Every day, customers in Germany are faced with a choice: cash or card? Payment transactions in Germany are undergoing a transformation—new technologies and changing customer habits are influencing daily payment behavior.

In this article, we’ll explore the current developments in payment behavior, along with the advantages and disadvantages of cash and card payments. We’ll also consider whether Germany is moving toward a cashless society and whether businesses should offer card payments.

What’s in this article?

• Do customers in Germany prefer to pay in cash or by card?
  
• What are the advantages and disadvantages of paying by cash and by card?
  
• Will cash soon become obsolete globally?
  
• Should businesses offer card payments?
  

Do customers in Germany prefer to pay in cash or by card?

Payment behavior in Germany has changed significantly in recent years. According to the study “Payment behavior in Germany 2023” by Deutsche Bundesbank, cash continues to be the most commonly used method for transactions. However, the proportion of cash payments is steadily decreasing. According to the study, 51% of all transactions were made with cash in 2023, compared to 58% in 2021. This shows a clear shift towards cashless payments.

The debit card is the most popular form of cashless payment in Germany, at 27% of all transactions in 2023. At 6%, credit card payments have also increased in importance, especially for online purchases and larger transactions. Mobile payment methods, such as Apple Pay and Google Pay, have increased as well, but at 6%, they still play a comparatively small role in Germany.

Cash for smaller amounts

A closer look at payment amounts shows that cash is preferred in Germany, especially for small sums. Among stationary retail businesses (i.e., retail stores and gas stations), 76% of transactions up to €5 were made with cash; however, the share of cash payments for larger transactions fell significantly. Most consumers use cards for amounts over €50, and they are increasingly using contactless payments.

As part of the Bundesbank’s report, people were asked which payment method they prefer—cash or card.Forty-four percent of respondents preferred to pay with cashless payment methods, while an equal percentage of people (28% each) answered that they either preferred cash or they had no preference between cash and card.

Cash continues to play a key role in Germany, but it is steadily losing relevance. Card payments are gaining market share and are increasingly preferred by customers. The trend towards the digitization of payment transactions continues, even though Germany has a relatively high level of cash usage compared to other countries.

What are the advantages and disadvantages of paying by cash and by card?

Both cash and card payments have their strengths and weaknesses, which can vary depending on the situation and personal preference. The comparison that follows can help customers choose the payment method that suits them best.

Cash payments

Advantages

One of the main advantages of cash is the anonymity and privacy that it offers, as transactions can be carried out without leaving any digital traces. In addition, there are no transaction fees for cash payments, which makes them more cost effective than some other methods. Another advantage is the independence it gives from technical infrastructure, as cash can be used anytime and anywhere, even in emergency situations in which electronic systems fail.

Disadvantages

There are some disadvantages that should be considered when using cash. One major risk is the theft or loss of cash, as it cannot be traced like digital payments. Cash is also impractical for large purchases because it has to be physically stored and transported, which can be unsafe. In addition, cash offers limited options for tracking spending, and some might find that this makes budgeting difficult.

Card payments

Advantages

Card payments are fast and convenient, as they significantly accelerate the payment process and enable contactless payment. Another advantage is the ability to track expenses, as all transactions are recorded digitally. Cards also take up little space in a wallet and offer increased security through the use of a chip, a personal identification number (PIN), and—for some modern accounts accessible via mobile apps—two-factor authentication.

In addition, card payments are widely accepted in international transactions, making them particularly attractive for travelers. It’s not even necessary to use a physical card anymore—many payments can be processed directly via a smartphone, making the payment process more convenient.

Disadvantages

There are also, however, some disadvantages to consider when using cards. One risk is fraud and data misuse, as digital transactions can be vulnerable to cyber attacks. However, there are tools to help with this. Stripe Radar, for example, can help businesses by protecting them with intelligent fraud prevention using AI.

In addition, card payments depend on technical infrastructure, which can be problematic in the event of an electronic system failure. Transaction fees can also apply to card payments, which in turn can increase costs for users. In some cases, there are minimum amounts for card payments, as well, which can limit flexibility. Finally, cards might not be accepted everywhere, which limits their use.

Will cash soon become obsolete globally?

