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Albania's Prime Minister, Edi Rama, won a fourth term in May, promising Albanian citizens that he would lead the country towards the European Union by 2030.
In mid-July, he announced another big plan for the same timeframe: “ We have an ambition: that by the end of this decade, Albania becomes a cashless society, which means that all financial interactions and transactions are fully digital ,” he told representatives of startups and the technology and innovation sector at a meeting titled “Albania 2030, a vision towards European integration.”
" What is needed is more capacity building ," he continued, stressing that the tools needed for a cashless Albania already exist. " I believe that if we manage to properly define the future plan, this goal is fully achievable and will free the country from a heavy burden of outdated practices and inefficiencies that burden daily life ," Rama said.
It all sounds very simple and straightforward. But is it?
"I prefer cash"
In everyday life, Mimoza A., a 62-year-old from Tirana, says that the only time she uses a bank card is when she withdraws her salary from the ATM near her apartment.
"It's not common for people of my generation to use a card to pay for groceries or to the hairdresser. I prefer cash and I always will," she told DW.
Mimoza is not the only one who has this attitude; most people in the country feel this way.
Is a cashless society a futile dream in Albania?
When Albania was freed from the shackles of communist dictatorship 35 years ago, it lacked a modern banking and financial system. Things also progressed slowly after the transition to democracy, with ATMs only being introduced in 2004.
Arben Malaj, who served as Minister of Finance and Economy from 1997 to 2005 and is now a senior financial expert and lecturer, believes that populism is the engine behind Rama's ambition to have a cashless economy.
Malaj says there are a number of key elements that will make it difficult to achieve a cashless society in the next five years.
"The high rate of informality, especially in the agricultural sector, which accounts for a large part of [Albania's] GDP, is much higher than anywhere else in the region. A high percentage of the population lives in rural areas. Also, the bulk of emigrant income - billions of euros a year - is sent outside official payment channels. And Albania's main trading partners - Turkey, Greece and Italy - also have high rates of informality," he told DW.
He warns that any reduction in cash would require massive investments in cybersecurity.
Cybersecurity experts like Besmir Semanaj consider Rama's plan not only unrealistic, but also "dangerous."
Semanaj highlights massive cyberattacks on government institutions in 2024. Targets included the e-Albania system (the government services website) and the websites of the Albanian parliament and the Institute of Statistics.
Semanaj says that these and other major cyberattacks in 2022 clearly show that Albania is not only highly exposed, but also lacks the necessary architecture to protect this critical infrastructure.
"Even the most advanced countries in Europe, such as Sweden or Norway, are reassessing the need to keep a minimum amount of money in circulation, precisely for security reasons and preparedness in cases of emergency or cyberattacks," he told DW.
“So, while the most digitalized countries are keeping ‘offline forecasts,’ Albania says it is planning to become 100% digital in less than ten years, without first building basic cyber defense capacities. An economy that is completely dependent on digital systems and does not have an alternative is an unprotected and exposed economy that would be completely paralyzed by a virus or power outage,” Semanaj said.
'Small and medium-sized businesses will suffer'
Hazis I. has worked as a manager in the tourism sector for about 40 years. Today he manages one of the most popular hotels in Tirana, which is used by tourists from all over the world.
As a rule, foreign tourists prefer to use cards to pay their bills. This is in stark contrast to Albanian hotel customers, who still prefer to pay in cash. This means higher costs for the hotel, because businesses pay bank fees for every card transaction.
Hazis I. is not very enthusiastic about the prime minister's plans for a cashless society.
"I'm against this cashless target because we can deal with tourists who want to use a card to pay for a coffee that costs 1.50 euros. But what am I going to do with those small businesses that supply us with vegetables or cheese from the farm for our restaurant?" he said.
"During the summer season, for example, I regularly buy watermelons from the farmer who sells them on the street corner. He has never used digital payments and I'm pretty sure he never will. This plan will put small businesses out of business. And even we will suffer a lot," he told DW.
Lack of concrete objectives
For financial expert Arben Malaj, the goal of going cashless by 2030 has not yet been set and, therefore, is not measurable. He says the government can only set concrete targets and binding deadlines after institutions, interest groups and academics have closely studied the payments system.
"Currently there is no 'zero cash' economy [anywhere in the world]. And in those countries where there is minimal financial education and lack of digital literacy, weak governance and poor quality of essential public services - such as education, health, social cohesion and solidarity - and where perceived corruption is high, it is impossible to achieve great and sustainable success in the short term," says Malaj.
The Bank of Albania has noticed an increase in electronic payments over the last ten years.
“The public has benefited from lower costs, products tailored to their needs and improved access to payment services, which has been reflected in a double-digit increase in the use of electronic payments, reaching 21 electronic payments per capita [per year], compared to just two in 2015,” the bank’s governor, Gent Sejko, said in a press release last year.
A long way to go?
For Semanaj, this is far below the EU standard, where member states count over 300 digital transactions per capita per year.
"E-commerce is limited [in Albania]," he said. "International platforms like Stripe don't work at all in Albania, and small or medium-sized businesses depend on local banks to provide gateways that are often very expensive to integrate. PayPal exists for individuals, but it is not an integrated solution for Albanian businesses. This means that online commerce is limited and blocks Albania's access to global digital commerce."
So, even though Albanian Prime Minister Edi Rama wants to catch up with Europe and join the EU as soon as possible, it seems like Albania still has a long way to go in terms of becoming a cashless society and it will take more than a decade to adapt to this new financial culture. /DW
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