Contrary to widespread belief, on the continent, cash is here to stay. This is according to the findings of an ECB study. Despite significant geographic disparities, euro area consumers still hugely favour using cash to make low-value purchases.

At the end of 2017 the European Central Bank (ECB) published an extensive study on the payment habits of European citizens from the 19 euro area countries. The aim? To shed light on consumers' payment behaviour at points of sale, particularly concerning the use of cash, bank cards and other payment instruments. The main result of the study was that cash continues to reign supreme, as it represents 79% of all transactions carried out and 54% of the total value of exchanges. Bank cards come in second (19% of transactions and 39% of value). However, the report — which is based on data from 2016, segmented by country, but also by other criteria, such as type, age and level of education — highlights significant geographic disparities.

Cash in the south? Not necessarily!

More than 124 billion payments were made in cash, compared to 30 billion by card and 3 billion using other instruments (cheque, bank transfer, smartphone, etc.). Contrary to what you might think, southern European countries are not the only ones favouring cash, particularly in terms of the number of transactions. In fact, Germany, Austria and Slovenia achieve record levels with at least 80% of transactions being made in cash. In terms of value, Greece, Cyprus and Malta come out on top, with more than 70% of amounts settled in cash at points of sale. And at the other end of the spectrum? The Netherlands, Estonia and Finland, where the majority of purchases are made by card. France, Luxembourg and Belgium join these countries, where only the lowest payment amounts are made using cash (33% or less).

No significant profile type

The ECB study also sheds light on the demographic characteristics of European consumers who prefer cash to other payment methods, even though there are not really any significant differences. Nevertheless, men aged over 40 of all levels of education take the crown. In fact, women are more likely to use bank cards; much like the younger generations (under 40), except for 18 to 24-year-olds (probably because there are more students of this age). More surprisingly, a large proportion of consumers say that they prefer bank cards to cash – information that is contradictory to what this analysis has found. The explanation provided by the ECB is that those surveyed tend to forget low-value payments and only think about the larger payments. However, 81% of transactions observed in 2016 involved values below €25 for the purchase of daily consumer goods, while only 8% were above €50.

Access to card payments does not explain everything

According to the report, European consumers have rather high access to card payments on average (almost 72%). However, the level of card support at points of sale does not explain the huge use of cash. Nevertheless, an undeniable correlation can be determined for countries where retail chains are less likely to accept card payments, such as Greece, Germany, Portugal, Spain, Italy, Slovakia and Malta – all of which are below the European average. Another interesting element is the low level of contactless payment provision throughout Europe. However, for most European consumers, the speed of the transaction is one of the most decisive criteria when deciding on a payment method. No doubt the increase of cards equipped with contactless technology — which will certainly speed up transactions — will compete with the use of cash...

Coping with climate change by adopting a more sustainable business model? That is what Antwerp scale-up zZoomer is doing with its zero-emission e-scooters for pizza deliveries.

Have you perhaps spotted a zZoomer moped or e-bike on your city's streets? That's because they are already being used to deliver the pizzas of Domino’s Pizza and Pizza Hut to your door. "Our e-scooters don't emit CO₂ or smell and are silent. Better for the environment, for the local population, and for the couriers themselves: a real win-win solution", explains Toon Donné, the founder and CEO of zZoomer. "When I saw couriers zooming through the city with loud, polluting motorcycles, I felt that we could do a lot better", says Donné, who trained as an engineer. "Furthermore, delivery services mainly focus on the delivery of meals, not on the maintenance of their mopeds. They are therefore often poorly maintained and, in less than two years, they are ready for the scrap heap! It’s a waste of material, a totally unsustainable way of doing things."

A ‘cleaner’ delivery

zZoomer was founded to solve this problem. "We prioritise sustainable mobility, with e-scooters and e-delivery bikes. Moreover, we have created a tailor-made solution for customers, by adding their branding. We've also made life easier for the couriers, as we manage everything for them", says Toon Donné. zZoomer supplies mopeds and bicycles in good condition and also takes care of their maintenance. In return, the companies pay a flat fee. "Our approach is really sustainable because we only use electric bikes and mopeds. Better for the environment, but also for the image of these couriers. This is also cost-effective, as electricity costs less than refuelling."

