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Ask an expert: Why is cash still so popular in Germany - and is it changing?

The Local Germany
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Ask an expert: Why is cash still so popular in Germany - and is it changing?
A person looks through cash in their wallet. Germans still have a fondness for Bargeld - but it is changing. Photo: picture alliance/dpa | Monika Skolimowska

Many foreigners in Germany are surprised to find that cash is still a big part of daily life. We asked an expert to find out why, and if the habit is changing.


Many countries have embraced card and contactless payments, and seem to be moving in the direction of ditching cash altogether.

But Germany remains a lot slower on that front. A study from last year found that - in an international comparison - Germans still prefer to pay with cash.

According to the survey commissioned by the Swedish payment service provider Klarna, almost half of Germans (49 percent) said they still prefer to pay with cash. At the other end of the scale - only nine percent still use cash in Sweden, and in Finland it's 15 percent.


In fact, it's only in neighbouring Austria where cash is almost as popular as in Germany, with 47 percent of the population using it, according to the survey.

We decided to ask an expert in Germany to find out what's going on. Here's a look at our interview with Mailin Schmelter, the payment expert at the IFH (Institute for Trade Research) based in Cologne. 

READ ALSO: Why Germans are finally choosing card over cash 

The Local: Many of our readers have moved to Germany from another country, and they are surprised to find that cash is still very common in Germany. Why do you think it is still so commonly used in Germany? Do people in Germany just love using Bargeld?

Mailin Schmelter: It seems that way. Germans love their Bargeld, especially before corona. But the pandemic has achieved what hardly any expert would have dared to predict at the German POS (point of sale) - the German's favourite payment method “cash” has drastically lost importance.


According to one study, in January 2022 most consumers (65 percent) said they preferred to pay contactless rather than with cash (58 percent). It's not only the associated increased hygiene awareness that caused this development. Convenience is the key success factor and payment by card or even contactless payment is far more convenient than using Bargeld. The main reason why new payment methods at the till are seldom used is the challenge of the first time try-out. Customers who have paid contactless once will usually do so again.

It's interesting to know that Germans are moving towards card payment. But there are still many places (especially smaller shops and restaurants) that still ask for "cash only". This is still quite different to places in Scandinavia for example. So I wonder if you know why Bargeld is still common in these businesses? Is it just a habit that's hard to change, but is changing as you say? Is it to do with credit card fees?

The number of small shops and restaurants which accept cashless payment is constantly rising – mostly because customers expect to pay cashless more and more. But (credit) card fees are the main reason why small shops/restaurants in particular still depend on cash. Some might even say it is because of tax reasons, too.

Have you seen any other changes in recent years in the trends for paying for goods in Germany?

In the online payment process, habits and preferences in terms of payment methods, have seen a stable development in recent years. German consumers still prefer to pay by invoice, although PayPal has now caught up and is either in second or even first place, depending on the age of the respondents.

Payment expert Mailin Schmelter of the IFH (Institute for Trade Research) in Cologne.

Payment expert Mailin Schmelter of the IFH (Institute for Trade Research) in Cologne. Photo: IFH

In stationary retail, we have seen a breakthrough for cashless payment methods since Covid. With this development, Germany is actually lagging behind. In Europe as well as in the USA and China, cashless and contactless payments are already the norm. Developments in Germany are much slower here.

READ ALSO: 'They thought it was witchcraft': The verdict on paying contactless in Germany

The EC card seems to be very important in Germany. In fact some places like post offices only accept EC cards or cash. What is the EC card and why is it so important in Germany? Why do these places not accept a credit card?

The EC card, or more recently the Girocard, is a special card (similar to a bank issued debit card) used in connection with the Eurocheque system with a validity of between two and three years. The EC card is valid only for the account indicated on it and issued only in the name of the account holder or an authorised representative. In Germany, the Girocard is a service offered in combination with the bank account and is therefore typically cheaper than credit card fees. This applies for the companies too - credit card fees for retailers are higher than fees for payments with Girocard.


READ ALSO: How Germany's EC card is set to go digital

Germany - and Germans - are known for being very debt-averse so tend not to go wild with credit cards. Do people tend to use credit cards in Germany in the same way as they do in places like the USA and the UK?

Once again, it seems to be a habit effect that causes Germans to pay mainly with Girocard. Credit cards are often used abroad or for refueling. Nevertheless, we have seen massive changes here as well in the last five years. Younger generations in particular are increasingly using credit cards in the same way as the Americans or the English do.


Comments (2)

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Anonymous 2022/08/13 11:03
Nothing this expert says goes beyond what one can come up with without being an expert. But most importantly, none of what she says actually explains the phenomenon. Other countries also have credit card fees, yet people are predominantly using credit cards. Germany is one of the wealthiest countries in the world, and you are saying that credit card fees are so problematic, the whole nation is not using them? So, it comes down to cultural factors then. But this expert provides exactly zero data to support this assertion. I can counter her baseless statements by my own anecdotes, that I know a lot of Germans who would love to use credit/giro cards, but they are just not accepted anywhere. So, the mystery remains.
Anonymous 2022/08/11 20:23
Cash is king. I love the way Dave Ramsey explains it. Which I will utterly butcher.. When you pay with cash you feel the pain of a purchase. Makes you wiser with your spending. When you pay with card you get the goods and your card back. No pain. You typically spend 20%+ more when paying by card. If there was advice I could give to my younger self. It would be use cash only. When its gone. Its gone. With the times of this inflation people are returning to using cash more. After years of more debit payments 2022 cash is making a comeback.

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