Germany is gradually transitioning towards a cashless society.
While many European nations have transitioned to digital and plastic payments, Germans continue to use cash more frequently than the continent's average. In 2023, each German citizen made around 304 electronic transactions, making them one of the lower electronic payment users in Europe, as reported by Boston Consulting Group (BCG). Countries like Norway (815), Luxembourg (753), Ireland (705), and Denmark (675) led the way in electronic payments that year.
On the other hand, Italy (194), Malta (243), Spain (288), and Austria (300) had fewer electronic payment methods than Germany, as per BCG's data.
The Bundesbank's annual survey also reveals a decrease in cash transactions in Germany. In 2008, cash transactions accounted for 83% of all payments, but this figure plummeted to 51% by 2022, as indicated in the "Payment Behavior in Germany 2023" report of July 2023.
Future Perspective: Waning Profits for the Payment Industry
Experts from Boston Consulting Group predict that the share of electronic and digital payment methods will continue to strengthen globally in the forthcoming years. However, the profitability of credit card companies, payment service providers, payment app providers, and banks is expected to dwindle due to this rise.
The global revenue of financial institutions, including payment and interest fees, was estimated at 1.8 trillion US dollars in 2022, according to BCG. This revenue has seen an average growth of 9% annually over the past five years, but BCG anticipates that this growth may slow down to 5% per year by 2028. According to the study, this decline is due to the fact that cash transactions are minimal in several countries, thereby limiting the payment industry's room for significant growth in electronic payments. For the purpose of their annual study, BCG collects payment transaction statistics from the central banks of various countries.
Despite the shift towards digital and electronic payments worldwide, many Germans still prefer using cash, making around 304 electronic transactions per year, as reported in 2023. In contrast, this frequent use of cash allows Germans to maintain profits in the payment industry, as the global revenue from financial institutions, including payment fees, is projected to decrease from an average growth of 9% annually to 5% by 2028 due to a decrease in cash transactions. [Cash, profits]
