Cashless businesses on the rise in Cyprus as cash use declines

Cashless businesses in Cyprus are becoming more visible as the shift towards electronic payments accelerates. Some businesses in Nicosia have stopped accepting cash, citing the cost and difficulty of handling daily takings, bank charges and the declining use of cash by customers.

However, data from the European Central Bank (ECB) show that many Cypriots still consider access to cash important, even though relatively few prefer it for everyday purchases. The trend has also raised questions about whether businesses can refuse cash payments under Cyprus’ current legal framework and how the planned digital euro will fit into the changing payments landscape.

Why some businesses are going cashless

Two businesses in Nicosia told Economy Today that they had adopted card-only payments for practical and operational reasons. They requested anonymity.

They said limited access to bank branches made it more difficult and time-consuming to manage and deposit daily takings. Bank charges, the practicalities of running a till and the ability to monitor staff and transactions also influenced their decisions.

Both businesses had noticed a steady decline in cash payments, reducing the practical cost of no longer accepting banknotes and coins.

The reasons broadly match findings from the ECB’s 2026 survey of eurozone businesses that do not accept cash. Some 36% said customers rarely used cash, while 35% cited difficulties depositing or withdrawing it and 29% pointed to security concerns.

The survey also found that only 76% of Cypriot small and medium-sized enterprises selling through physical outlets accepted cash, the lowest share in the eurozone. The Cypriot sample included 101 businesses in retail, restaurants, hotels, and arts, entertainment and recreation.

Card payments are mandatory, but cash rules remain unclear

Since September 2021, businesses across a broad range of retail and service activities have been required to accept card payments from consumers under the relevant decree and its amendments. According to the Tax Department, non-compliance can result in an administrative fine of up to €4,000.

Cash already has legal tender status in the eurozone. The ECB, referring to a 2010 European Commission recommendation, says cash should generally be accepted and that a sign refusing cash is not sufficient on its own to justify rejecting it.

Recognised grounds for refusal include difficulties providing sufficient change and specific physical security risks. The parties may also agree to use another payment method.

Asked by Economy Today whether businesses can refuse cash altogether, Cyprus’ Finance Ministry acknowledged that cashless practices exist in several European countries and said the issue is linked to the euro’s status as legal tender. However, its response did not clarify whether a blanket refusal of cash is permitted under Cyprus’ current legal framework.

The ministry supports the European initiative to strengthen cash acceptance and access. It said Cyprus already has a relatively developed payments framework and a high level of access to both cash and electronic payment methods.

Any legislative or other changes, it added, would depend on the final content of the proposed EU regulation and would be assessed in cooperation with the Central Bank of Cyprus and other relevant authorities.

“The digital transition and the promotion of innovative payment methods should not lead to the exclusion of cash,” the ministry said, adding that the digital euro should complement rather than replace physical money.

In December 2025, the EU Council agreed its negotiating position on strengthening cash’s legal tender status. The proposed rules seek to prohibit businesses and service providers from generally refusing cash, subject to limited exceptions such as remote purchases and unattended points of sale. Member states would also have to monitor cash acceptance and access and take corrective action where necessary.

The pandemic accelerated the shift away from cash

ECB figures show how sharply payment habits have changed in Cyprus. Cash accounted for 87.9% of payments at physical points of sale in 2016 and 82.7% in 2019. The share then fell to 59.4% in 2022 and 48.5% in 2024.

The biggest change came between 2019 and 2022, when cash use dropped by 23.3 percentage points in three years. Public health restrictions, the spread of contactless payments and the shift towards online shopping encouraged more people to use digital payment methods.

Online payments also grew significantly. They accounted for just 0.8% of everyday payments in Cyprus in 2019, rising to 15.6% in 2022 and 26.4% in 2024.

The trend continued after the pandemic. Between 2022 and 2024, cash use in Cyprus fell by almost 11 percentage points, the largest decline recorded in the eurozone over that period.

Many Cypriots want to keep access to cash

Despite the decline in cash payments, the ECB’s SPACE 2024 survey found that 56.8% of Cypriots considered it very or fairly important to retain the option of paying with cash. Only 17.7% identified cash as their preferred payment method at physical points of sale.

The figures highlight the difference between the payment method people use most often and the option they want to retain.

Privacy, household budgeting and the ability to pay during technical disruptions all contribute to cash’s continued importance.

