Will Covid End German’s Love of Cash?
By: Ani Calis
Tags: Payments, Germany, Economy, Pandemic, Digitization

Will Covid End German’s Love of Cash?

Germans have mostly refrained from using cards for their payments. What are the reasons? Is it still the situation or has pandemic brought a change? Ani Calis Dec 26, 2020·4 min read

Photo by Micheile Henderson on Unsplash

Year 2013. I moved to Germany to study a Masters, having no idea how long I would live there. Year 2020, I am still living in the same country, already finished my Masters and working in an industry that I would never have imagined.

Germany has brought a lot of change into my life. It seems, however, the country itself has not changed in specific areas. After few months of living in Germany, I was shocked by one particular thing — actually I am still after 7 years.

Germans love cash money. What that means, most of the time I need to have few euros in my purse to buy a coffee when I am on my way to work. Surely, this may change in some cases. For example, unless I prefer to buy my coffee from a local shop or I buy only coffee but more, which might enable me to pay via credit card — some shops give the customer possibility to pay via cards if a certain amount is spent.

Cash might be dying, but still is a ‘king’

What does this mean for a non German living in Germany?

Imagine you spontaneously want to have a dinner with your friends and you go to a restaurant — regardless of where you live — and see the sign “cash only”. Not only is it irritating not to be able to enjoy a casual experience, but it also brings up the question ‘why’.

Why do most of Germans, who are known as pragmatic, rational people, having the biggest economy in Europe and many technological innovations, refrain from card payments?

Historical and cultural reasons

The answer is simple and is related to German history and culture. Cash money represents trust, security, privacy, which in this case are more prioritized than the utility and convenience — the two other features that Germans can be related to.

For Germans, having something tangible in the hand means more transparency and trust. The latter brings along the security they need. The feeling that they know exactly how much they spent and how much is left, means no surprise debt at the end of a month. Financial caution and avoiding debt have been major issues in German’s daily life.

Last but not the least, keeping the transactions private and not sharing any personal data with others is the pillar of the privacy, which was missing in the previous years when Germany suffered from state surveillance.

Do these reasons mean there is no change?

Pandemic: Time for cultural shift?

When we had the first restrictions due to Covid-19 in Germany, one of the first questions I asked myself was:

How will this affect German’s opinion on the payment options?

Photo by Paul Skorupskas on Unsplash

A recent survey, by the German Payment System Initiative, shows that today 57% of Germans use cards more than they did before the pandemic. It is a significant increase for a society, who is highly connected to its cultural and historical values.

It does not mean that Germans were not using debit or credit cards before pandemic though. They have indeed been used by the younger generation in particular with the increasing popularity of online bankings in the country such as N26 — Berlin based online banking startup. Nevertheless, according to Georg Hauer, for the first time cash payments have been discouraged in the country and pandemic has probably changed German’s behavior on payment faster than any technology ever has.

Does this mean from now on I can buy my coffee with my credit card without any worry?

Not entirely, if I still want to ensure my purchase. Despite the recent increased numbers in the adoption of payment cards, many people — mostly older generation — feel insecure while paying with debit or credit cards and would rather pay cash as long as they can since it provides them with the stability and security they look for.

What about the younger generation? For us it is easier to respond to change, we are more flexible comparing to the previous generations and are more inclined to adopt the new, which definitely supports the potential of the shift in the society’s behavior regardless of its speed. So, let me go back to the title.

Will Covid end German’s love of Cash? Most probably not. Has it brought change? Yes, inevitably. However, as Agnieszka Gehringer says, the average German’s need for security, will continue slowing down the process.