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

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.

A person looks through cash in their wallet.
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 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.

Member comments

  1. 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.

  2. 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.

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For members


7 cultural differences between raising kids in Germany and the US

The Local editor Rachel Stern, an American mom in Germany, details how she's seen children brought up in the Bundesrepublik - and the often stark contrast to parenting styles in the USA.

7 cultural differences between raising kids in Germany and the US

Early independence. According to stereotypes, the good ‘ol USA is the land of freedom-loving folks who value individuality whereas ze Germans must always abide by a strict set of rules. Yet when it comes to parenting, Germans tend to be the ones who are much more lax. It’s a common sight to see kids as young as five or six walking to school by themselves, or jovially jumping around at the playground while their parents are engrossed in their own conversations or even out of sight.

What might be described as “free-range parenting” in the US is simply the norm in Germany. Parents believe that early independence allows kids to build the confidence and common sense to thrive later in life when someone isn’t constantly glancing over their shoulders.

Safety first? While American playgrounds often consist of neatly packed padded equipment and foam floors, German Spielplätze frequently host a labyrinth of long metallic tubes, tall towers and wobbly wooden bridges. Don’t German parents also worry about their kids getting hurt? Of course, but their philosophy tends to be that if they fall, they will pick themselves up again and learn to do the task at hand better the next time around.

A six-year old at a playground's obstacle course in Hanover. Photo: picture alliance/dpa | Julian Stratenschulte
A six-year old at a playground’s obstacle course in Hanover. Photo: picture alliance/dpa | Julian Stratenschulte

They also tend to trust preteen kids’ own basic judgment in walking to school on their own. In the US, where either bright yellow school buses or parents themselves carefully chauffeur their children to the classroom, this would usually be unthinkable in Germany. Some US states even have laws mandating a minimum age a child can be left alone, and there have been several instances of parents receiving a call from Child Protective Services for letting their preteens play in the neighbourhood park themselves, sans supervision.

Daycare vs Kita. In the US, the word daycare tends to be synonymous with a last-ditch alternative for parents who have to return to work (often shortly after giving birth). Yet in Germany, “Kitas” – childcare which stretches through the Kindergarten age – are coveted institutions in which many parents vie for a spot. Since 2013, all kids in Germany from age one are entitled to a “Kitaplatz” – and the search for one often notoriously begins during pregnancy.

By the age of three, 92 percent of all German children are in a Kita, according to the OECD. While many American parents pride themselves on keeping their kids out of daycare if they have the resources, Germans generally boast of the early socialisation and “Selbstständigkeit” (self-reliance) that Kitakinder pick up. It helps that they are free of charge in Berlin and Hamburg, and heavily subsidised in the rest of the country.

READ ALSO: What foreign parents in Germany need to know about ‘Sprach-Kitas’

Children at a kita in Hanover. Photo: picture alliance/dpa/Fellowes GmbH | Fellowes GmbH
Children at a kita in Hanover. Photo: picture alliance/dpa/Fellowes GmbH | Fellowes GmbH

Embracing germs. “It will build their immune system,” is a common adage for Germans to stay zen when their small child has shovelled sand in their mouth or eaten food that’s fallen under the table. American parenting publications, however, are abound with articles on how to steer children clear of germs, which one deemed “Public Enemy Number One.” German ones, on the other hand, often seek to reassure parents that exposure to Keime (the word for both germs and bacteria) is okay – and even beneficial in preventing the allergies that can arise from a too-sterile environment.

No bad weather. As with the even colder Nordic countries, there’s an expression in Germany that translates to: “There’s no such thing as the wrong weather, only the wrong clothes.” Just like how Germans are religious about opening their windows wide at least once a day in the heart of winter to let in fresh air, most are also firm believers in the benefits of bundling up babies and children and taking them outdoors daily.

This could explain why roughly two thirds of German children spend an average of 108 minutes outside per day. Compare that to the US, where children are estimated to devote four to seven minutes to unstructured outdoor play per day

Play that doesn’t fit in a plan. Most Americans know the stereotype of the soccer mom – a minivan driving, middle-class mother who shuttles her offspring to sports and a myriad of “extracurriculars”. It’s a true reflection of a culture in which children are often over-scheduled with various activities and classes by their well-meaning parents starting from an early age. 

Yet many German parents would rather that their kids “be bored”, or be left alone with their own interests in order to develop their creativity and problem solving skills. Starting at Kita, children are encouraged to partake in unstructured play, which teachers say brings much more value than being able to read by the age of five. 

READ ALSO: 7 surefire signs your kids are definitely German

Discipline, or lack thereof. A German school yard may look a little Lord of the Flies-esque, with kids playing (and often fighting) on their own. While teachers would of course intervene in a more serious situation, they often try to let kids work out their own conflicts, or engage in a dialogue with them about why they did (or did not) do something.

This attitude is common among German parents too, rather than embracing fear tactics as a consequence for misbehaving. Unlike in some parts of the US, spanking isn’t supported (and is in fact illegal) and “getting grounded” – a form of house arrest that US parents place on older kids who misbehave – is not common and frowned upon. That’s not surprising in a country where children learn to make their own decisions, independent of their parents, from an early age.