Bar ist Koenig…Or “cash is king”. Yes, regardless of Germany being well-versed in all things technological, the population is yet to give up their cash.
This can feel strange to Americans and Canadians who take out the plastic card at every checkout. But, this type of behavior will not fly in most German-speaking territories. It is one of the more obvious cultural differences between those residing in America, and those in Germany, Switzerland, or Austria.
It seems to be a worldwide mystery as to why the Swiss, Austrians, and Germans are so attached to their cash. Seriously, people have been looking for a definitive answer for a long time. It just appears to be ingrained in their brains from childhood — more on this story from NPR if you click here.
So much so that they don’t think twice about paying for large purchases with a wad of cash from their wallet. However, we are going to take a deeper look at all the facts to figure out some answers.
A Brief History of Germany’s Cash Transaction Limits
In Europe, it is customary to have a legal cap on the amount you can pay for in cash. But, Germany has not followed suit.
There was a proposal submitted for the country to introduce this cap, but it was met with passionate hatred. Of course, this has something to do with the fact that Germans can’t get enough of their cash (geld stinkt nicht — meaning money doesn’t stink — as they would say).
Following this reaction, at the beginning of 2016, their finance ministry suggested enforcing a ban on cash payments of more than €5,000. The government tried to get around the burning hatred for cash restrictions by claiming they were trying to prevent money laundering and terrorism (in fairness, this was probably the truth anyway). However, this didn’t work either. Germans fought this proposal with another bout of passionate disgust.
Still, the finance ministry decided to push on. On the back of the second refusal, they issued a recommendation to get rid of the €500 note. This time, the Bundesbank president, Jens Weidmann, shielded himself from the backlash of the public, telling the press that it would be disastrous if the population thought their precious cash was being eliminated. Plus, he issued a statement stating that if the banks were to inform citizens their well-loved notes were void, the mutual trust and respect would be negatively impacted.
European Cash Transaction Limits
Despite Germany’s neighboring countries putting a cap on cash transactions, their complete devotion to the stuff has segregated them. Let’s take a look:
- Greece: maximum of €1,500
- France: maximum of €1,000
- Italy: maximum of €3,000
- Spain: maximum of €2,500
See? It’s quite astonishing when you think of the overall impact of their choices towards cash limits.
In fact, Switzerland (who was just like Germany until 2016) enforced a legal cash limit. Why? They were receiving accusations from opposing forces claiming the Swiss were involved with money laundering, black market dealings, and terrorism. But still, the Germans rejected any changes to their paper system.
Don’t stress we know this is a lot so, we’re going to take a look at the nitty-gritty facts right now.
Where Cash Rules in Germany
We’ve just downloaded a lot of information onto your brain; trust us, we get it. So, we’re going to take the next bit nice and easy.
Hotels and All Things Tourist-y
It is obvious what Germans think about plastic payment methods. However, establishments like hotels, restaurants, and other venues that deal with tourists do accept Visa, American Express, and Mastercard. This is great — otherwise, who knows how many customers and holidaymakers they would lose!
Although, for those that go on vacation to immerse themselves in the culture, you will need cash. Locally owned and run shops and restaurants (yes, even in big cities) do not offer plastic payment methods.
Your best bet is to either ask before you leave your residence or look for the Visa logo on the door.
Insider tip: just be careful that you don’t confuse the Maestro logo with the MasterCard one. They’re two separate things!
So, What About ATMs?
If you do travel to Germany, you will be spending quite a lot of time at ATMs since (as you now know) plastic payments are frowned upon.
Thankfully, these guys are everywhere. You’ll never have trouble finding one. Most streets (even inside some high street shops) have ATMs for all to use.
It’s not all sunshine and rainbows though. There will probably be some sort of bank fee or conversion fee each time you withdraw cash. The amount is determined by your card issuer, but it is important to be aware of this before you run to a German cash point willy-nilly.
For best practice, make sure you research German ATM networks. This way, you’ll know which ones will work with your card and which will be cheaper before you even get on the plane! Having said this, each ATM should show you their fees before you committing to using them.
Are German Taxis Cash Only?
Right, this question is controversial. Generally, we are going to say that it depends on the two things: the driver and the company they work for.
In theory, you should be able to ride in a taxis and pay with your card at the end of it. However, some people have tried this in various German cities and it hasn’t worked out.
You are better off carrying some cash with you in any case. It’s better to be safe than sorry after all!
Why do Germans Love Cash So Much?
So, we have come to the super interesting part now — the reasons for the Germans’ love affair with cash. Honestly, people all seem to have different theories, therefore, we’re going to look at each one in turn.
Cash Protects Personal Data
Germans are big on protecting their personal data. Not to mention, they value security and confidentiality above everything else when they make a payment.
No one can fully achieve this when using plastic payment methods (even though, as we all know, banks are fairly secure nowadays). So, this is a huge reason for their love of paper money.
Interestingly, only 10 percent of the total bills issued by Germany’s main bank is used in day-to-day dealings! The next 70 percent is used outside of Germany’s borders. And the last 20 percent is…
Yep, it’s used for domestic hoarding. This is something that tends to be popular in this nation only.
Having said this, the trend has changed recently. Germans have begun to favor hoarding their money in checking accounts, rather than in their homes. To be honest, the rest of Europe needs to get behind this trend!
Of course, there are plenty of people living in Germany who do hoard their money in “safe places” around their house. The general idea here is that it is tangible, which offers a deeper feeling of security than a number on your bank account.
In reality, hoarding paper money domestically can be quite a security risk. Imagine if the wrong person got wind of the fact that you were storing a fair amount of money in your home. They could easily break in and find it, right? Not to mention that you have no insurance for it should your house burn down! But regardless, many Germans feel this is the right way to do it.
The Germans’ love of cold hard cash isn’t just a novel thing; it does hold historical relevance.
A lot of elderly people in Germany (Western Germany to be specific) consider the deutschemark (their old currency) a symbol of the economic boost after World War II. So, holding paper money doesn’t just bring about a sense of security, but it also signifies freedom, democracy, and peace.
For those who reside in Eastern Germany, cash resembles the end of socialism and the reunion of the West and East sides of the country. It is no wonder then why they value their paper money so much.
The population struggled when brand-new euros and banknotes were introduced in the early 2000s. But, to have to come to terms with plastic, heartless cards, or swiping a touchscreen phone to pay? That’s just too much sadness and disappointment.
The General Consensus
It is safe to say that the world has moved a long way from the times where cash was the trendy thing. But, Germans do still hold paper money close to their hearts.
While this sounds like quite a sweet (some may say quaint) thing, we know they have very valid reasons for doing so. However, that isn’t to say that it is very clever necessarily, due to the physical safety of those who carry round tons of cash.
Having said this, surveys conducted on the younger population of Germany have concluded that they are starting to change their cash-loving ways (not entirely of course). But complete conversion is a long way down the road.
Image by Mark Neuburger