Sustainable on every level

In addition to putting e-scooters on the road, the Antwerp scale-up focuses on sustainability in all aspects of its business. "A classic petrol scooter is often good for the scrap heap after 10,000 km, which is absurd. Some of our scooters already have more than 50,000 km on the odometer, without any major problems. Why? Because we choose top-quality bikes and do our utmost to prolong their service life, thanks to regular maintenance. It’s just one way of fighting throwaway culture", he says. The company's approach to energy consumption is no different in this respect: "Vehicles at our Antwerp premises are solar powered. Sustainability is ubiquitous at zZoomer: in our solutions, but also in the way we work."

A bright future

zZoomer already has more than 2,000 vehicles under contract in Belgium. But the scale-up has much greater ambitions... "Our fleet will grow! We started with e-scooters for meal delivery, but soon we also added e-bikes to our range. The next step? We want to help parcel and mail couriers get around more sustainably", says Toon Donné. But the entrepreneur is also considering other opportunities, in “smart” passenger transport. "We are already working on it. Real estate agents at Verimass in Leuven use our e-bikes to get to their appointments. This is a sustainable and comfortable solution, and its helps you avoid traffic jams."

Support from the bank

Given its business activity, zZoomer required substantial financing to get started. "In addition to e-scooters and e-bikes, we also offer electric cars and vans. A fleet like this is quite expensive. A start-up does not have easy access to such large sums of money", recalls the founder of zZoomer, who turned to BNP Paribas Fortis for help. "The only document I had was a good business plan. But the bank’s adviser believed in my project... BNP Paribas Fortis trusted me, because they value projects with a sustainable dimension. The bank really does assume its role in supporting the economy and society", he concludes.

Entrepreneurial success

At BNP Paribas Fortis, we are particularly proud to be supporting passionate, inspiring entrepreneurs. Because building the entrepreneurship of the future together is also an example of Positive Banking!

How can you keep your working capital healthy while incorporating the requisite financial flexibility? Factoring helps you to finance your cash requirements in a proper, timely and suitable way.

Securing liquidity is the key to financing your working capital requirements and keeping your business running smoothly at all times. That's exactly what factoring offers.It is a structural solution for optimising working capital. In the video below (in Dutch) in less than half an hour you will gain a clear picture of what factoring has to offer.

If you prefer to watch the video in French, click here.

Factoring: a tailored structural solution

In exchange for transferring your invoices to an external factoring company, you can count on fast, flexible financing, monitor the collection of your invoices, and protect yourself against potential bankruptcy among your customers. Each factoring solution is tailored to fit the needs of your business. This includes companies operating at international level. In Belgium, one in six companies currently outsource their invoices to an external factoring company. The same trend is evident in other European countries.

Cash management is an SME's frontline weapon, and payment terms are a key means of keeping it under control – providing companies proactively open negotiations with their suppliers. But this solution remains underutilised by entrepreneurs

Cash flow difficulties are the number one cause of company bankruptcy in Belgium. Business owners face a constant battle to stay in control and maintain the balance of their inflows and outflows. Negotiating payment terms is one of the levers that can be employed: shortening them for customers while extending them for suppliers. In Belgium, the statutory deadline between companies is 30 days. Yet the reality can be different, since either trading partner may deviate from the rule. Where one of the parties is in a dominant position, the other is often obliged to accept the conditions it imposes... meaning its payment term becomes longer. Everything is negotiable, however, even with "big" suppliers, as long as you formalise the situation and ensure you protect your business relationship.

Who is your supplier?

They say information is power, and there is some truth in this. Indeed, the more you know about your "opponent", the more you will be able to turn the tables. How are the company's finances, and what is its cash position? Is it experiencing difficulties? Where is it placed on the market, particularly in relation to its competitors? What is your dependency ratio in relation to this partner? How does it make payments, and what is its purchase history? The answers to these questions will allow you to take up better positions in the negotiations, and find the best angle to launch an attack that catches the other side by surprise. Specialised websites, data banks, word of mouth (the competition): all means are justified in order to find out more!

What do you want to gain?

And a resulting question: what are you willing to put on the table to achieve your objective? In other words, you need to be properly prepared and establish a strategy regarding what you are willing to concede (and how much this will cost you) and what you absolutely want to gain in return. Remember that the other party has presumably not requested anything, and potentially has little to gain. Therefore, you cannot arrive empty-handed. Are you willing to order larger volumes in order to extend your payment terms? Can you envisage a long-term contractual commitment? Could you contemplate paying more in return for spreading your debits further? Imagine you are playing poker: clearly, you should keep your cards close to your chest. Wait for the right time to show your negotiating partner that you are prepared to make concessions.

