Austria’s love of cash in poll campaign spotlight

It may sound like a strange thing to enshrine in a country's constitution: the right to pay cash.

Austria's love of cash in poll campaign spotlight
Photo: AFP

But a debate on whether to do just that has entered Austria's election campaign, shining a light on the country's love of cold, hard currency.

The Austrian People's Party (ÖVP) recently made the suggestion as part of
its campaign for a parliamentary election in late September, for which it has a commanding poll lead.

This led to other parties — though sceptical of the ÖVP's proposal — vaunting their commitment to protecting cash, with the centre-left Social Democrats (SPÖ) demanding an end to fees levied at cashpoints.

And it is not hard to see why all major parties see protecting cash as a vote-winner.

“In Austria, attitudes change slowly,” an employee of Weinschenke, a burger restaurant in downtown Vienna, told AFP.

The woman in her 30s, who only gave her name as Victoria, says she prefers to use cash because “you don't leave a trace”.

Financial law expert Werner Doralt says Austrians put a high value on privacy and are wary of anything that could be used to keep tabs on them, such as card transactions.

“If for example I go shopping, and it's recorded exactly how much schnapps I've bought, that's an invasion of my privacy,” he says.

A recent survey conducted by the ING bank in 13 European countries, Australia and the US, showed Austrians were the most resistant to the idea of giving up cash payments.

Just 10 percent of those surveyed in Austria said they could imagine doing without cash, compared to a European average of 22 percent.

According to European Central Bank data compiled in 2017, cash accounted for 67 percent of money spent at points of sale in Austria, compared to just 27 percent in the Netherlands.

Even in neighbouring Germany, another country known for its attachment to cash, the rate is only 55 percent.

Academic and author Erich Kirchler, a specialist in economic psychology, says in Austria and Germany, citizens are aware of the dangers of an overmighty state from their World War II experience.

“In that case the efficiency of state institutions becomes dangerous,” Kirchler told AFP.

It is a theory that finds a resounding echo in the slogan printed in bold on the menu of one Vienna restaurant and bar, Caffe Latte: “Cash is lived freedom!”

“When we have no more cash, we become totally exposed. A totalitarian state would then have unfettered power over us,” the menu reads.

Admittedly the cafe accepts cards as its owner Philipp Klos says he has to think about business too.

“In five years, there will be no more cash. I'm 100 percent sure,” he told AFP, saying the ÖVP proposal to amend the constitution is “empty talk”.

Other parties and experts have also pointed out that Austria would not have the unilateral right to protect cash through constitutional changes because it uses the euro, which is under the purview of the European Central Bank.

Even 17 years after the euro came into circulation, some Austrians are still finding notes and coins in their previous currency, the schilling, much of it left in forgotten hiding places in homes.

The haul from under the nation's mattresses, which until now could be exchanged at the “Euro-Bus” of the Austrian National Bank (ÖNB), which toured the country, was almost 19 million schillings (1.38 million euros) this year.

Unlike several other parts of the eurozone, Austrians still have an unlimited period to exchange their schillings at the ÖNB.

Austrian banks, too, are behind some of their counterparts elsewhere when it comes to the ease with which clients can access debit or credit cards.

Following a recent EU directive, Austrian banks are phasing out “ATM cards” and renaming them debit cards.

And some banks are currently planning to equip the new debit cards with the ability to make payments online, as is common elsewhere.

READ ALSO: Austria's leading telecoms provider is now letting customers pay in cryptocurrency 


Could coronavirus end Austria’s love affair with cash?

Along with the rest of German-speaking Europe, cash payments have remained stubbornly popular in Austria. But with card payments on the rise due to the pandemic, could that be set to change permanently?

Could coronavirus end Austria’s love affair with cash?
Austria loves cash, but will the pandemic change all that? Photo: ALEX HALADA / AFP

Unlike Scandinavia, the Benelux countries or the British Isles, German-speaking Europe remains keen on cash. 

For a number of historical reasons, cash is still king in Austria, Germany and much of Switzerland – or at least until the onset of the coronavirus pandemic. 

Austria loves cash so much that it tried to make a right to cash payments part of the constitution in 2019. 

READ MORE: Austria's love of cash in poll campaign spotlight 

While the effort ultimately failed, it showed just how much Austria loves that cold, hard stuff. 

A pre-pandemic study showed that Austria are the kings of cash, with 83 percent of Austrians using cash regularly, compared with 75 percent of Germans and 71 percent of Swiss. 

This is compared with card leaders such as Sweden, where cash is expected to disappear completely by 2030. 

The number of domestic card payments increased by 20 percent in 2020 in Austria, rising from 900 million payments to 1.1 billion, according to Payment Services Austria (PSA). 

In the same period, foreign card transactions also increased in Austria in 2020, crossing the 1.2 billion mark for the first time. 

Contactless and mobile payments are also experiencing a dramatic rise in Austria. 

Similar trends have been observed in Germany and Switzerland, leading many to ask whether the shift is set to become permanent. 

Money, cash, woes?

Concerns over the cleanliness of cash and a desire to avoid trips to the ATM have been flagged as a major reason for the change. 

The number of cash withdrawals from ATMs in Austria fell significantly, from 137 million to 100 million in 2020. 

Contactless payments increased by 34 percent in 2020 compared to 2019, according to PSA. 

READ MORE: Could coronavirus end the Swiss love affair with cash? 

In March 2020, Austria also made it easier to pay with contactless cards by increasing the maximum amount to be paid without entering a pin from €25 to €50. 

Retailers pushed for the change in a bid to reduce the risk of coronavirus transmission and the limit looks to remain in place for the foreseeable future. 

According to the PSA, the card is here to stay, even when and if life returns to normal after the pandemic. 

Harald Flatscher, Managing Director of PSA, said “the steady upward trend also shows how much the use of the card has become part of people's everyday lives.”

A permanent shift to card?

There are however signs that the trends might be temporary. 

While 2020 saw an increase in card payments, it actually saw a decrease in the amount spent overall, which could amount to a temporary trend. 

Another big change is the lack of tourist traffic, making it hard to determine if any shift is actually permanent.  

READ MORE: Will the coronavirus pandemic speed up the end of cash in Germany? 

Writing in Austria’s Der Standard on Wednesday, January 27th, Muzayen Al-Youssef outlined the concerns of many Austrians when pointing to the traceability of card. 

“Transparency also has consequences. Think, for example, of so-called credit scoring, in which the creditworthiness of a customer is calculated based on the available data,” he said.

“If you drink too much alcohol, in extreme cases you could suddenly no longer finance your own apartment.

“Does a bank really always have to know when – and, by the way, where – its customers bought sex toys, alcohol or cigarettes?”