Germans are famous for their love of cash and their scepticism about cashless payments. However, Germany is slowly moving towards a more cashless society, with contactless payments growing ever more popular in the federal republic.

The decline of cash payments in Germany

Back in 2018, Germans spent more money using cards rather than cash for the first time ever. Since then, the percentage of contactless transactions has continued to rise and, in 2020, 56 percent of sales in German stores were made via contactless payments. The German bakery chain Kamps even offered a 3 percent “innovation discount” back in June 2020, to customers who paid by card. According to the chain, contactless payments (via card or smartphone) are faster and more hygienic.

Despite the recent worry that cash might facilitate the spread of coronavirus, businesses had already started becoming more inclined towards card payments before the outbreak of the virus, according to Oliver Hommel, payments and open banking expert at Accenture management consultancy.

Due to hygiene concerns regarding the use of coins and banknotes over the past year, the use of cash has decreased even more. A survey by the European Central Bank (ECB) revealed that 40 percent of respondents have used notes and coins less often since the start of the pandemic and would continue to do so. Despite these concerns, there is no evidence that using coins or notes significantly contributes to the spread of coronavirus.

Cashless payments: An EU priority

Ursula von der Leyen, the President of the European Commission, has declared digitisation and cashless payment a top priority, alongside climate change. To promote cashless payments, a 2015 EU regulation requires credit card companies to reduce the fees they charge businesses, allowing them to reduce or scrap minimum prices for card payments.

Concerns over money protection and security have arisen regarding contactless payments. However, the Federation of German Consumer Organisations does not consider contactless payments to be fundamentally insecure or to pose significant risks to data protection.