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Why Germans pay cash for almost everything

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Re: Why Germans pay cash for almost everything

#41

Post by dublinben »

thinkMOAR wrote: post #34
cocoa19 wrote: post #13

In America, I would prefer to use a debit card or cash, but many credit card issuers offer 1%-3% cash back, meaning, they give back 1%-3% of the purchases you make. That amount adds up over time.

whats the fine print for your 1-3% cash back? wondered about that. Will you be sharing (allowing the card issuer) to sell meta data of your transactions?

With most credit cards, your entire purchase history (sometimes including item-level data) is for sale to data brokers and advertising companies. It's a high price for that 1-3% cash back.

Re: Why Germans pay cash for almost everything

#42

Post by zmk_ »

dvfjsdhgfv wrote: post #3

This seems counter-intuitive to me. The author argues it's due to hyperinflation from the pre-WW2 era, concluding that "People in countries that suffered banking crises quite sensibly often prefer to save in cash." If there really is some national memory of that crisis, wouldn't they actually prefer to actually avoid saving in cash? During the hyperinflation period your cash could lose half of its value overnight. Th…

I fully agree, if anything this would be about bank runs. Also it is a cherry picked example, I can cherry pick one too. Poland had a hyperinflation episode in 1920s and another high inflation event in the 1990s; yet card adoption (and adoption of innovations in consumer banking) is among the highest in Europe.

The differentiating factor is whether a solution is supported by the merchant. If it is, you will see adoption. Merchants in Germany do not support CCs and limit debit cards, so people do not use them. They do not do that partly because they can get away with it and partly because the fees they are being charged are high (both per transaction and per POS). Naturally there is room for the government to step in here. E.g., said Poland lowered the maximum allowable fee Visa/Mastercard can charge a few years back; along with that went away minimum spending limits on transactions in shops.

This will change though as Germany starts moving to a cashless economy as, e.g., Sweden is doing.

Re: Why Germans pay cash for almost everything

#43

Post by FRex »

arvidkahl wrote: post #14

Most brick & mortar stores in Germany will not offer debit card payments under 10 Euros, since the fees they have to pay are extremely high. Most clerks will frown upon small card payments for that reason, and sometimes outright decline the payment, even if that means no purchase happening. Credit cards are rarely accepted in any store but larger ones in malls. Most Germans, and that was pretty spot-on in the article…

Take a hike to Poland if you want to marvel at this tech in action. Paying contactlessly that is. Called "zbliżeniowo" in Polish, that's also the word to say in response to being told the total if you want to use the card without pin and not the cash.

It's not universal but extremely common at small shops, super markets, 'better' restaurants. Out of the way places, milk-bars ("bary mleczne", it has nothing to do with milk, it's a cheap place to eat simple foods at), pawn and thrift shops, street vendors, etc. are the majority of ones that don't have it.

In Poland such a limit of 10 zlotys is common-ish (I've seen it ONCE in Warsaw when visiting) but will run afoul of agreements terminal owners have with banks and the fees are (I have no idea if that's true, it's hearsay from consumer legal advice websites) percentages not fixed so there is no difference in the end.

Of course even if that's true the incentive is there - pure cash has no fees and most people buy little things very often so it adds up.

Re: Why Germans pay cash for almost everything

#44

Post by SyneRyder »

Spooky23 wrote: post #6

They're smart. I went all cash a few months ago for everything except hotels and rental cars. It's very liberating. Credit cards give you 3-5% incentives to spend because you spend more. Since going all cash, we spend in average 15% less.

I have the opposite problem - using cash means it takes more time for me to enter transactions into my finance software (Quicken). With electronic cards (whether credit, debit or presumably EC), I can download a list of my transactions at the end of the day in one go & be up to date. With cash, I'd often fall days behind.

Re: Why Germans pay cash for almost everything

#45

Post by petard »

m_mueller wrote: post #33

As a Swiss German I think the currency stability argument is moot. Swiss Frank is one of the most stable currencies available and we still have a similar attitude to cash as Germans. IMO it's mainly due to the following reasons: 1) CC is slow, at least in Switzerland. Like in Germany, efficiency is baked into the culture - people hate to wait on someone paying his chocolate bar with credit card. It's also not rare fo…

on 1) Recent touch-based CC terminals are really fast, and often don't require a PIN if the amount is less than 10€. I've stopped using cash since with these terminals CC are faster than paying in cash.

