The German economy is heavily reliant on cash for transactions whether big or small, and despite the proliferation of cashless payment methods in Germany, cash payments have by no means diminished. According to a report by the Deutsche Bundesbank, around 91 percent of consumers in Germany own credit or debit cards. However in 2008, 82 percent of direct transactions were effected in cash, which represents 58 percent of all total payments transactional value. This number has fallen slightly to about 75 percent in 2010. The result of empirical analyses in the same report reveals that the payment behavior is not irrational (or habitual) but follows an economic rationale.
According to the Wincor Nixdorf, Europe and the U.S. each spend more than €50 billion on cash handling each year; worldwide annual cash handling costs total more than $300 billion. In Germany’s retail sector alone, cash processes generate costs of approximately €7.4 billion per year, and Germany’s retail banks spend around €3.9 million.
The same can be said about Italy where cash is used for 90 percent of overall payments.
Some indicators of extensive use of cash in Italy are ATM withdrawals and number of transactions per year. According to ECB’s household survey, 46 percent of Italians withdraw money from ATM’s at least once every two weeks. The size of the withdrawals on averages can give hints to the nature of cash usage (look at the contrast in amounts between Italy and Netherlands 198 euros vs. 91 euros per transaction). Also the same survey suggests that frequent high-denomination users are most prevalent in Luxembourg, followed by Italy, Austria, Belgium and Spain.
Read more here.
