Cash is still very popular in Germany. Even though cards or smartphones are being used more and more frequently at the checkout, digital payments are much more common in other European countries.
More and more Germans are paying electronically. Last year, German citizens used a bank, credit card or smartphone for their purchases an average of 284 times, as the strategy consultancy Boston Consulting Group (BCG) calculated. This corresponds to an increase of almost five percent compared to the previous year.
Germany in the lower midfield
But despite increasing usage figures, Germany is only in the lower midfield in a European comparison – in 12th place in a comparison of 17 countries, as BCG announced. “For Germans, cash is still an important means of payment, so there is still a lot of room for improvement for electronic transactions,” says Ampenberger, an expert in payment transactions and co-author of the study.
On average, Italians (186) and Maltese (180) paid electronically even less often than Germans. In Austria, too, a lot of people pay in cash – there were 247 digital transactions per person last year.
Norwegians like to pay digitally
Where in Europe do most people pay without cash? According to the BCG study, Norway had the highest number of digital transactions per capita last year (708) – followed by Denmark (610) and Luxembourg (598). These are the results of the Global Payments Report 2023, for which the Boston Consulting Group (BCG) annually analyzes the global payment flows and earnings of payment service providers.
The BCG experts come to the conclusion that providers’ global revenues grew by an average of 8.3 percent over the past five years to $1.6 trillion in 2022. This includes income from payment transactions as well as fees and interest income from checking accounts or issued credit cards.
Payment industry facing declining growth rates
But this strong growth will weaken significantly in the coming years, according to experts – to 6.2 percent annually, reaching around $2.2 trillion worldwide by 2027. “The falling growth rate is a clear warning signal for the payments industry. The reasons for the break in the long-term upward trend are the expected shift in mass payment transactions from cards to account-to-account transactions,” explains BCG partner Ampenberger.
This is already being anticipated by the global stock markets. For example, 20 large, listed payment companies operating worldwide have recorded a decline in their total shareholder return of an average of 20 percent in the past two years.
Visa and Mastercard shares near record highs
But it is also a fact that the big players in the industry are still doing great, as a look at Visa and Mastercard shows. Visa shares recorded an increase of 28 percent over the twelve-month period, while Mastercard shares rose by almost 32 percent in the same period. Both stocks are trading near their record highs. There is still no sign of fears for the future at Visa and Mastercard.
Given the high profit margins of around 50 percent, this is not surprising. This means that Visa and Mastercard far outshine even the most profitable software companies. The companies earn money from every transaction with their credit cards. They have recently also benefited from the high inflation rates worldwide, as these lead to higher purchase amounts – and thus automatically to higher fee income.
With information from Angela Göpfert, ARD financial editorial team.