In Germany, where cash has been king for so long, cards take the lead

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Germans' devotion to cash is waning, as payments cards edged out cash for total transaction value in German retail sales in 2018.

Last year consumers in Germany spent €209 billion (about US$ 235 billion) in retail (excluding e-commerce, mail order, automotive and other miscellaneous) using payment cards, compared to €208 billion (about US$ 234 billion) using cash, according to a recent study by EHI Retail Institute, a research firm in Cologne, Germany.

All payment cards constituted 48.6% of retail transaction value compared to cash, which constituted 48.3%. Among payment cards, EHI Retail reported that Giro cards accounted for the bulk of value at 30.1% of total retail transaction value.

As reported in the English-language German newspaper The Local DE, while the total transaction value has shifted toward payment cards, cash is still popular among small-value transactions. More than three-quarters of the 20 billion purchases made in Germany in 2018 were made with cash.

Germany's affinity for cash is well known and has made it difficult for digital payment companies to enter the market and for bank credit card portfolios to grow. Swedish payments firm Klarna, which has long had its sights on building a German payments business, has actively been working with partners to expand in Germany. Klarna acquired the domestic network Sofort in 2014 and Germany’s equivalent of PayPal, BillPay, in 2017.

Other markets in Europe are moving much more quickly to newer payment formats. Last year the U.K. reached the tipping point where half of all retail transactions were conducted with contactless cards.

In Sweden, only 18% of payments made in 2018 were completed using cash, a drop of 15%, according to the Royal Institute of Technology in Stockholm as reported by Visa. According to a forthcoming study by Niklas Arvidsson at Royal Institute of Technology, Sweden will become a cashless society by March 24, 2023.

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