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Understanding Germans’ love of cash

Categories : Cash connects people, Cash is efficient
September 21, 2016
Tags : Consumers, Efficiency, Europe, Payment
History and culture can explain German's love of cash, but nothing can beat the most tangible spending indicator: a thinning wallet.
Communication Team / Equipo de Comunicación

Of all advanced economies in the world, Germany is by far the one that is most attached to cash. Eighty percent of German consumers settle their transactions in cash, compared to less than 50% in the United States. The average German can be caught walking around with approximately $123 in their pocket, more than double compared to their Australian or Dutch counterparts.

The explanations are both cultural and historical. Culturally, Germans have a deep aversion to debt – which explains the very low rates of credit card ownership and mortgages – a loathing that is deeply rooted in their lexicon. Simply said, the word debt (Schulden) comes from the word Schuld (guilt). Furthermore, Germans are adamant advocates of privacy rights. In the case of train transportation, Germans clearly chose paper over digital: Deutsche Bahn has decided to scrap its mobile ticketing service due to a low adoption rate.  

But history also plays a central role in this widespread cash-loving attitude. The series of catastrophic hyperinflation situations, first during the Weimar Republic in 1923 when a loaf of bread cost 428 billion marks; then after WWII when Germans were forced to exchange their savings for the newly introduced Deutsche Marks at a huge loss; and finally, after the fall of the Berlin wall when East Germans were allowed to exchange their worthless ostmarks 1-to-1 for West German Deutsche marks.

Germans might like to have control over their finances in a tangible way, but nobody can beat the most visible indicator: a thinning wallet.

To read Quartz’s full article, please click here