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Beyond the Transaction: Every Transaction Has a Story

Germany and the True Cost of Cash

Prof. Dr. Jens Kleine is Professor of Financial Services at Steinbeis Hochschule Berlin

While most people regularly think about their personal finances, not many give a second thought about the cash that sits in their pocket. My colleagues and I at the Research Centre for Financial Services at Steinbeis University, Berlin, looked into the cost of cash and other payment methods in Germany. What we found shed some interesting light on this issue.

Cash isn’t free

Cash is seen by consumers as a low cost method of payment – 89 percent of Germans think cash is the cheapest way to pay. But nothing could be further from the truth.

Cash creates costs for all parties – retailers, banks, consumers and governments.  The total cost of cash for the German economy is a staggering 8.3bn Euros per year.  Meanwhile the total cost of cash for the private sector was 12.5bn Euros in 2011. Cash is also involved in driving the shadow economy as well as tax evasion and social security fraud.

Other ways to pay

We compared the cost of cash and cards in Germany. The latter entail fewer costs than cash with the total cost of the card system amounting to about 1.4bn Euros per year.

Consumer attitudes are changing

Another interesting aspect of our findings is that attitudes towards cash and other payment methods seem to be evolving. The volume of card payments has increased continuously over the last 20 years. While cash is still the favourite payment method, only 30 percent of Germans think cash offers good security: a top priority when deciding how to pay.


There is a need for greater education about the benefits of electronic payments. Greater card acceptance could help consumers manage their expenditure, reduce costs for retailers and benefit society as a whole.

The long term challenge is to correct the false perceptions of cash payments.