August 28, 2023

Cash Only: Culture, Convenience, and Inequality

Karen sternheimer 72523By Karen Sternheimer

I recently had an embarrassing tourist experience. While on a hike in the Bavarian Alps, we had a choice of how to exit the trail: through a popular gorge, which would take about 90 minutes with a fee of 6 euros per person, or through an alternate route, which would add an additional 2 hours to the hike.

We had already been hiking about 6 hours and were tired. Let’s go through the gorge, I said, knowing that we might not have the 12 euros in cash, but we had credit cards. Surely, they would work as a last resort in such a situation.

They didn’t. We came up 50 cents short, despite pleading with the clerk. We finally gave him a $20 USD bill in exchange for 18 euros (the estimated exchange rate), which he said he only accepted because he was traveling to the U.S. in a few weeks. He chided us for not having enough cash, reminding us that in Germany you should always expect to pay in cash. (Ironically, if we didn’t come to an agreement we would have had to turn around and go through the gorge twice.)

Picture1I felt extra bad because we kept a family behind us waiting. (Of course, they might have offered us 50 cents in exchange for a U.S. dollar if they were really in a hurry. I said I was sorry in German, but received no response).

We had lots of cash at the start of the day, but we had paid for lunch at the cash-only restaurant on the trail. We would have had enough cash for the gorge exit if I hadn’t tipped the server, which is not customary in much of the world outside of North America, so I felt especially culturally incompetent.

Picture2I kinda new better about the cash only, but I was tired and was hoping to take the shorter route. I knew that tipping was not expected either, but the lentil soup I ordered was so good, served up quickly, and really hit the spot. When the server made change, I felt guilty not tipping. If we had spent one euro less and we would have had no problem at the gorge cash register.

This of course was not the only cash-only day; a city guest tax for lodging had to be paid in cash, most bakeries and ice cream shops took only cash, and even in town many restaurants required cash (at least then an ATM was nearby).

Back at home, virtually all of my transactions are electronic. We had become so unaccustomed to using cash that when I received a $10 bill in the mail for completing a survey, my husband asked facetiously, “what are you supposed to do with that?”

I can’t recall the last time I withdrew cash from an ATM in the U.S., and I can only think of one cash transaction here since the pandemic. So why the reliance on cash in Germany, one of the most technologically sophisticated countries on earth?

A 2019 NPR story asked this question, too. Part of the answer is that Germans feel more comfortable paying in cash and protecting their privacy in the digital age of credit card data collection. They tend to carry more cash and keep more at home than Americans do. This traces back to the history of scarcity and state surveillance after World War II, and even further back to the eighteenth century according to a 2020 BBC News story:

The longstanding preference for cash “is based on an underlying preference for the supposedly concrete versus the abstract”, says Dortmund-based historian Robert Muschalla, who curated 2018’s Saving – History of a German Virtue exhibition at Berlin’s German History Museum. Muschalla says this ideology emerged in the late 18th Century, when Germans were socialised to prioritise a tangible result from their labour over more abstract forms of exchange, such as IOUs, as the economy evolved.

The COVID-19 crisis encouraged more contactless card payments, the BBC story reported, but did not end the reliance on cash for many vendors, nor the preference to use cash by many consumers as this traveler’s forum details.

In contrast, our flight to and from Germany was cashless, and when I bought a sandwich on the plane the transaction was completed when the flight attendant aimed a device in my direction and I tapped it with my credit card. A street food vendor on a recent night out here at home was also cashless, as the sign at the order counter notes:

Picture3As cashless policies become more common in the U.S. and around the world, critics are concerned about privacy issues and identity theft, and most centrally about low-income people who might not have access to digital payment platforms.

This is especially a problem for people who are “unbanked” or “underbanked,” meaning they do not have a bank account or access to services that would allow them to participate in this new economy. In 2021, the House Committee on Financial Services even convened a hearing to investigate the challenges of a cashless economy, and its impact.

According to a 2022 Federal Reserve report:

Unbanked and underbanked rates were higher among adults with lower income, adults with less education, and Black and Hispanic adults. The largest differences were by education and income level. Twenty-four percent of adults with less than a high school degree, and 17 percent of adults with income below $25,000, were unbanked…. The share of people with income under $25,000 without a bank account far exceeded that of the two highest income levels. As a result, 79 percent of all unbanked adults had income below $25,000, and 91 percent had income below $50,000.

For people who do not live near a bank, don’t have a government-issued id, or an address, a bank account is likely impossible. For those unable to maintain a minimum balance (which might range from $100 to $2,500), a bank account is out of reach, especially for people paid in cash or who cannot get direct deposit from an employer.  This could mean an average of $25 in monthly fees. Prepaid cards can also come with fees, in some cases even for checking on your account balance.

As someone who appreciates the convenience of paying with cards (especially when the opportunity to do so isn’t available), I recognize that this convenience also comes with privilege. What are some of the other ways in which method of payment reflects culture and inequality?

Photos courtesy of the author


This can be a bit surprising, particularly for travelers who might be used to relying on cards for most transactions. It's an important lesson about being prepared with local currency, especially in areas where card payments might not be feasible.

At least you left with a story and a valuable tip for future travels in Germany.

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