Cash not only perpetually ranks as Germany’s most popular means of payment, it also saves time and money, as shown by a recent study carried out by the Bundesbank in cooperation with EHI Retail Institute. Presenting the study, Bundesbank Executive Board member Johannes Beermann hailed cash as “still the quickest and most cost effective form of payment at the point of sale”.

22 seconds to pay in cash

The study found that an average payment transaction at the point of sale takes around 22 seconds, compared with roughly 29 seconds for card and PIN payments and as long as around 38 seconds for card and signature transactions. As the study shows, the duration of the payment transaction does, however, depend on the payment amount. For amounts of up to €100, cash payments are the quickest. Above that amount, card payments prove to be faster.

Cash also outperforms other means of payment in terms of its costs per transaction for merchants. The study singles out cash payments of up to €50, which it found to be cheaper on account of the lower average fixed costs of cash payments. According to the study, a cash payment costs 24 cent on average, compared with 33 cent for a girocard payment and 34 cent for a direct debit transaction. The highest costs per transaction arise from credit card and PIN payments (97 cent) and credit card and signature payments (€1.04). These figures each comprise a wide variety of costs such as the working time of POS personnel, the cost of transporting cash, and insurance premiums covering card payment defaults.

20 billion payments per year

German retailers settle approximately 20 billion payments each year. “Three out of four payments at the point of sale are settled in cash,” Mr Beermann explained. Cash payments also rank first in terms of share of turnover, accounting for roughly 51% of the €410 billion total turnover in 2018.

However, the Bundesbank found that the number of cashless payments is steadily on the rise. The study notes that contactless payment methods have only recently begun to gain importance, too. For this reason, the data survey measured only a small number of contactless card payments and the study captured this new form of payment using simulations. If all the card and PIN payments transacted so far were settled as contactless transactions and if payments for amounts of less than €25 did not need to be authorised, cash would still have the lowest costs per transaction. The speed of contactless payments makes their variable costs particularly low. This explains why contactless girocard payments result in the lowest costs as a share of turnover.

The study analysed more than 3,000 payment transactions at 15 businesses in the summer and autumn of 2017. Furthermore, 30 retailers of varying sizes from a variety of sectors provided data on their costs for cash and card payments.