No.your money is the truth, which seemed to be a principle in Germany for decades. But the Crown crisis has also overturned this previous certainty in Germany. Because even here the cash drastically loses consensus. This is the result of the EHI study “Payment systems in retail”. The retail institution reviews member companies for this survey, making it one of the most accurate surveys of its kind.
In particular, the number of banknote and coin payment transactions plummeted from 14.58 billion in purchases paid in twelve months to just 10.11 billion in paid purchases. Expressed as a percentage, the share of cash payments in purchases fell from 46.5% to 38.5%. Looking even further back, in 1994 it was still 78.7 percent.
The sheer drop in numbers can be explained very simply by the fact that numerous stores were closed during the corona pandemic. The relative loss of importance of at least eight percentage points is also partly attributable to the pandemic. At the time, retail was expanding card payment options. A study from the time concluded that 97% of all companies wanted to attach notices indicating the possibility of paying by card or did.
Another reason for the steady increase in card payments is the proliferation of terminals. Even small shops that had previously refused to buy them, mainly for hygienic reasons in response to the Crown crisis. There are now more than 922,000 such terminals. 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 ability, now there are probably nearly 100 million pieces. And what many may have forgotten: the amount that can be used to pay without a PIN was increased from € 25 to € 50 in spring 2020. As a result, the card is drawn and presented much more frequently today. In particular, according to the German Banking Association, 72.6 percent of all payment transactions are now made contactless with the Girocard alone – the previous year it was 61.1 percent. The EHI comes back to other numbers. According to his study, between 78% (self-service department stores) and 87% (drugstores) of all transactions are processed contactless, depending on the retail sector.
All of which has meant that 58.8% of all transactions are now paid for by card. Girocard, as market leader, accounts for 42.4% of this, 9% is paid by credit card and 6% by direct debit. Other procedures such as Maestro, V-Pay, Debit Mastercard or the commercial card account for only 0.6 percent.
small amounts of money
The situation is different when it comes to the number of transactions. Here, 37.9 percent of all payment transactions were made with a card. This is a very strong increase of nearly twelve percentage points and it shows two things: when it comes to small amounts, cash is still king. However, it is also evident that this role is also changing rapidly, thanks to the contactless function, which allows you to pay even small amounts quickly.
Another development is also happening at a rapid pace: retail is increasingly becoming an ATM. Nearly 90 percent of the grocery stores and pharmacies represented in the EHI Payment Systems panel offer cash payments. The average payout amount is stable around 95 euros. This means that every tenth of a euro raised was returned to customers in this way last year. Two years ago it was only 2.8 percent.
Businesses benefit from it
For stores, this is a situation that only the winners know: they offer customers an additional service, while the retail trade has lower costs. Because cash always costs. Retailers keep large amounts of change in stores. To do this, complex security technology must be installed, companies must insure against theft and pay the service providers who deliver and collect money in armored vehicles. Also, there is no interest on the stored money, but everyday things like the wrong exchange also cause costs. Working hours for cash inventory management are also not to be laughed at. An old study from the University of Steinbeis concluded ten years ago that the trade had a loss of 6.6 billion euros. The number is likely to have increased since then solely due to inflation.
One change that the EHI has also noticed directly is the buying behavior of the Germans. The average receipt in 2021 was € 25.90 – the previous year it was € 2.06 less. This is particularly noteworthy given that brick and mortar retail sales fell from € 435 billion to € 430 billion in the previous year. The EHI experts also explain this by contact restrictions: as a result, the trade was visited much less frequently, but then more was bought. Almost 3.4 billion fewer purchases were made. At the same time, gross online sales have gone from € 60 billion in the pre-pandemic period to € 100 billion today.