A customer paying by debit card in Nuremberg. Photo: DPA.
While cashless payments are widespread and growing rapidly in much of Europe as well as the rest of the world, Germany still lags far behind.
But Germany could soon get on the bandwagon, says Deutsche Bank CEO John Cryan, who says paying by cash in the country is "inefficient and terribly expensive." Within ten years, it will disappear, he adds.
Hardly any other nation likes paying with Bargeld (cash) as much as the Germans do.
According to Barkow Consulting, only about every twentieth payment in Germany is processed by credit card. Statistically speaking, says founder Peter Barkow, each German citizen keeps €2,200 cash at home.
Germans moreover carried an average of €103 in their wallets in 2016, a study by the European Central Bank revealed, compared with an average only €65 in the Eurozone.
Moving closer to completely digital or card-based systems is going at a snail’s pace in the Bundesrepublik. Between 2010 and 2016, cashless payments rose by only seven percent per capita, a recent study by Boston Consulting Group (BCG) based in Berlin showed. Only two other countries – Italy and Spain – trailed behind Germany in the study.
“In Germany, restaurant visits and groceries are paid in cash more than twice as often as the European average," says BCG expert Holger Sachse.
“Only a quarter of consumers believe that cashless payments are safe," Sachse adds.
Meanwhile in Scandinavian countries, the UK and the US, even for small purchases it's common to use one's credit card.
In Sweden, only one out of every five store purchases was paid for with cash in 2015. And some restaurants in the city no longer accept cash at all. This stands in stark contrast to Berlin, for instance, where many cafés and bars have signs at their entrances that warn: "Cash only."
Thus, skepticism over cashless payments in Germany is seemingly not just due to consumers. There also seems to be a lack of terminals for debit and credit card-based payments. A study by the Institute of Economic Research shows that for every cash machine in Germany, there are 13 terminals for cashless payments. In Sweden this figure is 91.
The slow progression of Paydirekt – a cashless payment service that German banks hoped would compete with US company PayPal – furthermore shows that Germans are not keen on parting from their beloved Bargeld.
When shopping online, Paydirekt users can pay invoices directly from their account without having to transfer data to third parties. But about two years after its launch, the service has 1.6 million customers. By way of comparison, PayPal has 19 million customers. Paydirekt customers also have access to only 20 percent of the most important online retailers in Germany.
But another potential market competitor could trigger a decline in Germany's use of notes and coins. According to unconfirmed reports, US tech giant Apple plans to introduce its own payment service in the country. If implemented, it would allow consumers to use their smartphones to pay for purchases in shops and online via stored account data.