was significantly behind
market leaders Estonia, Denmark, the Netherlands, Finland and
Iceland where online banking was undertaken by between 53 percent
and 72 percent of people during the survey period.
One reason for the low adoption of online banking in Spain
appears to be a comparatively low penetration of broadband internet
services. According to EU statistical service Eurostat, Spain ended
2008 with 45 percent of households having broadband connection.
This compares with, for example, broadband penetration of 74
percent in Denmark and the Netherlands and 71 percent in
Spain has also displayed a slow adoption of online shopping.
This is evident from a comprehensive study of European online
shopping in 2007 conducted by Eurostat.
According to Eurostat, 18 percent of Spaniards shopped online in
2007, ranking Spain 15th out of 27 EU countries. The EU average was
30 percent and market leaders the Netherlands, the UK, Germany,
Denmark, and Finland where between 48 percent and 55 percent of
people had shopped online.
Overall, while Spain has progressed well along the electronic
payments route there is clearly a way to go. This is evident form
Spain’s still high use of cash and comparatively slow uptake of new
technologies. Put in perspective, the number of non-cash
transactions in Spain per inhabitant in 2007 – 161 – ranked it 10th