Will the German love affair with cash ever end?

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.

Will the German love affair with cash ever end?
A customer paying by debit card in Nuremberg. Photo: DPA.

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.

READ ALSO: Vast majority of Germans never want to give up cash, poll shows

Photo: DPA.

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.


Where in Germany do people have the highest disposable income?

An economic study has shown huge regional differences in income throughout Germany. So which parts of the country have the most to spend each month, and which are feeling the squeeze?

Where in Germany do people have the highest disposable income?

A study by the Economic and Social Sciences Institute (WSI) of the Hans-Böckler foundation reveals stark regional differences in disposable income in Germany. In some cases, households had as much as double the spending money of those in other parts of the country. 

Here’s where people have the most – and least – disposable income each month.

What is disposable income?

The WSI calculated disposable income as the sum of income from wealth and employment, minus social contributions, income taxes, property taxes and other direct benefits or taxes.

What’s left is the income which private households can either spend on consumer goods or save.

The study, which was based on the most recent available national accounts data for 2019, looked at the disposable income of all of the 401 counties, districts and cities across Germany.

Which regions have the highest and lowest disposable incomes?

The study found that the regions with the highest disposable incomes were in the southern states.

Heilbronn in Baden-Württemberg had the highest disposable income of all 401 German counties and independent cities – with an average per capita disposable income of €42,275. The district of Starnberg in Bayern followed in second place with €38,509.

READ ALSO: REVEALED: How much do employees really earn across Germany’s states?

By comparison, per capita incomes in the cities of Gelsenkirchen and Duisburg in North Rhine-Westphalia were less than half as high, at €17,015 and €17,741 respectively. These regions had the lowest disposable income in the country. 

The study also found that, more than thirty years since German reunification, the eastern regions continue to lag behind those in the west in terms of wages.

According to the WSI, the Potsdam-Mittelmark district is the only district in the former east where the disposable per capita income of €24,127 exceeds the national average of €23,706.

Do regional price differences balance things out?

The study also showed that regionally different price levels contribute to a certain levelling out of disposable incomes, as regions with high incomes also tend to have higher rents and other living costs.

“People then have more money in their wallets, but they cannot afford more to the same extent,” WSI scientist Toralf Pusch explained.

READ ALSO: EXPLAINED: When will Germany raise the minimum wage?

Therefore, incomes in the eastern states, adjusted for purchasing power, are generally somewhat higher than the per capita amounts would suggest.

That could explain why, even after price adjustment, the cities of Gelsenkirchen and Duisburg in western Germany continue to be at the very bottom of the list.

Saxon-Anhalt’s Halle an der Saale, on the other hand, which has an average disposable income of only €18,527, benefits from the lower prices in the east.