People around the world are increasingly using debit and credit cards, mobile payment apps, and other digital payment methods for their daily transactions. This development is driven by innovations such as contactless payments and digital wallets.

Global digital transactions are forecasted to reach over $38 trillion by 2030. In countries such as Sweden and Norway, upwards of 90% of transactions are cashless, while in China, mobile payments dominate with services such as WeChat Pay and Alipay. However, cash remains the preferred payment method in many regions due to factors such as a lack of access to banking services and distrust of financial institutions.

Digital currencies

Digital currencies—such as digital wallets, cryptocurrencies, stablecoins, mobile money, and central bank digital currencies (CBDCs)—are growing in significance. While digital wallets and mobile money facilitate access to financial services, cryptocurrencies and stablecoins offer new opportunities for investments and transactions. CBDCs could provide a stable, government-regulated alternative to cash. However, cryptocurrencies in particular are still viewed critically due to their volatility and associated risks. Fluctuations in value can be difficult for both investors and users, and therefore using crypto requires careful consideration.

Payment trends in Germany

When deciding between cash and card, people in Germany often choose cash. One reason for the country’s low acceptance of cashless payment transactions is the strong desire for privacy protection and the rejection of controllable financial data. Nevertheless, according to the Global Payments Report 2024 and supplementary report from Boston Consulting Group (BCG), there have been noticeable changes, as the use of digital payment methods in Germany increased by around 10% between 2022 and 2023. Despite this growth, the cash use ratio in the country remains comparatively high, which poses challenges for payment service providers. Germany is in the bottom third of Europe for electronic transactions, with an average of 304 made per capita.

Fewer cash payments at points of sale

In Germany, the amount of revenue earned from cash transactions at the checkout point has fallen significantly in recent years, indicating a gradual move away from cash. Nevertheless, this payment method remains popular in the country, and the use of digital payment methods is lower in Germany when compared to other European countries.

Challenges and opportunities

The finance industry faces the challenge of achieving profitable growth, as the high-margin earnings of recent years are expected to decline due to normalizing inflation and interest rates. At the same time, the number of regulatory requirements is increasing, forcing payment service providers to devote more resources to compliance.

Innovations such as instant payments and AI offer potential, but they require comprehensive technological modernization in many areas of life. Payment providers must ensure that their systems are prepared for the demands of real-time payments to remain competitive. Modernizing technology is critical to remaining resilient and cost effective in a continuously evolving market environment.

Should businesses offer card payments?

The increasing significance of cashless payment methods raises a question: can businesses survive without offering cards as a payment option?

Customer expectations and market requirements

One of the main reasons businesses need to consider card payments is the changing expectations of customers. In many parts of the world, especially in urban areas, customers expect to pay by card. This expectation is further reinforced by the increasing prevalence of smartphones and contactless payment methods. Businesses that accept card payments can reach a wider customer base and potentially increase customer satisfaction. This can ultimately lead to stronger customer loyalty.

Challenges and costs

Despite the many benefits, there are also challenges that businesses must consider before offering card payment options. The implementation of card payment systems requires a certain technological infrastructure, including card readers and a stable internet connection. In addition, transaction fees apply, which can reduce profit margins. Businesses must consider whether the potential benefits outweigh the costs.

Stripe Terminal enables the seamless integration of card readers that are compatible with a business’s existing infrastructure. Terminal offers easy customization to individual business requirements and supports many different payment methods. Transparent fees make calculations easier, allowing businesses to take advantage of card payments without significantly impacting profit margins.

Increased sales and efficiency

Card payments offer businesses the opportunity to increase their sales. They speed up the payment process and offer customers more flexibility. This payment method is particularly advantageous during peak sale times. It makes it possible to serve more customers at a faster pace. In addition, there is no need for a business to keep large amounts of change on hand. This makes the checkout process more efficient. Businesses that accept card payments benefit from the convenience that their customers are given. This can lead to higher customer satisfaction.

Traceability

Another major advantage of card payments is the easy traceability of all expenses. Every transaction is recorded digitally and can be viewed at any time via account statements or banking apps. This makes budget planning easier, allows for better financial monitoring, and enables the rapid identification of suspicious transactions.