Cash is King, Cards are Kong

Germany is the Wurst No. 35

Our local Eisdiele (ice cream shop) recently opened for the season and, combined with the fact that my four-year-old can now ride his bike, we often make afternoon or evening trips to get ice cream. A few weeks ago, my kids and I rode our bikes to the ice cream shop after supper. I remember thinking that I should take some cash with me, just in case, and luckily, I found €10 in my wallet. When we got to the Eisdiele, it was a good thing I had a ten spot on me, because not only has a scoop of ice cream become extremely expensive, but only cash payments are accepted at our local ice cream shop. How annoying.

Now, let me preface today’s newsletter by admitting that I absolutely hate paying in cash. Nothing irritates me more than having to get cash, carry cash, or pay with cash. In a perfect world, I would use Apple Pay everywhere I go; but alas, I do not live in a perfect world, I live in Germany.

An example of my perfect world.

Let’s take a closer look at a question I often ask myself: why are Germans so obsessed with paying in cash?

According to the Deutsche Bundesbank, which, in addition to managing the cash flow in Germany, has been collecting data on payment behaviors and publishing its findings since 2008, just over half (51%) of all transactions in Germany were paid in cash in 2023. On average, people in Germany keep about €100 in their wallet at any given time, bunker around €1,300 at home (probably in their pillow or mattress), and are still trading in their Deutsche Mark for Euros. Who are these people? In fact, since the introduction of the Euro currency, the Bundesbank has issued more cash in Germany than any of the other 27 member countries in the European Union. All of these figures were quite surprising to me, as someone who uses mobile payments for 99% of my transactions and usually keeps €1 in my wallet for the sole purpose of unlocking a grocery cart at Rewe.

In order to answer the question why, in the year 2025, cash is still king in Germany, we can look at three main factors: Germans value Datenschutz, Germans dislike debt, and Germans are old. According to one scholar, there are a few key historical events that factor in as well, such as hyperinflation during the Weimar Republic in 1923, during which people could literally wallpaper their living rooms with banknotes, the currency devaluation after World War II which wiped out many people’s savings, and the division of the country during the Cold War which led to widespread poverty in Soviet-controlled East Germany. And, to top off a century of economic turbulence and add to German Angst, Germany was reluctant to accept the introduction of the Euro currency at the turn of the century. Based on these historical events, we can understand the German obsession with cash through the lens of cultural attachment theory, or in layman’s terms, “if it ain’t broke, don’t fix it.” For many Germans, cash is seen as a safe, transparent, and reliable payment method that is more familiar than digital alternatives.

Moreover, Germans are painstakingly sensitive about their data protection, or Datenschutz. By growing extremely tall hedges in their gardens and hanging curtains in their windows, it is clear that Germans value their privacy, and this sentiment extends to online activity, as well. For example, in the same article linked above, one German mentioned he prefers paying in cash so that he can protect his personal information from his bank, and another German chimed in that he would feel surveilled if he used digital payment methods. Okay. The only real surveillance you’ll find here in Germany comes from those Stasi-looking speed cameras that take your picture if you are speeding. And, when that photo arrives in the mail, you can’t help but wonder if a worse picture of you has ever existed. Not that I would know, but my husband has collected his fair share of speeding tickets.

Besides protecting their data from bank surveillance, another reason Germans prefer paying in cash is to stay out of debt. According to the 2023 Bundesbank study, almost all respondents had a debit card, which was the most commonly used method for cashless payments. A good starting point; however, debit card use only accounted for just over one-third of total expenditures, followed by credit transfers (20%) and credit cards (10%). In fact, Germans are so afraid of debt that in 2009, the Merkel administration introduced the Schuldenbremse (debt break) as a constitutional amendment to restrict the annual federal structural deficit to 0.35% of the GDP. To be fair, the amendment was enacted because the German debt-to-GDP ratio exceeded the limit stipulated in the Maastricht Treaty, which is the foundational document of the European Union. Nevertheless, the debt break has drawn criticism by economists and left-leaning political parties (and me), as Germany’s general reluctance to spend money only stagnates the economy and inhibits important investments in areas such as defense, infrastructure, healthcare, and education.

And finally, the third reason Germans may prefer to pay in cash compared to newfangled digital transactions is because the population here is simply old. In fact, the International Monetary Fund recently published some projections for the German economy and the future isn’t so bright for old Germany. The aging population and declining birth rate at 1.38 children per woman will lead to a shrinking workforce with an increased strain on pension systems and healthcare services. In case anyone was wondering, I am not really interested in working until I’m 74. On top of that, older individuals are less likely to feel comfortable using digital payment methods, meaning the 60-80 age group, which currently makes up 22.6% of Germany’s total population, are more likely to stick to cash.

You know what? After giving this topic a little bit more thought, maybe I’ve been wrong about cash this whole time. Although the new government coalition has agreed that all forms of business in Germany will have to offer at least one digital payment method, Germans clearly still prefer to pay in cash. As this is the case, I took it upon myself to think of some more benefits to paying in cash in Germany.

Money Laundering

If you are in the mafia, or thinking of joining the mafia, then forget southern Italy, Germany is the place for you! Germany’s cash friendly economy makes it a prime spot for money laundering activities on behalf of the mafia. For example, there is currently no legal limit to the amount of cash you can use for payments in Germany. Even better (for the mob at least), you can spend up to €10,000 in cash without having to identify yourself in most situations. As if anonymous, unlimited cash transactions weren’t convenient enough, up until 2023 it was even possible to purchase real estate in Germany with cash. To combat money laundering, and because German politicians don’t really seem to care that Germany has become a mafia stronghold, the European Union has stepped up and introduced a limit of €10,000 in cash transactions, but the limit won’t be enforced until 2027. Until then, I can only hope that my local ice cream shop, which if you remember, accepts only cash, is simply just an ice cream shop and not a front for the mob.

Locking and unlocking shopping carts and lockers

If you go grocery shopping in Germany and plan on buying more items than you can carry, then it would be advisable to bring some extra change with you. Specifically, make sure you have €1 or a 50 cent coin in your wallet, or else you will not be able to make use of a shopping cart. Or, in the case of public swimming pools, you will not be able to use a locker. Inserting a €1 coin to unlock a shopping cart is meant to incentivise customers to bring their shopping carts back to the designated area in order for them to get their coin back. Honestly, I cannot think of a better use for loose change than corralling shopping carts and locking my valuables while swimming laps.

Money Origami - Wedding presents

When my husband and I got married, I was genuinely surprised by how creative our friends got with gifts of money. Instead of tucking a few bills into a card like our American wedding guests, our German guests intricately folded their cash contributions into all kinds of origami-like shapes and designs, which actually took us a really long time to unfold, mostly because I was worried about accidentally ripping the money. And, once we finally unfolded everything, I was even more worried that the bank would even accept a wad of crumpled up banknotes.

So, after much consideration and despite my atypical payment behavior here in Germany, I digress that there are indeed many undeniable benefits to paying in cash: transactions are simple and transparent, old people don’t need to learn new tricks, you can launder money for the mafia, unlock shopping carts, and delicately fold money as an origami wedding present. I admit I may have viewed Germany’s dependency on paper money as outdated and unnecessary; however, for better or worse, paying in cash continues to play a central role in everyday life here. And, since King Peter I was arrested last week, now there is officially only one king in Germany, and that is cold, hard cash.