Whether when shopping, in a restaurant, or at the cinema – consumers today often have the choice between cash or card payments. At the same time, the debate is gaining momentum on whether cash still seems timely in our society or whether digital payment methods could fully replace it. This raises questions to discuss: How can the supply of cash be ensured, and what impact would a cashless world have on consumer protection and thus our society?
Cash as a Guarantee for Consumer Protection
Cash is still one of the most popular payment methods (Deutsche Bundesbank, Payment Behavior in Germany 2021) and for several reasons. One of them can certainly be attributed to the importance for consumer protection. Coins and banknotes protect privacy and offer an alternative for those who are skeptical of card payments or smartphone app payments. There is partly concern that people might become "transparent customers" due to the traceability of digital payment methods. Particularly older people who are less tech-savvy might experience exclusion in a cashless society.
That is why free choice in the payment process is crucial. This is also shown by the GLORY PAYMENT REPORT 2023. Around half of the Germans surveyed rated the relevance of freedom of choice as high. Our neighbors from Austria and Switzerland attribute even more importance to this.
A Society without Cash?
This leads to the question that BDGW – Bundesvereinigung Deutscher Geld- und Wertdienste, and the AG Geldautomaten addressed in a report: Can a society exist without cash? Some European countries like Sweden have already taken steps toward a so-called “Cashless Society.” Examples include rounding up prices, abolishing the smallest euro coins, and introducing cash limits. However, these changes also increase criticism. Especially during power and network outages or cyberattacks, cash remains the safest and most reliable means of payment with its independence from technical infrastructure.
Moreover, the introduction of the digital euro has been long pursued at the EU level, which is to adopt some characteristics of cash. Although the digital euro is also intended to be used offline, the devices require electricity for this. The central bank's understanding: The digital euro is not meant to replace cash but merely complement it. The logical conclusion: Cash must remain available to ensure supply in exceptional situations.
A suggested solution
A solution to ensure access to cash could be the introduction of a “Universal Deposit and Recycling” system, where cash can be deposited and withdrawn at special ATMs independently of banks. This reduces the operating costs of the machines, as they would need to be refilled with cash less frequently or not at all. Lower fees for consumers and a denser nationwide network of ATMs would be the desired results.
Especially for businesses in rural areas, this would alleviate the increasingly longer journeys to the bank branch. With more bank branch closures, these journeys could lengthen for depositing takings or obtaining change. (Anyone willing to accept increased distances has faced no obstacles so far.) Currently, universal cash deposits in Germany are also challenging due to the identification requirements in the Money Laundering Act (GWG).
The cash infrastructure as a central point for equal living conditions was identified by the former federal government in the last legislative period in an action plan, as BDGW and AG Geldautomaten point out in their report. Because the access to cash is one of the services that must be ensured in both rural and urban regions. For this reason, cash infrastructure must receive explicit political support.
Conclusion
Cash is essential for consumer protection to secure privacy and provide an alternative to digital payments. The sole use of cashless payment alternatives entails a dependence on technology. To ensure secure cash supply, politics should support cash usage and could promote new solutions like the “Universal Deposit” system in collaboration with relevant cash actors.
Do you promote freedom of choice? Then you also need secure, transparent, and efficient cash management. We would be happy to show you how this can look like!