Re: Why Germans pay cash for almost everything

#46

Post by Retric »

overcast wrote: post #28
distances wrote: post #23

Earlier quoted context omitted.

Normal person doesn't carry around wads of cash during their normal day. From the article: > On average, wallets in Germany hold nearly twice as much cash—about $123 worth Not worth a mugging in a Western country that doesn't leave its citizens starving.

$123 is still a lot of money. Pickpockets aren't roaming gangs of starving thieves.

$123 * 365 ~= 45k/year. So, you would need to mug / pickpocket 1 or more people per day per person involved. At a guess that's not very stable and your very likely to get caught. aka, you might get 100 peoples wallets at moderate risk, but going for 10's of thousands is a lot more risky.

Also, stolen CC can be turned into cash.

Re: Why Germans pay cash for almost everything

#47

Post by captainmuon »

arvidkahl wrote: post #14

Most brick & mortar stores in Germany will not offer debit card payments under 10 Euros, since the fees they have to pay are extremely high. Most clerks will frown upon small card payments for that reason, and sometimes outright decline the payment, even if that means no purchase happening. Credit cards are rarely accepted in any store but larger ones in malls. Most Germans, and that was pretty spot-on in the article…

The difference between debit cards and credit cards is not so big and not really relevant. You can do almost everything (domestically) with a debit card that you can do with a credit card in other countries. There are tens or hundreds of thousands of business receiving money already. Wire transfers are ubiquitous, can also be initiated by the vendor after some checking, and have no fees. There are also payment processors who help you as a business. Using cards for small payments, just like large bills, is a bit socially frowned upon, but usually no problem anymore. Compared to the US system, i have almoat nothing to complain about the German system.

I sometimes do wonder though why you can't just send money to a telefone number like in China. Like in most countries, banks move slowly here.

Re: Why Germans pay cash for almost everything

#48

Post by thinkMOAR »

dublinben wrote: post #41
thinkMOAR wrote: post #34

Earlier quoted context omitted.

whats the fine print for your 1-3% cash back? wondered about that. Will you be sharing (allowing the card issuer) to sell meta data of your transactions?

With most credit cards, your entire purchase history (sometimes including item-level data) is for sale to data brokers and advertising companies. It's a high price for that 1-3% cash back.

Ah okay, that cashback system doesn't exist here and creditcard usually not used at all. Wondered if it was a loyalty bonus or data sharing.

Not sure why people down vote it? then again who cares.

Re: Why Germans pay cash for almost everything

#49

Post by Raphmedia »

revelation wrote: post #19
cocoa19 wrote: post #13

In America, I would prefer to use a debit card or cash, but many credit card issuers offer 1%-3% cash back, meaning, they give back 1%-3% of the purchases you make. That amount adds up over time.

Because you are paying much more in transaction fees. In the EU, transaction fees are capped at <<1% so there are no silly cash-back programs.

(Canada)

As far as I know there are no transaction fees on credit cards. That's one of the reasons to stop using debit and use credit. The only fees are on the merchant (1.5%).

Example : https://www.desjardins.com/ca/personal/loans-credit/credit-c... with no transaction fees (or monthly fees) along with 1% cashback.

Re: Why Germans pay cash for almost everything

#50

Post by gt565k »

thinkMOAR wrote: post #34
cocoa19 wrote: post #13

In America, I would prefer to use a debit card or cash, but many credit card issuers offer 1%-3% cash back, meaning, they give back 1%-3% of the purchases you make. That amount adds up over time.

whats the fine print for your 1-3% cash back? wondered about that. Will you be sharing (allowing the card issuer) to sell meta data of your transactions?

You have a good point. I just got the costco citi credit card, and there was a small pamphlet included with the privacy information and what data is shared. Basically something like 8 line items for different kinds of data, 5/8 were required, the other 3 I had the option to opt-out, but they were automatically opt-in.

At the end of the day, the benefits far outweigh the meta-data that is shared. Ok, sure you can see what I ordered at costco and how much I spend on gas.

Yes, it's a data grab by companies, but what are you gonna do... not take 4% back on gas and 3% on restaurants?

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