Cash is king no more in Germany as plastic money gains ground

A card slot for various credit and payment cards is seen in Duesseldorf, Germany. Cash accounted for 47.6 per cent of transactions in Germany last year, the first time it has fallen under 50 per cent since recording beganin 2008, due mainly to an inc
A card slot for various credit and payment cards is seen in Duesseldorf, Germany. Cash accounted for 47.6 per cent of transactions in Germany last year, the first time it has fallen under 50 per cent since recording beganin 2008, due mainly to an increase in the use of cards.PHOTO: REUTERS

FRANKFURT (REUTERS) - Cash no longer makes up most of the money spent in Germany, a Bundesbank study showed on Wednesday (Feb 14), denting a historical supremacy over other means of payments rooted in the country's longing for privacy and freedom.

The survey showed cash accounted for 47.6 per cent of German transactions by volume last year, down from 53.2 per cent three years earlier and below the half mark for the first time since polling started in 2008.

Cards were mostly responsible for the change as they grabbed a 39.4 per cent market share last year compared to 33.4 per cent in 2014, mirroring a global trend that has long taken hold in many other countries including Sweden and Britain.

"Cash remains the most popular, but card payments are increasing," Bundesbank board member Carl-Ludwig Thiele said.

Internet payments also grew but still accounted for a modest 3.7 per cent of total volume.

Germans and Austrians are the biggest users of cash among countries in the euro zone's richer "core", according to a recent study by the European Central Bank (ECB).

This preference has been associated to worries about their privacy and a deeply ingrained diffidence towards the state, which some trace back to the era of the Nazis and of communist East Germany.

The Bundesbank survey found most Germans thought that cash was useful to teach children about the use of money and to ensure a better control of one's personal finances.

The vast majority also believed the abolition of notes and coins would cause problems to parts of the population, such as the elderly, while only a third saw it as a way to fight tax evasion and money laundering.

A government plan to push for an upper limit of €5,000 (S$8,160) to cash payments was met with fierce resistance two years ago, including by the country's own central bank.

And the Bundesbank mounted a lonely opposition in 2016 to the ECB's decision to retire the €500 note, its highest denomination, due to suspicions it was used by criminals.

Mr Thiele said on Wednesday he was still hoping the purple bill would make a comeback when a new series of euro banknotes is unveiled.

He added that an estimated 50 per cent of cash issued by the Bundesbank ends up outside the euro zone, brought by migrant workers, German holidaymakers and citizens from high-inflation countries seeking a way to preserve the value of their money.