How can you negotiate successfully?

The art of negotiating is a difficult skill. However well prepared you are, keep the following principles in mind:

• Even if you have brought a proposal to the table, listen to the other side and pay attention to detail so that you can react quickly.
• Do not be frightened of bearing your teeth a little, even if you are concerned about spoiling the business relationship with your supplier. Stand your ground and mention what the competition can offer you, for example.
• You must control how you communicate, so that you avoid giving the impression that you have cash management problems. Emphasise that payment delays do not help anyone, and that it would be better to agree on a reasonable and sustainable schedule.
• If your business relationship is established, mention your positive partnership and your desire to see this continue.
• During discussions, regularly refer to how far you have come and your shared progress to date. This positive tone will be well received.
• If the negotiations stall, try to resolve the difficulty by pulling out a trump card, for example (i.e. a concession).
• Remember: a good agreement is balanced, and leaves neither party feeling wronged. So do not be too greedy: the outcome must be worthwhile.
• Are you happy with the situation? Move to finalise the deal, either by accepting what is on offer or by finally opting for a fair compromise.

Companies working with several currencies often want to avoid exchange rate risks and administrative hassle. That is why the bank has come up with a behind-the-scenes solution: the 'embedded FX' service.

Embedded FX? You don't even need to remember the name, because the system works automatically, without you even having to think about it. FX doesn't stand for Hollywood-style special effects, but for Foreign Exchange, sometimes referred to as Cross Currency. You are guaranteed to come across this at some point if you make international payments, since they are not always executed in the currency of the debit account (referred to as 'mono-currency payments'). Sometimes, the currencies of the accounts the payment is being debited from or credited to may not be the same. These are FX payments. During such payments, an exchange takes place: one currency is sold and another bought, without you having to lift a finger.

The volumes on the FX market might be greater than you'd think. To put it plainly: they are enormous. Every day, more than 5 trillion American dollars are traded. That is 5000 billion American dollars, more than the volume involved in global equities trading...in a single day. The FX market operates day and night, and only closes over the weekend from 10 pm on Friday until 10 pm on Sunday.

Wim Grosemans (Head of Product Management Payments and Receivables at the BNP Paribas Cash Management Competence Center):

'On the FX market, banks essentially play the role of a wholesaler: they buy and sell currencies on the international market, and then sell them on to the customer with a mark-up. BNP Paribas is one of the biggest players, ranking among the global top ten. There is no official market rate in this over-the-counter market. Each bank determines the rate at which it wants to buy and sell currencies itself. Unofficial market rates can be found in publications from a number of public institutions (such as the European Central Bank) and private organisations (Reuters, Bloomberg etc.). These are based on the average rate offered by a number of major banks.'

The rate is always determined per currency pair, for example the euro versus the American dollar: EUR/USD = 1.1119. The most traded pair is EUR/USD, which represents 25% of daily trade. Second on the list is the pair American dollar/Japanese yen

(USD/JPY) with 18%, with British pound/American dollar (GBP/USD) coming in third at 9%.

Alwin Vande Loock (Product Marketing Manager Payments and Receivables at the BNP Paribas Cash Management Competence Center):

'As for the rate, banks offer a number of options. The rate can be a live market rate that is continuously being updated. The EUR/USD rate, for example, is adjusted more than 50 times per second. Another option is a daily rate. In this case, a rate is offered that will apply for a certain period.'

For many companies, all of this hassle with exchange rates is a real headache. Too complex, too expensive in terms of administrative costs and too many exchange rate risks. For those customers, banks have a solution: embedded FX.

Wim Grosemans (Head of Product Management Payments and Receivables at the BNP Paribas Cash Management Competence Center):

'When you make a payment in a currency you do not hold an account in, the bank will immediately retrieve a good exchange rate from its colleagues in the dealing room of the Global Markets department. The rate is usually confirmed within one hour after the customer has sent the payment. Unless large amounts are being transferred, the entire process is automatic. The IT systems used are much more efficient than they were just a few years ago, meaning that the bank is less exposed to volatility and can offer its customers a competitive rate. Embedded FX is an efficient and simple alternative for anyone who doesn't want to hold accounts in different currencies and run the exchange rate risks that entails. For the customer, it no longer matters what currency they use: the process is exactly the same. What's more, it gives them peace of mind, because they know that they'll always get a great rate.'