One of the key aspects of any business transaction is the timing of the payment. According to this criterion, payments are divided into two types: cash and credit. This distinction not only affects customers' finances, but it also defines the relationship of debt or independence they establish with businesses.

Although financing high-value purchases is common in Spain, many customers prefer to pay in cash. In fact, according to the Cetelem Observatory's study of consumption in Spain, 74% of those surveyed indicated that they would pay in cash for their household appliance purchases. Achieving greater financial control and avoiding debt are some of the factors that justify this preference.

In this guide, we'll explain what paying in cash means, its benefits for businesses and customers, and the current legal limits.

What's in this article:

• What is cash payment?
  
• Differences between cash payments and credit payments
  
• Advantages and disadvantages of cash payments for businesses and customers
  
• Legal and operational limits on cash payments in Spain
  
• FAQs about cash payments in Spain
  

What is cash payment?

Cash payment is a method of paying the full amount of a purchase at the time of purchase. When paying in cash, there is no instalment plan or deferral, so the customer settles the transaction without incurring a debt.

Differences between cash payments and credit payments

These two payment methods result in a very different shopping experience for both customers and businesses: while one prioritises instant liquidity and the absence of debt, the other focuses on flexibility and deferred payment. Let's look at the main differences:

• Time of payment
  Cash payment occurs instantly (simultaneously with the transaction), whereas when paying on credit, payment takes place at a later date.

• Payment amount
  With cash payment, the full amount of the transaction is paid instantly. Conversely, some credit payment methods – such as instalment payments – divide the total into several instalments, so that the amount of each individual payment is smaller.

• Additional costs
  Generally, paying in cash does not entail additional costs, except in some very specific cases such as fees for instant transfers. In contrast, credit payments often involve additional financial costs, such as interest or origination fees, especially in the case of consumer loans divided into several instalments.

Advantages and disadvantages of cash payments for businesses and customers

In Spain, cash payment is the preferred option for many businesses for a compelling reason: immediate access to liquidity. However, this method also has some drawbacks. Below, we present the main advantages and disadvantages from the perspectives of businesses and customers:

Advantages for businesses

• Greater liquidity
  Instant payments increase business liquidity and improve net cash flow. By not depending on future payments, a business strengthens its solvency and reduces its need to resort to loans for business cash flow. The income from cash payments allows a business to cover regular expenses, such as payroll and payments to suppliers, from its own funds.

• Zero risk of non-payment
  The immediacy of cash payment eliminates the risk of non-payment and the need to manage unpaid invoices. According to the European Payment Report 2025 prepared by Intrum, 12% of invoices in Spain are paid after the agreed deadline, forcing Spanish businesses to dedicate, on average, more than 10 hours per week to the attempted collection of overdue payments.

• Lower administrative costs
  Settlement at the time of sale eliminates the administrative burden related to tracking outstanding payments, whereas credit payments require constant management of collections and due dates. In this regard, using a modern payment platform that offers revenue recovery options can be helpful. For example, Stripe Payments can send automated payment reminders to your customers for payments that are not settled in cash.

Disadvantages for businesses

• Lower average order amount
  Since customers can only buy products or services up to the value of the money they have available, they limit themselves to purchasing what is necessary and usually opt for more affordable options. Therefore, the average amount of these orders is usually lower compared to orders paid for in credit.

• Customer churn
  In certain scenarios, such as large payments to suppliers, credit payment is the most common option. Therefore, if a business only accepts cash payments, some customers might prefer to use competing alternatives that offer greater flexibility in B2B payments.

Advantages for customers

• No debt
  By paying for purchases instantly, customers avoid medium- and long-term debt. This gives them greater financial freedom, as they do not have to deal with consumer loan payments.

• Greater financial control
  Generally, cash payment requires customers to stick to their budgets. This strengthens their control of their personal finances and curbs impulse purchases, which are common nowadays due to the rise of m-commerce or "mobile commerce." According to a Hostinger survey, 35.44% of Spaniards make impulse purchases at least twice a month.

• Savings
  Choosing to pay in cash guarantees the best final price, as customers do not incur additional costs such as fees or interest.

Disadvantages for customers

• Reduced liquidity
  Paying in cash means having less liquidity, since customers must pay the full amount of their purchases up front. Given that a healthy household economy requires having funds to cope with possible unforeseen expenses, many customers choose to pay for larger purchases on credit or in instalments. This rise in instalment payments has caused the amount of new loans to households to increase by 3.9% quarter-on-quarter in May 2025, according to data from the Bank of Spain.

• Inability to pay for high-value purchases
  When paying for high-value purchases, cash payment is not an option for customers if they do not have the necessary funds. For this reason, many resort to credit payments, especially in sectors such as travel. In fact, 45% of Spaniards who pay for their purchases in instalments do so to finance travel.

Legal and operational limits on cash payments in Spain

In Spain, cash payment is not always feasible, as various legal and operational limits apply. We've prepared a summary of the limits that are currently in force:

• Physical cash payment limit
  On 9 July 2021, the anti-fraud law was approved, which set the limit for physical cash payments in Spain at €1,000 (or its equivalent in other currencies), provided that at least one professional or business is involved in the transaction. It's important to note that this physical cash payment limit applies to the total amount of the transaction (including the corresponding VAT), even if the payment is distributed among different payment methods. For example, if a product costs €1,200, it is not legal to pay €900 in physical cash and the remaining €300 with another payment method.

• Instant one-time transfer limit
  The limits on instant one-time bank transfers are by far the strictest. For example, BBVA sets a limit of €5,000 per day on this type of instant money transfer. Ordinary transfers, on the other hand, cannot be considered a cash payment method because they are not effective instantly – especially if they are international. However, customers can provide instant proof of transfer to show that they have already paid the amount. In this case, the limits are less strict; for example, BBVA sets the limit at €30,000 per day. That is why ordinary one-time transfers are the most-used payment method in Spain for high-value payments.

FAQs about cash payments in Spain

Are cash payments the same as paying in physical cash?

Although often used interchangeably, a cash payment does not necessarily have to be made in physical cash; "cash" simply indicates that the full amount of the sale has been paid upon completion of the transaction.

What cash payment methods are used the most for in-person purchases in Spain?

In brick-and-mortar stores, physical cash is the most commonly used payment method: it's used by 57% of customers, according to the Bank of Spain, although its use is decreasing every year. The second most common method is cards (27%), followed by mobile devices (15%), whose use for everyday payments grew by 16% in 2025.

What cash payment methods are used the most for online purchases in Spain?

Although the term "cash payment" is commonly used for in-person sales, it can also apply to digital environments if payment is made in full upon completion of the transaction. In electronic commerce, cards are by far the most used payment method: according to Stripe data, 48% of ecommerce purchases made in Spain were paid by card. Meanwhile, e-wallets account for 29% of all online payments.