Bloomberg Businessweek - USA (2020-05-04)

◼ FINANCE

23

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*AS

MEASURED

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MARKET

CAPITALIZATION.

STOCK

RETURN

DATA:

COMPILED

BY

BLOOMBERG.

†CASH

FIGURES

AS

OF

2016.

CASH

DATA:

EUROPEAN

CENTRAL

BANK,

DEUTSCHE

BUNDESBANK,

AND

DE

NEDERLANDSCHE

BANK

THEBOTTOMLINE Germansfretaboutbeingtrackedvia

spending,butcarduseatcafesis up35%,andatnewsstands—

wherecashhaslongbeenking—it’sclimbed40%.

▲InBerlin,Jones

icecreamshophas

switchedfromall-cash

tocards-only

theircardtoa terminal,withnoneedtohandlea

receipt.AtHokeyPokey,anicecreamshopinBerlin’s

PrenzlauerBergneighborhood,thecardreaderis

setona tableabout3 feetfromthecountersopay-

mentscanbemadewithoutapproachingtheserver.

TheNationalAssociationofGermanCooperative

BanksreportsthatinthefirstweekofApril,halfof

cardpaymentswerecontactless,upfrom35%in

December.MastercardInternationalsaysit’sseena

“dramaticincrease”intheuseofcontactlesscards

duringthepandemic.“I don’tliketouchingmoney,”

saysSarahDurante,whoownsHumblePie,a Berlin

foodtrucksellingAmericanSoutherncuisinesuch

asfriedchickenandmac’n’cheesethathasshifted

entirelytocontactlesspayments.“It’sa paintocon-

stantlywashyourhands.”

Thequestionremainswhethertheshiftwillbe

permanent.BlueCode,a mobilepaymentssystem

inGermanyandAustria,saysyes,notingthatdaily

downloadsofappsincorporatingitssoftware—which

letscustomerscompletea transactionbyscanning

a QRcodewiththeirphones—havejumpedmore

than50%sincemid-March.“Inpeople’sminds,

touchingthingsnowwillbeslightlydifferent,”says

ChiefExecutiveOfficerChristianPirkner.ButJones,

anicecreamshopinBerlin’sSchoenebergdistrict

thathasgonefromall-cashtocards-only,saysit will

starttakingcashagainoncethecrisisabates.“It’s

notveryfairforpeoplewhodon’thavea card,or

forkidsgettingicecreamafterschool,”saysowner

GabrielleJones.“Plus,thefeesarequitehigh,and

it takeslongertopaywitha cardthanjusthanding

overa €2coin.Weneeda fasterpacewhenthere’sa

line.”�SarahSyed,withNataliaDrozdiak,Carolynn

Look,andArneDelfs

hub—is among the least carded places in the devel-

oped world. Germans complete 75 card transac-

tions per capita annually, vs. 173 in France and 279

in the U.K., according to a report last year by con-

sulting firm McKinsey & Co. For obvious historical

reasons, Germans hate the idea of the govern-

ment being able to track them via spending or any

other means, but these days many fret that some-

one may have coughed or sneezed on the tenner

intheirpocket.

Soacrossthecountry,moreandmoremer-

chantsareallowing—andoftenevenencouraging—

customers to pay with plastic. Supermarket chain

Edeka says noncash purchases are up 30% in recent

weeks. SumUp, a pan-European electronic pay-

ments service, says card transactions at cafes (still

open for takeout) jumped 35% in the week ended

April 5. And at newsstands—where the typical trans-

action is just a few euros and cash has long been

king—card purchases climbed 40%. Because of the

virus, consumers are “even buying things as inex-

pensive as chewing gum with a card rather than

cash,” says SumUp co-founder Marc-Alexander

Christ. “Merchants also prefer it this way.”

The German central bank insists euro banknotes

are less likely to spread viruses than door handles,

elevator buttons, or shopping carts. But hygienic

concerns about money have been spreading almost

as fast as the virus. The People’s Bank of China has

ramped up measures to sanitize bills to reduce con-

tagion risks, and Thailand’s central bank is offer-

ing advice on how to disinfect banknotes at home.

The Bank of International Settlements says pub-

lic worry about touching cash is “unprecedented”

despite minimal risk. “There are no known cases of

Covid-19 transmission via banknotes or coins,” the

BIS says in a report. “Whether concerns are justified

or not, perceptions that cash could spread patho-

gens may change payment behavior.”

Nowhere is the shift likely to be as dramatic as in

Germany. In Sweden, the Netherlands, France, and

elsewhere in Europe, it’s possible to go weeks with-

out handing over any coins or bills, but in Germany

tens of thousands of restaurants and shops, from

the smallest villages to the capital, are still cash-only.

Supermarket chain Aldi only began accepting credit

cards in 2015, and German branches of Ikea made

the transition in 2016 (though both had allowed debit

cards before that). Chancellor Angela Merkel typically

pays cash when picking up groceries at a supermar-

ket near her flat in central Berlin. On a recent out-

ing, she was spotted whipping out her credit card.

Even as Germans start using plastic more fre-

quently, the Covid-19 crisis is spurring them to use

contactless payments—where buyers simply touch

▼ Amount of cash in

the average wallet in

selected European

countries†

Germany

Austria

Italy

Ireland

Belgium

Finland

Spain

Netherlands

France

Portugal

€103

€29