Is Germany’s payments landscape changing?

The payments landscape in Germany is a fascinating place. Whilst in countries such as the UK digital payments have already overtaken cash transactions in 2014 and we actually are now spending £1.5 billion a month using contactless cards, nearly 80% of transactions in Germany are still made in cash. However, recent findings from TSYS and Wirecard suggest things could be about to change.

One would perhaps expect the pattern to be similar with specifically younger groups (in the UK people under the age of 44 believe cash will disappear in the next few years). But one would be wrong: a recent study by Bankenverband found that 67% of 14 to 24-year-olds prefer paying in cash.

There is a clear perception of cash being safe – or at the very least safer than other payment methods. That’s what a YouGov survey found as 72% of German respondents said they believe it’s safer to pay in cash.


Contactless payments on the horizon

A recent report by TSYS found that awareness in Germany of newer payment methods is increasing, however. Two-thirds of respondents said they have heard of contactless payments, although they weren’t sure whether their card supported the technology. Two out of ten people actually have a contactless card but don’t use it that way, whilst only 15% actually made a tap-and-go transaction in the last six months.

contactless payments awareness in germany

Source: TSYS German Consumer Payments Study

The data suggests that one of the most important factors to consider is education. People are aware of contactless cards but perhaps there isn’t enough explanation. Why, if they have contactless cards don’t they use them? Is because they don’t know where they can use it? Is because they don’t know how to use it? Ultimately it will come back to the YouGov stat: cash is seen as safe because it is simpleand familiar. With no incentive and little messaging on where and why new payment methods like contactless make sense, it’s no surprise.

Mobile Payments, P2P, Cryptocurrencies

This lack of education about new payment tech is seen in Germany’s attitude to other digital payment methods. Sixteen per cent of German consumers said they used mobile payments but more would use them (24% more) if tokenisation were explained to them properly.

Over half of respondents (57%) had heard of P2P payments but only 9% used them. Pretty much nobody used virtual currencies.


So, what is the future of German payments?

Well, according to Wirecard, the future of German payments is…a bit more digital. Apologies if you were expecting some sort of bold statement about either cash dying or vanquishing its electronic foes in the near future.

Wirecard’s infographic shows at the moment debit cards are not all that popular with 11.4% stating it’s the most popular payment method. The country has a long way to go before it comes anywhere near matching the levels of usage in the UK where debit cards will single-handedly topple cash as the most popular payment method within five years.

However, there is a clear framework for digital growth as 84% of Germans use the internet, 121% have mobile contracts and 60% have smartphones.

With stats like this, Wirecard concludes that mPOS will grow rapidly until 2020. Here is the full infographic.



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