In 2024, Cyprus and Luxembourg recorded the highest median amount of cash carried in wallets in the eurozone, at €82. Meanwhile, 12% of Cypriot respondents declined to say whether they kept additional cash outside their wallets, the highest share in the eurozone. The ECB linked the finding to the importance some people attach to the privacy associated with holding and using cash.

ATM data point to another change in behaviour. Withdrawals in Cyprus totalled approximately €2.6 billion in the second half of 2025. Although the number of withdrawals declined, their total value remained relatively stable compared with the same period in 2024.

The average withdrawal increased by 27% in three years, from €307 in the second half of 2022 to €390 in the second half of 2025. In other words, people are visiting ATMs less often but withdrawing larger amounts each time.

The transition to digital payments has not been equally easy for everyone. In the SPACE 2024 survey, 12% of respondents in Cyprus said they had needed help making an online payment or paying by card or mobile phone, the highest proportion in the eurozone.

The Finance Ministry also recognises that cash remains important for certain groups and helps make the payments system more resilient during technical or operational disruptions.

Cyprus leads the eurozone in card payments

According to the Central Bank of Cyprus’ statistical report for the second half of 2025, card payments accounted for 75% of the total volume of cashless transactions in Cyprus, compared with 57% across the eurozone.

This placed Cyprus first among eurozone countries for the share of cards in cashless transactions. The figure measures a different set of transactions from the ECB’s data on cash use at physical points of sale and should not be compared directly with those figures.

Panayiotis Polydoros, Mastercard’s senior vice-president and country manager for Greece, Cyprus and Malta, told Economy Today that consumers should remain in control of their payment choices.

He stressed the importance of maintaining access to a wide range of reliable payment methods, allowing people to choose the option that best meets their needs and preferences.

Electronic payments and tax transparency

The expansion of electronic payments has also been linked to efforts to reduce the shadow economy.

The Finance Ministry told Economy Today that electronic transactions leave a clearer record, making it easier to cross-check information, identify discrepancies and conduct tax audits. This can discourage undeclared economic activity.

However, the ministry said it was difficult to calculate precisely how much of the increase in tax revenue could be attributed exclusively to electronic payments. Other factors include economic growth, the digitalisation of tax administration, targeted inspections and legislative changes.

Overall, it described the impact as positive.

The ministry also pointed to the 2026–2028 Strategic Framework, which highlights electronic payments and the modernisation of tax procedures. These efforts include expanding the Tax Department’s online services, introducing electronic tax returns and developing tools to improve compliance.

According to the ministry, the best results come when electronic payments are combined with a proportionate tax framework, a broad tax base, modern information systems, effective inspections, information sharing and simpler compliance procedures. It also places the recent tax reform within this wider effort.

The digital euro is intended to complement cash

The Central Bank of Cyprus describes the digital euro as part of the response to the challenge of maintaining public money, trust and European autonomy in an increasingly digital payments environment.

Stelios Georgakis, director-general of the Central Bank’s Payments Directorate, told Economy Today that the main difference between the digital euro and existing electronic payments is that the digital euro would be central bank money. Current electronic bank payments generally involve a claim against a commercial bank or private payment provider.

The digital euro is intended to offer a pan-European payment method that people could use regardless of their country, bank or commercial platform. It would support payments in shops, online and between individuals.

The Central Bank has stressed that it would not be a cryptocurrency and would not be designed to replace cards, banking apps or cash.

Under the EU Council’s negotiating position, basic services such as opening and closing an account and making payments would be provided to consumers free of charge. The proposed framework also envisages limits on the amount of digital euros an individual could hold, helping to protect bank deposits and financial stability.

These provisions remain part of the developing legislative framework.

Offline payments and the next steps

One important feature under consideration is the ability to make certain digital euro payments offline. This would allow transactions to take place without an internet connection, improving resilience during temporary network disruptions.

Design options are also being explored to give offline payments privacy features closer to those associated with cash.

The project remains in preparation and depends on the completion of the EU’s legislative framework. According to the Central Bank of Cyprus, the Eurosystem aims to be ready for a possible digital euro launch towards the end of the decade.

Before then, the ECB plans to conduct a 12-month pilot from the second half of 2027, with the Central Bank of Cyprus participating alongside selected payment service providers and merchants.

The Central Bank nevertheless emphasises that physical cash would continue to play a crucial role during a widespread disruption.

Also read: Cyprus development budget: millions left unspent
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