The Germans’ love of cash is gradually waning. Especially during the corona pandemic, consumers used cards more often than before to pay. A return to the old payment behavior seems rather unlikely. The German Retail Association (HDE) does not rule out that sooner or later the first retailers will no longer be able to accept notes and coins.
According to a survey by the Deutsche Bundesbank, 58 percent of payment transactions for goods and services were settled with notes and coins last year. In the last major survey by the central bank in 2017, it was still 74 percent. “Payment behavior has changed significantly in recent years,” said Johannes Beermann, the Bundesbank board member responsible for cash, on Wednesday in Frankfurt.
According to the Bundesbank, one reason is the increase in online purchases and the reduced use of cash during the corona pandemic. Retailers had advertised paying without notes and coins during the pandemic. In addition, cashless payment has become much easier, said Beermann with a view to contactless payment. The customer no longer has to insert their credit card or Girocard into a reader, the card is simply held in front of the device.
Measured against sales, cash accounted for 30 percent last year. In 2017 it was 48 percent. Of all recorded payments at the till, during leisure time or in online trading, 29 percent were made with a card, based on sales it was 40 percent. Payment cards such as the Girocard were particularly popular. With 23 percent of all transactions, it was the second most frequently used means of payment. During the pandemic, people increasingly paid smaller amounts with it.
Mobile payments with smartphones, smartwatches or fitness bracelets are becoming increasingly popular, especially among younger people. According to the survey, 17 percent of smartphone owners used it to pay at the checkout. For owners of a smartwatch or a fitness bracelet, it was 27 percent. “Mobile payment is gaining in importance, but it has not yet reached the general public,” said Burkhard Balz, the Bundesbank board member responsible for payment transactions and settlement systems.
A general return to the old payment behavior seems rather unlikely. According to the survey, only 11 percent of those who paid less in cash want to use more notes and coins again after the end of the pandemic. However, according to the central bank, more frequent purchases in shops and fewer online orders could increase the proportion of cash payments again.
If the development continues, “sooner or later we will see the first companies that no longer accept cash,” said Ulrich Binnebößel from the German Retail Association (HDE). In addition to falling demand, companies are faced with constantly rising cash handling costs.
A study by the trade research institute EHI published in May also came to the conclusion that notes and coins play a smaller role in shopping as a result of the pandemic. Customers are increasingly using cards instead of cash to pay. As a result, the share of card payments in stationary retail rose from 50.5 percent in 2019 to 58.8 percent last year. The Girocard was the most popular.
The Bundesbank noticed an increased demand for cash this year after thousands of retail payment terminals were out for several days. At the end of May, many customers were no longer able to pay with giro or credit cards when shopping. Among other things, branches of Aldi Nord, Edeka or the Edeka subsidiary Netto were affected.
“We were honestly surprised and of course not amused by what happened there,” said Balz. “For us as the Bundesbank, it is also clear that we still have to work through this case very precisely.” The fact that about 10 percent of the card terminals suddenly failed is “a completely unacceptable situation, which is clearly in the direction of a systemic risk.”(dpa)