Cash is also disappearing in Germany

NOTOur money is the truth – this seemed to be a principle in Germany for decades. But the Corona crisis has also upset this old certainty in Germany. Because here, too, cash is losing support considerably. This is the result of the EHI study “Payment systems in retail”. The retail institute polls its member businesses for this survey, making it one of the most accurate surveys of its kind.

Specifically, the number of cash and coin payment transactions fell from 14.58 billion paid purchases in twelve months to just 10.11 billion paid purchases. Expressed as a percentage, the share of cash payments in purchases increased from 46.5% to 38.5%. Looking even further, in 1994 it was still 78.7%.

The absolute drop in numbers can be explained very simply by the fact that many stores were closed during the corona pandemic. The relative loss in importance of at least eight percentage points can also be partly attributed to the pandemic. At that time, retail was expanding card payment options. A study at the time came to the conclusion that 97% of all businesses wanted to attach notices indicating the possibility of card payment or did so.

Another reason for the constant increase in card payments is the proliferation of terminals. Even small shops that previously refused to buy them, mainly for hygienic reasons in response to the Corona crisis. Today there are more than 922,000 terminals of this type. Before the pandemic, there were only 857,000 stations.

Contactless is becoming more and more important

The third major development concerns contactless payment. More and more cards have been equipped with this capability, now there are probably close to 100 million parts. And what many may have forgotten: the amount that can be used to pay without a PIN has increased from 25 to 50 euros in the spring of 2020. As a result, the card is removed and presented much more frequently today. Specifically, according to the German Banking Association, 72.6% of all payment transactions are now made contactless with the Girocard alone – the previous year it was 61.1%. The EHI again comes up with other numbers. According to his study, between 78% (large self-service stores) and 87% (pharmacies) of all transactions are processed contactless, depending on the retail sector.

All this means that 58.8% of all transactions are now paid for by card. The Girocard, as the market leader, represents 42.4%, 9% is paid by credit card and 6% by direct debit. Other procedures such as Maestro, V-Pay, Debit Mastercard or commercial card represent only 0.6%.

small amounts of money

The situation is different with regard to the number of transactions. Here, 37.9% of all payment transactions were made with a card. This is a very large increase of almost twelve percentage points and shows two things: when it comes to small amounts, cash is still king. However, it is also obvious that this role is also changing rapidly – thanks to the contactless function, which makes it possible to pay even small sums quickly.

Another development is also happening at a rapid pace: retail is increasingly becoming an ATM. Nearly 90% of grocers and drugstores represented in the EHI “Payment Systems” panel offer cash payments. The average amount of payments is stable around 95 euros. This means that every tenth of a euro collected was donated to customers last year. Two years ago, it was only 2.8%.

Businesses benefit

For stores, this is a situation that only winners know: they offer customers an additional service, while retailing has lower costs. Because money always costs money. Retailers hold large amounts of change in stores. To do this, complex security technology must be installed, companies must insure against theft and pay service providers who deliver and collect cash in armored vehicles. Also, there is no interest on stored money, but everyday things like bad change also incur costs. The working time for the management of the cash stock is not to be neglected either. An older study by Steinbeis University came to the conclusion ten years ago that the trade suffered a loss of 6.6 billion euros in this way. The number is likely to have increased since then solely due to inflation.

A change that the EHI has also noticed directly is the buying behavior of Germans. The average receipt in 2021 was EUR 25.90 – the previous year it was EUR 2.06 less. This is particularly noteworthy given that brick-and-mortar retail sales fell from €435 billion to €430 billion the previous year. The EHI experts also explain this with the contact restrictions: as a result, the trade was visited much less frequently, but more was bought. Nearly 3.4 billion fewer purchases were made. At the same time, gross online sales have risen from 60 billion euros in the pre-pandemic period to 100 billion euros today.

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