Contactless payment by card is trendy, especially since Corona. But hygiene is just a pretext to replace cash with electronic systems.
This is where paying by cards comes to an end: a stall at a Berlin weekly market Photo: Karsten Thielker
BRUSSELS taz | First came the pane of glass to protect the seller. Shortly afterwards, the disinfectant for the customers was also available at the checkout. And then one day the new card reader arrived that my baker in Brussels wanted to use to pay. “You don’t have to insert the card anymore, it is now contactless, too,” said the young woman behind the counter. That was in June. I haven’t paid for my baguette in cash since then. “Sans cash” is also possible, and often even faster.
Cash is not only on the decline in Belgium. The trend has long since reached Germany. “If bakeries are thinking about introducing new payment options, now is a good time,” says the general manager of the Central Association of the German Bakers’ Trade, Daniel Schneider.
The trend towards electronic payments has been noticeable for years, says Schneider. But it was only the corona pandemic that made it massively worse. With a few groschen out of your pocket, as in the past, the baker is paying less and less. Some companies even help a little – and urge customers to pay electronically.
Anyone who waives cash at the Kamps bakery chain receives an “innovation discount” of 3 percent. According to Kamps, payment by card or smartphone is not only faster, but also more hygienic. The discount is intended to say thank you to all customers who have remained loyal to the company during the corona crisis.
The EU promotes cashless payments
The pandemic initially increased the demand for cash. In March 2020, the euro cash in circulation in Germany jumped by 36 billion euros to 1,344 billion euros. That was the highest monthly increase since the financial crisis in October 2008. It was a fear reaction – similar to the initial hamster purchases of toilet paper. But hardly that the fear had subsided a little, many Germans changed their behavior – and paid “contactless”. Not only Kamps helped. In supermarkets and department stores, too, electronic payment transactions are advertised as a secure and fast “hygiene measure”.
The EU Commission in Brussels joins the choir. The corona pandemic has shown how practical cashless payments are, according to the Brussels authority. That is why the EU will promote it even more in the future.
There is no scientific proof that coins and banknotes pose a significant risk of infection. The Bank for International Settlements in Geneva emphasizes that no transfer through banknotes has yet been proven.
It is also not proven that not using cash will boost business. For the independent baker around the corner and other small shops, the changeover is often associated with losses. Because the individual sales are mostly low for them, the average customer at the bakery only puts 2.60 euros on the counter.
If such small amounts are paid with the card, the commission charged by the card terminal operator or the bank (with EC cards this is usually 0.25 percent, with credit cards up to 3 percent) is often higher than the profit margin of the Baker. In other words: it is a losing business, you cannot bake big rolls with a card.
If there are no compelling reasons for the abolition of coins and bills – why is cash still becoming more and more rare? Are there dark forces at work trying to make us dependent on credit card companies like Visa and Mastercard? Is there a secret lobby for electronic or even digital money?
A gradual process
No, says Norbert Häring, who has dealt critically with the topic for years. Neither in the Frankfurt banking center, where Häring works as a business journalist, nor in Berlin, lobbyists would openly advertise the abolition of cash. The whole thing is more of a creeping process – but that’s what makes it so problematic.
Because with the abolition of cash there is also a loss of control. Not the local savings bank around the corner, but large foreign corporations such as Mastercard or Visa benefit from the card business. In addition, the buyer becomes a transparent customer. Every transaction leaves its mark, and data protection becomes a problem.
The supporters of new means of payment are not openly in favor of the abolition of cash, especially not in Germany, where people are particularly attached to “their” money. In this country, the Bundesbank and the Bundestag watch with eagle eyes that the supply of cash is secured.
But these two institutions are also working behind the scenes to dematerialize payment transactions. In the name of technological progress and international competitiveness, the course is being set for a “world without cash”.
Ordinary citizens not asked
This became clear at a hearing in the Bundestag in June. Mainly representatives from the IT industry, engineers and financial experts were invited. Ordinary citizens were not asked, trade and consumers only played a minor role. One of the few reminders was Ulrich Binnebößel from the German Trade Association. In retail, the “tipping point” is getting closer and closer, at which cash is pushed to the edge, he says. “At the beginning of the corona pandemic, the system was tipped over,” complains Binnebößel – and calls for politicians to make more use of cash.
The figures prove Binnebößel right. As early as 2018, more money was spent by card in Germany than in cash. At that time, card payments were for the first time just ahead of cash (208 billion) at 209 billion euros. Since then, the trend has intensified more and more, Corona could completely tip the system.
For many digital natives, this tipping point, at which cash finally falls behind and wallets and wallets disappear, cannot come quickly enough. Germany is lagging behind in competition with the USA and China, so their argument.
Competition to the euro from the USA
Kurosch D. Habibi from the Federal Association of German Start-ups says he is not concerned about the cash, but above all about the fact that Germany could lose the digital connection. US internet companies like Amazon are already showing how they can position themselves as a platform for financial transactions. “If we don’t do that, others will do it,” warned the expert who specializes in “Fintech” at the hearing in the Bundestag. A warning example is Facebook, which wants to cash in with its crypto currency Diem in Germany and the EU.
This worries politicians too. They are committed to cash, but at the same time they are calling for alternatives. The left member of the Bundestag Fabio De Masi is also calling for a “digital euro” to be created – an electronic form of central bank money for which the Bundesbank would be responsible
“The digital euro is the only chance to limit the increasing financial power of Facebook & Co.”, says De Masi, who made a name for himself in the Wirecard affair. Although it is no guarantee against money laundering and organized crime, as supporters of digital currencies like to claim, it could help the EU to assert itself against the US.
Valdis Dombrovskis, EU Financial Commissioner
“The future of finance is digital”
While there is still discussion in Berlin, facts are already being created in Brussels. EU Finance Commissioner Valdis Dombrovskis outlined where the journey is headed in September. “The future of finance is digital,” he said – and suggested not only introducing new, EU-wide electronic payment systems, but also the “digital euro”.
The Brussels authority emphasized that this was not an attack on the analog currency. They advocate that “cash should remain both accessible and generally accepted,” said a spokesman for the taz. After all, the euro is the only legal tender in the euro area.
But these words were not followed by deeds, the guarantee of existence is only on paper. Brussels is doing just as little against the flood of digital card readers and payment apps that kill the cash as it is against the creeping abolition of ATMs or the closure of bank branches.
The EU Commission and the European Central Bank (ECB) are all the more eager to promote digital alternatives to cash. Commission head Ursula von der Leyen has declared digitization to be a top priority – right after climate protection. ECB President Christine Lagarde has even made a U-turn.
When she took office a year ago, the Frenchwoman was still strictly against a digital “e-euro”. Now she takes the lead in the movement. The euro must be “fit for the digital age”, declared Lagarde in October. An e-euro would make everyday payments faster, easier and safer, the ECB lures. It should be ready by mid-2021 at the latest.
The rush is justified by the fact that Facebook could launch its digital currency Diem as early as January. The US company is planning a digital coin that will be pegged to the dollar. This digital dollar could call the monopoly of the euro into question, the ECB fears – and wants to counter it as soon as possible.
Transparency and democracy fall by the wayside. The ECB has started a public hearing on the “digital euro”, but an opinion is only expected in early 2021. But behind the scenes, groups of experts are already working feverishly on the introduction. Above all, one question drives the experts: Should digital money only be available to central and commercial banks – or also to citizens?
If the e-euro is only used internally, most people shouldn’t really care. But if it is also available to ordinary people, the cash becomes even more dispensable. Even savings could be invested digitally. The good old piggy bank would then be just as superfluous as the wallet.