In the past, to get anywhere in Germany, you’ve needed a fistful of banknotes and a pocket full of coins - but concerns about hygiene during the coronavirus crisis have finally come between the country and its preference for cash. According to a new report, card payments are expected to overtake cash payments in Germany for the first time ever in 2020.
Coronavirus crisis ends Germany’s preference for cash
In Germany, cash is king. Everybody knows that. Over the years, Germans have stubbornly kept hold of their banknotes and coins, even as other countries across the world embraced the speed and convenience of bank cards, contactless payments and digital wallet services.
But the outbreak of the coronavirus pandemic finally forced people in Germany to embrace new technologies, as concerns about hygiene prompted a desire not to handle physical cash. This shift was further accelerated when the German government opted to double the transaction limit on contactless payments to 50 euros.
These changes seem to have finally dragged Germany - kicking and screaming - into the 21st century. Cashless transactions rose by 48 percent in May 2020 compared to the previous year, according to the National Association of German Cooperative Banks. And now a new Euromonitor report has predicted that card payments will “exceed cash payments in Germany for the first time in history in 2020.”
“As a response to the COVID-19 pandemic, German consumers showed an abrupt shift in payment behaviours, increasingly using card payments over physical cash for hygiene reasons,” explained Ratna Sita, head of DACH research at Euromonitor International. “Many of them started to use the contactless card function and smartphones for mobile payments for the first time.”
The study, published as the white paper, “The German consumer: A rapid development in the midst of the crisis”, forecasts that the total value of card transactions will increase by 28 precent between 2019 and 2025, while the value of cash payments will decrease by 34 percent over the same period.
The study also found that consumers in Germany are increasingly satisfied with data protection around card usage, dispelling privacy concerns that historically prevented them from making the switch. Trust in security measures, card providers and merchants is also on the rise, and consumers are increasingly appreciative of the convenience of payments that don’t require a PIN or signature.