Germany’s Passion for Cash Cools on Hygiene Fears in Virus Era

(Bloomberg Businessweek) -- For years, Lauren Lee has offered a revolving mix of delectables drawn from various cuisines—Korean, Indian, American, and more—at Fraulein Kimchi, her Berlin food truck. One thing, though, never changed: Customers had to hand over cash for every bowl of bibimbap or plate of curry. But these days she's worried about picking up the coronavirus from handling grubby money, so Lee now accepts only cards. “Since I started in 2013, this is the first time I've taken noncash payments,” she says. “But we all know money is super dirty.”

Germany—industrial powerhouse, Europe's biggest economy, and home to the Continent's finance hub—is among the least carded places in the developed world. Germans complete 75 card transactions per capita annually, vs. 173 in France and 279 in the U.K., according to a report last year by consulting firm McKinsey & Co. For obvious historical reasons, Germans hate the idea of the government being able to track them via spending or any other means, but these days many fret that someone may have coughed or sneezed on the tenner in their pocket.

So across the country, more and more merchants are allowing—and often even encouraging—customers to pay with plastic. Supermarket chain Edeka says noncash purchases are up 30% in recent weeks. SumUp, a pan-European electronic payments service, says card transactions at cafes (still open for takeout) jumped 35% in the week ended April 5. And at newsstands—where the typical transaction is just a few euros and cash has long been king—card purchases climbed 40%. Because of the virus, consumers are “even buying things as inexpensive as chewing gum with a card rather than cash,” says SumUp co-founder Marc-Alexander Christ. “Merchants also prefer it this way.”

The German central bank insists euro banknotes are less likely to spread viruses than door handles, elevator buttons, or shopping carts. But hygienic concerns about money have been spreading almost as fast as the virus. The People's Bank of China has ramped up measures to sanitize bills to reduce contagion risks, and Thailand's central bank is offering advice on how to disinfect banknotes at home. The Bank of International Settlements says public worry about touching cash is “unprecedented” despite minimal risk. “There are no known cases of Covid-19 transmission via banknotes or coins,” the BIS says in a report. “Whether concerns are justified or not, perceptions that cash could spread pathogens may change payment behavior.”

Nowhere is the shift likely to be as dramatic as in Germany. In Sweden, the Netherlands, France, and elsewhere in Europe, it's possible to go weeks without handing over any coins or bills, but in Germany tens of thousands of restaurants and shops, from the smallest villages to the capital, are still cash-only. Supermarket chain Aldi only began accepting credit cards in 2015, and German branches of Ikea made the transition in 2016 (though both had allowed debit cards before that). Chancellor Angela Merkel typically pays cash when picking up groceries at a supermarket near her flat in central Berlin. On a recent outing, she was spotted whipping out her credit card.

Even as Germans start using plastic more frequently, the Covid-19 crisis is spurring them to use contactless payments—where buyers simply touch their card to a terminal, with no need to handle a receipt. At Hokey Pokey, an ice cream shop in Berlin's Prenzlauer Berg neighborhood, the card reader is set on a table about 3 feet from the counter so payments can be made without approaching the server. The National Association of German Cooperative Banks reports that in the first week of April, half of card payments were contactless, up from 35% in December. Mastercard International says it's seen a “dramatic increase” in the use of contactless cards during the pandemic. “I don't like touching money,” says Sarah Durante, who owns Humble Pie, a Berlin food truck selling American Southern cuisine such as fried chicken and mac 'n' cheese that has shifted entirely to contactless payments. “It's a pain to constantly wash your hands.”

The question remains whether the shift will be permanent. Blue Code, a mobile payments system in Germany and Austria, says yes, noting that daily downloads of apps incorporating its software—which lets customers complete a transaction by scanning a QR code with their phones—have jumped more than 50% since mid-March. “In people's minds, touching things now will be slightly different,” says Chief Executive Officer Christian Pirkner. But Jones, an ice cream shop in Berlin's Schoeneberg district that has gone from all-cash to cards-only, says it will start taking cash again once the crisis abates. “It's not very fair for people who don't have a card, or for kids getting ice cream after school,” says owner Gabrielle Jones. “Plus, the fees are quite high, and it takes longer to pay with a card than just handing over a €2 coin. We need a faster pace when there's a line.” —With Natalia Drozdiak, Carolynn Look, and Arne Delfs